New Delhi, Feb. 14 -- Niti Aayog, the government's top public policy think tank, plans to launch the Investment Friendliness Index by July to assess states' investment potential to drive competition in deregulation and ease of doing business, according to two people familiar with the development.

The index, announced by finance minister Nirmala Sitharaman in the Union Budget 2025-26, aims to strengthen competitive cooperative federalism while pushing states to take the necessary steps to spur investments and growth.

The Centre hopes that states will look up to top performers, ask how they can match them, learn from their best practices, and adopt improvements, said the first person mentioned above on the condition of anonymity.

"At the...