The paper elaborates upon the current developments in the information and communication technology (ICT) sector in India and their implications in transforming the country into knowledge economy. It analyses the ICT infrastructure, policies, present status within the framework of India Vision 2020; Digital opportunity Task Force of G8 (DOT Force), World Summit on the Information Society (WSIS) Geneva 2003 and Tunis 2005. It dwells upon the challenges which must be overcome to attain the status of knowledge economy of the country.