India's digital transformation is advancing rapidly, but its spread across states remains uneven, according to a new report, 'State of India's Digital Economy', by Delhi-based economic think tank Indian Council for Research on International Economic Relations (ICRIER) in collaboration with the Prosus Centre for Internet and Digital Economy (IPCIDE).
Using the CHIPS framework, spanning five pillars: connect, harness, innovate, protect, and sustain, the report reveals a clear divergence among Indian states.
It classifies Indian states into four clusters based on digitalization levels: advanced digitalizers (CHIPS score above 48), assured digitalizers (41-44), ascending digitalizers (32-38), and aspirational digitalizers (25-29).
Delhi, Kerala, Karnataka, Maharashtra, and Haryana have emerged as the country's most advanced digital states, falling in the “advanced digitalizers” category. Unsurprisingly, these states are home to the country's largest technology hubs, including Bengaluru, Mumbai, Pune, Gurugram, and Kochi.
Overall, southern states, along with Delhi, Haryana, Punjab, and Gujarat, lead India's digital charge, either achieving “advanced” status or approaching it with the “assured digitalizers” status.
Connectivity, driven by smartphones and internet access, remains the foundation of digitalization. While internet access continues to show wide gaps across Indian states, encouragingly, those gaps are beginning to close.
Internet usage averaged 63% nationally in 2024, with 11 states exceeding this benchmark. More significantly, the sharpest gains between 2022 and 2024 came from states in the lower-tier—“ascending” and “aspirational”—digitalization categories. These states included Uttarakhand, Madhya Pradesh, Himachal Pradesh, Jammu and Kashmir, Assam, Jharkhand, and Bihar. While absolute gaps remain substantial, these states are catching up.
Beyond mere access, India's digital story is increasingly defined by usage patterns. Digital Public Infrastructure (DPI) systems, such as Aadhaar and Unified Payments Interface (UPI), now match private platforms in terms of reach among connected users—a notable shift from earlier years, when private apps dominated.
Aadhaar enjoys near-universal coverage, while UPI usage rivals that of popular platforms like streaming services and social media. However, this success isn't uniform: other public platforms such as e-NAM and e-Sanjeevani continue to see limited adoption, highlighting uneven outcomes within the public digital ecosystem.
However, India's digital progress remains vulnerable in the area of protection. The report highlights that even high digitalization does not shield states from rising cyber fraud and crimes. Average fraud losses per incident remain elevated across all clusters, including the most advanced states. Notably, states offering the strongest overall protection from digital threats—Assam, Rajasthan, Punjab, Madhya Pradesh, and Bihar—aren't among the most digitally advanced.
The report findings suggest that India’s next phase of digitalization will depend less on building new digital rails and more on strengthening access, adoption and protection. Without closing these gaps, rapid digital expansion risks becoming both uneven and insecure.