Bengaluru: India recorded its highest-ever average cost of a data breach in 2026, reaching ₹255 million (₹25.5 crore), according to the latest IBM Cost of a Data Breach Report 2026. The figure represents a 15.9% increase from ₹220 million (₹22 crore) reported in 2025, highlighting the growing financial impact of cyberattacks on Indian organizations.

The report revealed that the average data breach in India also increased in scale, with organizations losing an average of 39,500 records per breach, compared with 38,200 records in the previous year.

As artificial intelligence continues to transform the cybersecurity landscape, the report found that 26% of malicious breaches in India were AI-generated, indicating that attackers are increasingly using AI tools to launch faster, more sophisticated and scalable attacks.

At the same time, organizations that adopted AI-driven security solutions and automation saw significant improvements in cyber resilience, including lower breach costs and faster response times. However, AI adoption in cybersecurity remains limited, with 68% of Indian organizations reporting either limited or no use of AI and security automation.

“India’s accelerating AI adoption is creating immense opportunities for innovation, but it is also enabling cyber threats to evolve rapidly. Organizations using AI and strong governance frameworks are significantly better positioned to defend against cyberattacks,” said Gaurav Agarwal, Vice President, Technology, IBM India & South Asia.

He added that businesses need to move beyond using AI only for threat detection and integrate AI with agentic capabilities across the cybersecurity lifecycle, including detection, analysis, prioritization and remediation, to build stronger resilience.

AI Adoption Gap Increases Cybersecurity Costs

The IBM report highlighted a clear connection between AI adoption and breach costs.

Only 32% of organizations surveyed in India reported extensive use of AI and security automation, while 36% reported limited adoption and another 32% reported no use at all.

Organizations without AI and automation in security operations faced an average breach cost of ₹316 million (₹31.6 crore). In comparison, organizations with extensive AI and automation deployment reported average breach costs of ₹213 million (₹21.3 crore).

The report also found that organizations without AI-based security tools experienced slower breach response. Such organizations took an average of 236 days to identify a breach and 75 days to contain it, compared with organizations using extensive automation, which took 175 days to identify breaches.

Another emerging concern was Shadow AI, where employees use unauthorized AI applications without organizational oversight. The report found that Shadow AI increased breach costs by an average of ₹17.9 million (₹1.79 crore), placing it among the top three factors contributing to higher breach expenses in India.

Financial Services Sector Faces Highest Breach Costs

The financial impact of cyberattacks varied significantly across industries.

The financial services sector recorded the highest average data breach cost in India at ₹409 million (₹40.9 crore), followed by:

Technology sector: ₹357 million (₹35.7 crore)

Communications sector: ₹345 million (₹34.5 crore)

The report identified phishing attacks, including voice phishing and SMS phishing, as the most common initial attack method in India, accounting for 19% of breaches.

Other major attack vectors included:

Drive-by compromise — 16%

Supply chain compromise — 15%

Proactive Security Measures Help Reduce Costs

IBM’s findings showed that proactive cybersecurity measures can significantly reduce the financial impact of breaches.

Offensive security practices, including red teaming and penetration testing, emerged as the biggest cost-saving measures in India, reducing breach costs by an average of ₹24.7 million (₹2.47 crore).

Other effective measures included proactive threat hunting and AI governance technologies.

Organizations Plan Higher Cybersecurity Investments

Following the rise in cyber threats, Indian organizations are increasing investments in cybersecurity infrastructure and governance.

The top areas where companies plan additional spending include:

Incident response planning and testing — 67%

Threat detection and response technologies such as SIEM, SOAR and EDR — 51%

Identity and access management — 49%

AI security and governance tools — 39%

Employee cybersecurity awareness and training — 36%

The IBM report concludes that as cyber threats become increasingly AI-driven, organizations must combine artificial intelligence, automation and strong governance frameworks to reduce risks, improve response capabilities and strengthen digital resilience.