The improvement in India's rankings come after five continuous years of slide even as Switzerland, Sweden, the Netherlands, the US and UK retained their top spots as the most-innovative countries.
The index, co-authored by Cornell University, INSEAD and World Intellectual Property Organisation shows India's rise as an emerging innovation centre in Asia, although the country ranks far behind China which occupied the 22nd spot.
In a statement, the Ministry of Commerce & Industry said that the improvement in India's rank came after five years of a continuous drop in rankings.
"The Task Force on Innovation had the mandate of assessing India's position as an innovative country, suggest measures to enhance the innovation ecosystem in India and thus improve India's ranking in the GII.
Recognising India's potential to reach great heights in innovation and creativity, a task force on innovation was set up on the direction of Commerce and Industries Minister Nirmala Sitharaman.
"The Team, comprising of government officials and experts from private organisations & academia, has come up with its report which gives specific measures the measures to improve India's rank," the official statement said.
The report, however, said that India's rise has benefited a host of the neighbouring countries.
"Opportunities have emerged to leverage the rise of new East Asia Innovation Tigers, fostering deeper regional innovation networks and benefiting from the rise of India," the report noted in its findings.
Among India's neighbours, Sri Lanka took the 90th spot whereas Nepal was at 109th. Pakistan came in at 113 followed by Bangladesh at 114.
"As demonstrated in the GII for some years, India has consistently outperformed on innovation relative to its GDP per capita. Recently, it made important strides in innovation input and output performance," the report said.
It highlighted the continual improvement of India in terms of investment, tertiary education, quality of its publications and universities, its ICT services exports and innovation clusters.
"It is to be hoped that India will continue on this trajectory, with innovation investments leading to more and more dynamic R&D-intensive firms that are active in patenting, high-technology production, and exports," the report noted.
In 2017, Switzerland leads the rankings for the seventh consecutive year, with high-income economies taking 24 of the top 25 spots, except China which in 2016, became the first- ever middle-income economy in the top 25.
"Public policy plays a pivotal role in creating an enabling environment conducive to innovation. Since the last two years, we have seen important activities around the GII in India like the formation of India's high-level task force on innovation and consultative exercises on both innovation policy and better innovation metrics," CII Director General Chandrajit Banerjee said.
Each year, the GII surveys some 130 economies using dozens of metrics, from patent filings to education spending, providing decision makers a high-level look at the innovative activity that increasingly drives economic and social growth.