71-country benchmarks reveals India outpaces Germany, France, Japan, UK and Canada in AI race as 72% of global AI users now in developing countries
India generated USD 328 billion in digitally delivered trade and is home to the world's second-largest AI talent pool
India has emerged as the 5th most digitalised economy and 4th on the CHIPS-AI index, according to the State of India's Digital Economy (SIDE) 2026 report released today by the ICRIER-Prosus Centre for Internet and Digital Economy (IPCIDE). This comprehensive benchmarking exercise, expanded to 71 countries covering 96% of global GDP, reveals that India is outpacing major developed economies, including Germany, France, Japan and Canada, in digital performance.
The report documents a fundamental shift in the global digital landscape: 72% of AI users are now in developing countries, with India and China together accounting for nearly two-fifths of worldwide AI adoption. Generative AI has diffused faster than any previous technology in history, becoming a developing-country phenomenon almost immediately after launch.
The findings also reveal a structural shift in global digital leadership. Among the world's top five digital economies, three - China, Singapore and India - are now from the Indo-Pacific region, signalling the emergence of a tripolar digital order alongside the traditional North Atlantic pole.
Pramod Bhasin, Chairperson, ICRIER, said, "India has built strong foundations through connectivity, entrepreneurship and digital public infrastructure. The next phase of growth depends on how effectively we leverage AI, deepen innovation capabilities and strengthen digital trust."
India improved from 8th to 5th globally, demonstrating accelerating digital momentum in an increasingly competitive environment. The country's standalone AI index ranking of 4th - behind only the United States, China and Singapore - validates its emergence as a global AI powerhouse.
Dr. Deepak Mishra, Distinguished Visiting Professor, ICRIER, added, "India has transitioned from digital adopter to digital leader. Translating scale into sustained innovation and productivity gains will require stronger institutions, increased investment in research ecosystems and forward-looking policy preparedness."
India's digital transformation is increasingly driven by AI adoption, fintech innovation and a rapidly evolving startup ecosystem. The country has emerged as a globally significant exporter of digitally delivered services - software, IT services and cloud-based solutions - recording nearly USD 328 billion in digitally delivered trade despite being a lower-middle-income economy.
"India is no longer just a large digital market - it is emerging as one of the world's most influential AI economies. At Prosus, we remain committed to supporting India's digital ecosystem as a long-term innovation partner", said Sehraj Singh, Vice President, Group Corporate Affairs & Public Policy, Prosus.
India's next frontier combines significant advantages with clear opportunities: the world's second-largest AI talent concentration after the United States, massive user adoption, and strong digital public infrastructure. Converting these strengths into sustained value creation will require expanded compute access, mobilised risk capital and stronger commercialisation pathways linking universities, startups and industry.
The report emphasises that while AI adoption spreads rapidly across countries, frontier infrastructure - advanced chips, compute capacity and large language models - remains concentrated among a small group of countries and firms. India's ability to build domestic AI capabilities while leveraging its application-layer strengths will determine its competitive position in the decade ahead.
While digitalisation has brought about various benefits through its transformation of economies and societies by boosting growth, it also creates new risks and hidden costs. Online financial crime and digital fraud have grown rapidly and are now among the most commonly reported forms of crime in the country. Risks of digital exclusion and growing environmental challenges have also come to the forefront. The report highlights the need for rapid digitalisation to be accompanied by adequate investment to prevent cybercrime, and the opportunity for developing countries to avoid following the environmentally damaging paths that many advanced economies took while digitalising.
The SIDE 2026 report uses the enhanced CHIPS framework - Connect, Harness, Innovate, Protect and Sustain, a methodology specifically designed to capture how emerging economies are navigating the AI era. The expanded framework covers countries representing 96% of global GDP, 93% of internet users and 91% of the world's population, making it the most comprehensive digital economy benchmark to date.
