Placed a notch above Gandhi is the Indian American chairman and chief executive of PepsiCo, Indra Nooyi.
Topping the list for a second year in a row is Angela Merkel, the first woman to become chancellor of Germany. Says the US business magazine, She continued to impress the world with her cool leadership at two back-to-back summits."
Other women who made it to the top were Chinese Vice premier Wu Yi at No 2, Ho Ching, chief executive of Temasek Holdings, Singapore's largest business conglomerate, at No 3 and US Secretary of State Condoleezza Rice at No 4.
Describing Gandhi, the Forbes magazine said, "the Italian-born leader of India's most powerful political party, the Indian National Congress Party, has come far since entering politics in the 1990s.
The magazine also made a mention about her clout in Indian politics. Noting that the Indian lawmakers recently elected her choice for president, Pratibha Patil.
Describing it as "a historic vote seen as a step forward for India's women and girls who endure daily discrimination", the magazine said, "The vote, however, saw angry allegations levelled against Patil, over purported corruption and criminal activity in her family.