India has emerged as the fifth most digitalised economy globally and fourth on the global AI capability index, according to the State of Indias Digital Economy (SIDE) 2026 report released by the ICRIER Prosus Centre for Internet and Digital Economy (IPCIDE), a leading Delhi based think tank, in late May 2026. The benchmarking exercise covered 71 economies accounting for 96 per cent of global GDP using the CHIPS framework Connectivity, Harnessing, Innovation, Protection and Sustainability. India climbed three places from eighth in 2025 to fifth in 2026 on the CHIPS Combined Index, overtaking Germany, France, Japan and Canada. On AI India ranks fourth after the United States, China and Singapore, with the country accounting for around 26 per cent of global AI users and possessing the worlds second largest AI talent pool. The report notes that 72 per cent of AI users globally are now in developing countries, with India and China together accounting for nearly two fifths of worldwide AI adoption. Indias digitally delivered services exports stood at nearly USD 328 billion, making it one of the largest exporters in this category despite being a lower middle income economy. Drivers include the Digital Public Infrastructure stack of Aadhaar UPI ONDC and DigiLocker, deepening internet smartphone penetration, the startup ecosystem and policy reforms such as the Digital Personal Data Protection Act 2023 and IndiaAI Mission 2024. The report cautions India to bridge gaps in private AI investment, compute infrastructure and rural digital access.