A major development unfolded today as India formally rejected the IMF’s AI Preparedness Index, citing methodological and contextual concerns. In response, economists at the National Institute of Public Finance and Policy (NIPFP) announced plans to develop a homegrown AI Composite Index, signalling a strategic effort to measure AI readiness in ways aligned with national priorities and policy frameworks.

India’s decision reflects growing scrutiny over international benchmarks that may not capture local technological, economic, or regulatory realities. The IMF index had ranked countries on AI preparedness across adoption, innovation, and governance metrics, but India questioned its relevance to domestic policy and investment realities.

NIPFP economists are now working on an AI Composite Index designed to incorporate national priorities, including digital infrastructure, research capacity, skill development, and sector-specific AI adoption. The proposed framework aims to offer actionable insights for policymakers, investors, and businesses, while providing an alternative perspective on India’s positioning in the global AI ecosystem. The move has already sparked interest among ministries, think tanks, and private-sector stakeholders.

The development aligns with a broader trend across global markets where nations are asserting sovereignty over AI metrics and benchmarking frameworks. International indices often serve as reference points for investment, policy, and reputational purposes, but discrepancies in methodology and local context can lead to misrepresentation.

India has rapidly expanded its AI ecosystem through initiatives like the National AI Strategy, Digital India, and public-private partnerships in sectors ranging from healthcare to agriculture. Accurate measurement tools are critical for tracking progress, identifying gaps, and targeting interventions.

Global competitors, including China, the U.S., and EU countries, are actively deploying national AI readiness frameworks to guide policy and attract investment. By developing its own composite index, India is signalling both a desire for data-driven governance and a nuanced understanding of AI’s economic, social, and regulatory dimensions, while positioning itself strategically in the global AI discourse.

Policy analysts note that India’s move underscores the limitations of one-size-fits-all AI indices. Global experts highlight that differences in economic structure, digital infrastructure maturity, and regulatory frameworks can distort international rankings.

Economists at NIPFP emphasise that the national AI Composite Index will integrate multiple indicators: human capital, R&D itntensity, digital infrastructure, policy readiness, and sectoral AI adoption. Officials suggest that the index could influence government funding allocation, private-sector investment decisions, and international partnerships.

Industry leaders view the development as a step toward creating an India-centric narrative on AI leadership, potentially enhancing credibility with global investors and multilateral agencies. Analysts also observe that a robust domestic index may provide the government with leverage in negotiating AI-related collaborations and benchmarking exercises with international bodies.

For global executives, the initiative signals that AI policy and investment decisions in India will increasingly be guided by domestic metrics. Companies operating in or with India may need to align strategies with locally prioritised AI indicators, rather than relying solely on international benchmarks.

Investors can expect a more nuanced evaluation of AI readiness and opportunity, reflecting India-specific strengths and constraints. Policymakers may use the index to optimise incentives, training programs, and infrastructure investments. The move also carries diplomatic and regulatory implications, as India asserts influence in shaping global AI discourse while safeguarding national interests and ensuring alignment with domestic development goals.

Attention now turns to the timeline and methodology for the NIPFP AI Composite Index, as well as the reception among international stakeholders. Decision-makers will monitor how the index informs government strategy, private-sector investment, and international collaborations. The key uncertainty remains whether the index can achieve global credibility while reflecting India’s domestic priorities, potentially setting a new standard for national AI benchmarking in emerging economies.

Source & Date

Source: Fortune India
Date: January 2026