According to State of India’s Digital Economy (SIDE) 2026 report, released by the ICRIER-Prosus Centre for Internet and Digital Economy, India has emerged as the world’s 5th most digitalised economy and 4th in global AI performance. The report evaluates digital competitiveness across 71 countries and highlights India’s rapid transformation into a major player in the global digital and AI ecosystem.
India’s rise reflects a strong combination of digital infrastructure, AI adoption, innovation ecosystem, and policy support, positioning it as a leading voice in the evolving global digital order.
Key Findings of SIDE 2026 Report
- India improved from 8th rank (2025) to 5th rank (2026) in digital economy rankings
- Ranked 4th in CHIPS-AI Index, behind USA, China, and Singapore
- Generated $328 billion in digitally delivered trade
- Holds the world’s 2nd-largest AI talent pool
- 72% of global AI users are in developing countries
- India + China = ~40% of global AI adoption
- Generative AI adoption has been the fastest in history, spreading rapidly in developing economies
Significance of India’s Rise
- Shift in Global Digital Power: Indicates growing dominance of the Indo-Pacific region, with leadership shifting from Western economies to Asia
- Emerging AI Leader: India ranks among top AI nations, enhancing global technological competitiveness
- Expansion of Digital Trade: $328 billion digital trade strengthens India as a hub for IT services, fintech, and digital platforms
- Voice of Global South: Demonstrates how developing countries can achieve transformation via Digital Public Infrastructure (DPI)
About IPCIDE
- A joint initiative of: Indian Council for Research on International Economic Relations and Prosus
- Focus Areas: Digital economy research, Emerging technologies, Internet governance, Digital policy
CHIPS-AI Index
A composite index developed by IPCIDE to assess AI capability and digital competitiveness based on:
- AI talent and research output
- Sector-wise AI adoption
- Digital infrastructure readiness
- Policy and regulatory ecosystem
It provides a holistic measure of a country’s preparedness for the AI-driven economy.
Factors Driving India’s Digital Transformation
1. Digital Public Infrastructure (DPI)
- Platforms like Aadhaar, UPI, DigiLocker, CoWIN, ONDC
- Improved financial inclusion, governance, and service delivery
2. Expanding Connectivity
- Affordable internet + smartphone penetration
- BharatNet expansion and rapid 5G rollout
3. Strong Startup Ecosystem
- Growth in fintech, edtech, health-tech, AI, e-commerce
4. Demographic Dividend
- Large young population with rising digital literacy and skills
5. Increasing AI Adoption
- Integration across governance, healthcare, agriculture, manufacturing, and finance
Government Initiatives Supporting Digital Growth
| Initiative | Key Role |
| IndiaAI Mission | ₹10,372 crore for AI infrastructure, datasets, startups |
| Digital India Mission | Strengthens digital connectivity & e-governance |
| National Data Governance Framework | Enables structured data access for AI |
| BharatNet | Expands rural broadband connectivity |
| PM-WANI | Public Wi-Fi access for digital inclusion |
| Semicon India Programme | Promotes semiconductor manufacturing |
| NEP 2020 | Promotes coding & AI literacy |
| ONDC | Democratizes digital commerce |