According to the list compiled by the US publication, among the BRIC economies, Brazil was placed higher at the 80th position on the list, followed by Russia (91st), China (94th) and India (98th).
The best countries for business was determined by grading 145 nations on 11 different factors -- property rights, innovation, taxes, technology, corruption, freedom (personal, trade and monetary), red tape, investor protection and stock market performance.
Ireland, which maintains an extremely pro-business environment that has attracted investments by some of the world's biggest companies over the past decade, topped the list, followed by New Zealand which slipped to the second position. Hong Kong was third for the second straight year.
Scandinavian kingdoms of Denmark (4th) and Sweden (5th) featured highly educated workforce with GDPs per capita among the highest in the world.
"India is developing into an open-market economy", Forbes said, adding that "the outlook for India's medium-term growth is positive due to a young population and corresponding low dependency ratio, healthy savings and investment rates, and increasing integration into the global economy".
The US business magazine noted, however, that "India has many long-term challenges that it has yet to fully address."
The challenges include, poverty, corruption, violence and discrimination against girls, inefficient power generation and distribution system, ineffective enforcement of intellectual property rights, inadequate transport and agricultural infrastructure, limited non-agricultural job opportunities, inadequate availability of quality basic and higher education, and accommodating rural-to-urban migration.
In terms of trade freedom, India was ranked 128 and on monetary freedom basis it was placed at 132nd rank; property rights (55); innovation (39); technology (94); red tape (139); investor protection (32); corruption (86); personal freedom (58); tax burden (122); market performance (75).
The data for the report came from published reports from organisations like -- Freedom House, Heritage Foundation, Property Rights Alliance, Transparency International, World Bank and World Economic Forum.