Group update

India is the third largest digitalised economy in the world, and has the potential to challenge the AI hegemony of US and China in a few years

• At the country-level, India emerges as the third largest digitalised country in the world, behind the United States and China.

• The rise of India is part of a larger story of the rise of the Global South in the world’s digitalisation map, with China being the second most digitalised country, and India, Brazil, Thailand and Nigeria overtaking many developed nations.

• While India boasts of a large number of users and a high level of digital, the average Indian remains only modestly digitalized. When country and user level scores are combined, India’s rank falls to 8^th in a group of 32 countries (G32, comprising of 17 developed and 15 developing).

• US and China have gained a decisive lead over the rest of the world in the AI race, followed by South Korea, Singapore and the Netherlands. India ranks 11^th in AI research and 16^th on AI infrastructure in G32. But with appropriate investment and policies, India can develop the scale and capability to challenge the AI hegemony of the US and China.

• India’s large population gives it the advantage of scale but also creates risk of cyber threats and environmental degradation due to the rapid digitalisation. There is considerable scope of improvement when it comes to dealing with these risks.

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The ICRIER-Prosus Centre for Internet and Digital Economy (IPCIDE) unveiled the third edition of the 'State of India’s Digital Economy (SIDE) 2025' report at its annual conference in New Delhi today. The conference brought together stakeholders from the government, industry, academia and policy experts including Amitabh Kant, G20 Sherpa for India; Debjani Ghosh, NITI Aayog; Neeraj Mittal, Secretary, Department of Telecommunication; R. Chandrashekhar, Former President, NASSCOM; Former Secretary, Department of Information Technology; Aruna Sundararajan, Chairperson (Broadband India Forum), Former Secretary of DoT and MeitY; Pramod Bhasin, Chairperson, ICRIER and Sanjeev Bikhchandani, Co-founder, Info Edge; to discuss the progress of India’s digitalisation agenda and opportunities ahead.

The SIDE 2025 report presents a new approach to measuring digitalisation. This approach, better suited for developing countries like India, proposes a much wider definition of digitalisation through its Connect-Harness-Innovate-Protect-Sustain (CHIPS) framework, taking into account the breadth and depth of the digital economy.

India has the world’s second largest mobile and internet network by number of users. Few countries see data traffic per smartphone as high as in India. India is also the global leader in terms of the volume of digital transactions and export of ICT services. However, despite rapid mobile broadband adoption and some of the highest mobile data usage rates globally, fixed broadband infrastructure remains underdeveloped, limiting long-term digital resilience. In AI, India ranks 11th in research and 16th in infrastructure, highlighting the need for greater investment to compete globally. While inclusion efforts are making progress, with UPI significantly reducing gender and urban-rural disparities, geographical divides in access to other digital services continue to persist.

Speaking at the launch of the report, Sehraj Singh, Managing Director – Prosus, India, said, “India's digital transformation is rapidly redefining its economy and global standing. The SIDE 2025 report offers valuable insights into how India can leverage its digital strengths while tackling critical challenges such as AI readiness, cybersecurity, and broader digital adoption. At Prosus, we are dedicated to supporting India's progress towards a more connected, innovative, and secure digital AI future. The IPCIDE conference plays a vital role in driving dialogue and collaboration within this dynamic digital ecosystem."

Speaking at the event, Deepak Mishra, Director and CE, ICRIER, said, “The State of India’s Digital Economy (SIDE) is the only report from the Global South that not only challenges the way digitalisation is being measured by various global organisations, it also provides an alternative framework that is more suited to the way digitalisation has evolved in recent years. This report, along with the other research being undertaken at the ICRIER-Prosus Centre, is helping policymakers, better benchmark India’s performance in the global digital economy.”

The ICRIER-Prosus Centre was set-up in April 2022 and this was the third annual digital economy conference organised by the Centre.

Please click here to read the full report.

About IPCIDE

The ICRIER Prosus Centre for Internet and Digital Economy (IPCIDE), set up jointly by the Indian Council for Research on International Economic Relations (ICRIER), one of India’s premier economic think tanks, and Prosus, a global consumer internet group, is focused towards building policy evidence to shape the next phase of India’s digital transformation. The overarching objective of an efficient, inclusive and sustainable digital economy in India is being met through high-quality research, prominent networking events and resource banks that collectively assist in policy debate and design. The Centre’s activities are mentored by a group of eminent academics, policy makers and industry representatives.

About ICRIER

Indian Council for Research on International Economic Relations (ICRIER) is one of India's premier economic think tanks. Established in 1981 with the goal of providing policy advice to effectively deal with external economic shocks, it has grown to become one of India's most well-known independent and informative policy research organization. It is known for providing credible, candid and constructive ideas to accelerate India's inclusive development. While enjoying the trust of the governments, corporates, multilaterals and foundations as its major donors, ICRIER has served as a bridge between the academic world and the policy arena. ICRIER's Board of Governors include leading academicians, policymakers, and representatives from the private sector. Mr. Pramod Bhasin is ICRIER's chairperson and Dr. Deepak Mishra is Director & Chief Executive. For more information, please visit: icrier.org.