Southern States Lead India’s Digital Race : New Report Reveals Big Tech-Readiness Divide

 

India’s journey towards becoming a digital powerhouse is accelerating like never before. Technology is reaching millions of people daily through a variety of ways including UPI payments in villages and AI-led public services in major metropolitan areas.

 

However, the most recent study shows that the rapidly evolving technology does not have a uniform impact on the entire country; some states are moving rapidly forward while others are not making as much progress.

The Technology Readiness Index 2025, created by Koan Advisory Group and the PHD Chamber of Commerce and Industry (PHDCCI), is an extensive evaluation of how well prepared Indian states are for the future and was conducted using data collected from 30 states and union territories.

 

The assessment of each state was conducted using 25 distinct aspects, called indicators, which have been grouped into four pillars- Access to Technology, Digital Infrastructure, Business Environment and Technology-Related Laws and Institutions. The findings of the study reveal a significant digital divide between the southern and western states that are currently leading, and the larger number of eastern and northeastern states that are far behind.

The states that lead the way in technology for the country of India are Tamil Nadu, Karnataka and Maharashtra. According to the Technology Readiness Index's results, Tamil Nadu received an 80.95 in the Technology Readiness Index and has been identified as the overall leader in preparation for technology in India due to its multiple strengths in the areas of Digital Infrastructure, Innovation, Business Environment and Institutional Readiness.

The state boasts the highest number of operational Special Economic Zones (SEZs), strong gram panchayat fibre connectivity and impressive patent filings, a sign of continuous innovation. The state that is home to Silicon Valley of India, Karnataka ranks number two overall due to its booming startup ecosystem, high increase of Foreign Direct Investment (FDI) inflow, the presence of Satellite Technologies Parks (STPis), as well as large-scale online public service delivery systems.

 

Maharashtra takes the number three spot, primarily due to its economic strength through Mumbai/Pune, a strong digital services network, and the largest percentage of the total FDI into India.

The top three states demonstrate a consistent trend that a combination of good policy, deep business ecosystems, and modern digital infrastructure are leading India's technology boom.

 

The South and West regions dominate the Top 10 rankings

The trend described above holds for the rest of the states in the Top 10 - Telangana, Delhi, Andhra Pradesh, Gujarat, Haryana, Goa and Kerala. It is the addition of Technology-Friendly Policies/early investments in fibre connectivity, having a skilled workforce, possessing a strong base of industry, and embracing emerging technologies like Artificial Intelligence (or AI) and the Internet of Things (or IoT) that propelled these states into the Top 10.

For instance, Telangana ranks first on the policy pillar as it provides a comprehensive framework that includes AI, IoT, Blockchain, Cyber Security, and Skills. For technology access, Goa ranks number 1 based on the highest Internet Penetration and fastest mobile data speeds.

 

Northern India, as a whole, has a mixed record. Delhi performs exceptionally well on tech access due to high connectivity and widespread digital service usage. Haryana is among the top 10 states in the list because of its strong infrastructure and readiness for policies.

 

India’s journey towards becoming a digital powerhouse is accelerating like never before. Technology is reaching millions of people daily through a variety of ways including UPI payments in villages and AI-led public services in major metropolitan areas.

 

While larger states like Uttar Pradesh, Punjab, Rajasthan, and Uttarakhand are located in the middle, Uttar Pradesh is ranked 14th, despite having a significantly larger population and recent advances in 5G infrastructure and presence of Common Service Centres. The major reason for Uttar Pradesh's low ranking is its lack of digital policies and the depth of scrutiny placed into innovative ideas within its confines.

Punjab and Himachal Pradesh have good internet connectivity; however, their business ecosystems are weak and their infrastructure rollout is slow.

 

Eastern and north-eastern states still lag far behind.

Among all the trends that are increasingly worrying is the inclusion of almost all of the eastern and north-eastern states, which are largely located in the bottom 30 per cent of the rankings. This means that Bihar, Jharkhand, Assam, Meghalaya, Mizoram, Sikkim, Arunachal Pradesh, and Nagaland have performed poorly overall on three major attributes - infrastructure, business readiness, and institutional structures.

 

Nagaland is ranked in the bottom (30th out of 30) in the entire country and has extremely low fibre connectivity, inadequate digital governance, and very few businesses within the technology sector operating in the state. Odisha is one of the few exceptions to this trend and is now ranked 11th, having improved its performance as a result of its business-friendly policies, as well as the implementation of several better digital initiatives. Geography, weak manufacturing base, and insufficient investment into these states are driving these widening disparities.

 

Tech Infrastructure and Access: India’s Biggest Weak Spots

According to the Index, digital infrastructure is the most unevenly developed pillar across India. Rural fibre connectivity, EV charging networks, 5G tower deployment and smart-city capabilities vary widely between states. Only a few states score above 50 in infrastructure, while some north-eastern states have single-digit scores.

Technology access, including internet usage, UPI adoption and mobile speed, also shows major gaps. Goa scores a perfect 100, while many large states remain below 30. This unevenness will directly affect how fast states adopt advanced technologies such as AI, big data and automation, the report warns.

 

Economic Powerhouses Are More Tech-Ready, but Income Alone Is Not Enough

States with large economies, Maharashtra, Karnataka, Tamil Nadu, Gujarat and Telangana, score well in tech readiness. These states have the financial capacity to build digital infrastructure, attract talent and support innovation.

 

However, economic size does not always guarantee digital strength. Goa, a mid-income state, outperforms many larger economies. Meanwhile, Uttar Pradesh and West Bengal, despite their economic scale, score lower than expected.

 

Tech Readiness Does Not Always Match Human Development

Surprisingly, the Index shows only a weak connection between human development and technology readiness. High-HDI states like Kerala, Himachal Pradesh and Mizoram are not necessarily tech leaders. Mid-HDI states like Telangana and Andhra Pradesh score much higher.

This indicates that digital progress depends more on targeted investments and policy focus than traditional development indicators.

 

Experts Raise Concerns About Cybersecurity and Digital Inclusion

Dr Deepak Tandon, BFSI Expert, told ETV Bharat that while such reports help guide users and policymakers, India must urgently strengthen cyber security to protect digital growth. “Everything should be user-friendly, but what is going to be a bane under artificial intelligence is cyber frauds,” he warned. “Technology has to be more enabled and foolproof from hacking, phishing and spoofing,” he added.

 

Tandon emphasised the need to expand digitalisation to rural and agricultural regions, “We must reach the grassroots unless we open bank accounts and create financial literacy, how can digitisation reach the rural masses? Banking for the unbanked must be strengthened.”