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Key Findings from SIDE Report 2026
1. India jumps to 5th globally in digital economy rankings
India improved from 8th position in 2025 to 5th in 2026, reflecting gains in connectivity, AI adoption and innovation capabilities.
2. India ranks 4th in standalone AI Index, ahead of major developed economies
India ranks behind only the United States, China and Singapore in AI performance, outpacing Germany, France, UK, Japan and Canada.
3. 72% of global AI users now in developing countries
Generative AI has become the fastest-diffusing digital technology in history. China and India each have more AI users than all developed countries combined (excluding the U.S.). Together, they account for nearly two-fifths of global AI users.
4. Global digital economy becomes tripolar
Three of the top five digital economies - China, Singapore, India - are from the Indo-Pacific region, marking a structural shift from traditional North Atlantic to a tripolar digital order.
5. India records USD 328 billion in digitally delivered trade
India has emerged as one of the world's largest exporters of digitally delivered services (software, IT services, cloud solutions) despite being a lower-middle-income economy. India represents ~50% of BRICS digitally delivered services.
6. India has world's 2nd-largest AI talent pool but faces capital gap
India commands 26% of global AI users but just 1% of global private AI investment, reflecting a crucial gap. It ranks second globally in AI talent after the United States but lacks comparable levels of long-term venture capital and compute infrastructure - creating both challenge and opportunity.
7. Frontier AI infrastructure remains globally concentrated
While AI adoption spreads rapidly, advanced chips, compute infrastructure and large language models remain concentrated among a small group of countries and firms.
8. Converting scale into innovation is India's defining challenge
India's long-term competitiveness depends on mobilising risk capital, expanding compute access, strengthening university-startup linkages and building AI commercialisation pathways.
9. Managing the risks and costs of digitalisation, including cybercrimes, digital exclusion and environmental sustainability require greater attention and policy measures.
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About the State of the Internet & Digital Economy (SIDE) Index
The SIDE Index is an annual benchmarking framework that measures digital economy performance across four pillars: connectivity, usage, protection & sustainability, and innovation. The 2026 edition expands to 71 countries and integrates a standalone AI Index tracking adoption, talent, investment, and infrastructure. Developed by IPCIDE, the index provides policymakers, investors, and researchers with data-driven insights into the evolving global digital landscape.
About IPCIDE
The ICRIER Prosus Centre for Internet and Digital Economy (IPCIDE), established jointly by the Indian Council for Research on International Economic Relations (ICRIER) and Prosus, builds policy evidence to shape the next phase of India's digital transformation. Through high-quality research, networking events and knowledge resources, the Centre supports policy debate and design toward an efficient, inclusive and sustainable digital economy. The Centre's activities are mentored by eminent academics, policymakers and industry representatives.
About ICRIER
The Indian Council for Research on International Economic Relations (ICRIER), established in 1981, is one of India's premier economic think tanks, providing credible, candid and constructive policy research to accelerate India's inclusive development. ICRIER serves as a bridge between the academic world and the policy arena, enjoying the trust of governments, corporates, multilaterals and foundations. Mr. Pramod Bhasin is ICRIER's Chairperson and Dr. Shekhar Aiyar is Director & Chief Executive. Visit: www.icrier.org
About Prosus
Prosus is the power behind the world’s leading lifestyle ecommerce brands, across Europe, India, and Latin America, unlocking an AI-first world for our 2 billion customers.
The Prosus technology ecosystem spans food delivery, payments, classifieds, travel, events, and mobility. Our integrated approach enhances user engagement and creates the foundation for unprecedented AI capabilities through proprietary data and cross-service intelligence.
Through Prosus Ventures, we invest in companies which inspire and support the Prosus ecosystem. We search for new opportunities at the leading edge of AI and ecommerce, the digital AI workforce and in frontier technologies, such as robotics, drones and synbio.
The team actively backs exceptional entrepreneurs who are using technology to improve people’s everyday lives.
To find out more, please visit www.prosus.com.
