India has climbed to the fifth position among the world’s most digitalised economies and ranked fourth globally in artificial intelligence performance, according to the State of India’s Digital Economy (SIDE) 2026 report released by the ICRIER-Prosus Centre for Internet and Digital Economy (IPCIDE).

The report benchmarked 71 countries covering 96% of global GDP and found that India moved up from eighth place in 2025 to fifth place in 2026 on the CHIPS-Combined Index, which measures digital economy performance across the Connect, Harness, Innovate, Protect and Sustain pillars.

India ranked behind only the United States, China and Singapore on the standalone AI index, placing ahead of Germany, France, Japan, the United Kingdom and Canada.

The report said the country’s improved ranking was supported by gains in connectivity, digital technology adoption and a strong AI talent base.

According to the report, India generated around USD 328 billion in digitally delivered trade and has the world’s second-largest AI talent pool after the United States.

It also highlighted India’s growing role in software exports, IT services and cloud-based solutions despite being a lower-middle-income economy.

The study pointed to a broader shift in the global digital landscape, noting that 72% of AI users are now located in developing countries.

India and China together account for nearly two-fifths of global AI adoption, making generative AI one of the fastest-spreading technologies globally.

The report also said the global digital economy is becoming increasingly centred around the Indo-Pacific region.

Three of the world’s top five digital economies, China, Singapore and India, are now from the region, indicating what the report described as a tripolar digital order.

Pramod Bhasin, Chairperson, ICRIER, said, "India has built strong foundations through connectivity, entrepreneurship and digital public infrastructure.