Andhra Pradesh and Telangana jointly topped the 2016 all-India State/Union Territory-wise Ease of Doing Business rankings.
The move is aimed at triggering competition among states to attract investments and improve business climate.
The last date for uploading evidence of reforms implemented by the states has been extended to tomorrow.
"We are trying to release the ranking by January or February," the ministry official said.
State governments are taking several steps such as setting up of single window system for approvals to improve ease of doing business, the official added.
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The parameters include areas such as construction permit, labour regulation, environmental registration, access to information, land availability, and single window system.
According to the latest World Bank report, India has jumped 30 places to rank 100th.
The Department of Industrial Policy and Promotion (DIPP), is working with the World Bank to recognise over 200 reforms that will help propel India into the top-50.