India has secured the 11th position in AI research and the 16th spot in AI infrastructure among a group of 32 countries, comprising 17 developed and 15 developing nations, according to the third edition of the State of India’s Digital Economy (SIDE) 2025 report.
The findings, released by the ICRIER-Prosus Centre for Internet and Digital Economy (IPCIDE) on Friday, emphasise India’s rising stature in global digitalisation but also highlight significant gaps that need to be addressed to compete on the global AI stage.
Despite these rankings, the report underscored that India has considerable potential to challenge the current dominance of the US and China in the AI race. The report suggests that with enhanced investment in AI research and infrastructure, coupled with targeted policies, India could significantly bolster its standing and build the scale necessary to compete with AI giants.
Front-runners in AI
The global AI race is currently led by the US and China, with South Korea, Singapore, and the Netherlands also making significant strides. These nations have established themselves as front-runners in AI research, innovation, and infrastructure. India, on the other hand, despite its growing presence in the digital economy, faces challenges in narrowing the gap between itself and these AI powerhouses.
“India ranks 11th in AI research and 16th in AI infrastructure in the G32 group. While these are respectable positions, there is a clear need for increased investment and policy intervention to foster growth in these areas,” the report noted. “With the right focus, India can develop the capabilities necessary to compete at a global level and challenge the current AI hegemony dominated by the US and China.”
The SIDE 2025 report introduces a fresh perspective on measuring digitalisation, with a focus on a broader definition of digitalisation. It proposes a new framework — Connect-Harness-Innovate-Protect-Sustain (CHIPS) — which is designed to cater to the specific needs of developing nations like India. This framework emphasizes not only the technological infrastructure but also the societal, economic, and policy-driven aspects of digital transformation.
According to the report, India is the third-largest digitalised country globally, trailing only behind the US and China. This places India in a strong position in the context of global digitalisation, marking significant progress over the past few years. However, when combining both country-level and user-level digitalisation scores, India’s ranking drops to 8th in the G32 group.
Digital drive
While the rise of India in the digital space is evident, there is a pressing need for the average Indian to be better integrated into the digital economy. The report highlights that although India has a large number of users and high levels of digital engagement, the average user remains “modestly digitalised.” This disparity suggests that while digital services are increasingly accessible, their usage and impact are not yet widespread across all segments of the population.
India’s digital transformation is part of a broader trend where countries in the Global South, including Brazil, Thailand, and Nigeria, are outperforming many developed nations in terms of digitalisation. The report notes that India’s rise on the digitalisation map is a significant development, not just for the country but for the broader Global South.
The SIDE 2025 report calls for a comprehensive strategy to address these challenges. With the right investments, India has the opportunity to emerge as a leading force in the digital economy and AI innovation, the report has said.
At the launch of the SIDE 2025 report, India’s G20 Sherpa, Amitabh Kant, said, “The future of India’s economy is entirely digital, and the SIDE 2025 report helps establish how much progress India has made already. The artificial intelligence race actually has just begun, and this race is wide open, and the race will not be won by those who built up very high-cost model but by those who democratize technology, use open source, and use cost competitive models.
The government must strengthen digital infrastructure, businesses must continue to innovate, startups must continue to disrupt, and individuals must embrace more and more digital skills. The government, business, startups and citizens must work together to ensure an inclusive, sustainable and innovation driven digital growth in India.”