Owing to their Nehru Cup triumph, the Indian football team earned 57 points to climb six places to 145 in the latest FIFA rankings.
India beat a higher-ranked Syrian team 1-0 in the final of the tournament to win their first Nehru Cup title.
World champions Italy have returned to the top of the rankings after leaping above Argentina and former leaders Brazil.
The Italians benefited from a 2-1 away win over Ukraine in a qualifying match for next year's European Championship and also picked up points for a 0-0 home draw with France.
Brazil enjoyed three wins out of three over Algeria, the United States and Mexico but still dropped from top spot to third place, since the matches were friendlies carrying less rankings points than Italy's games.
World Cup runners-up France have fallen two places to sixth following their shock 1-0 home defeat by Euro 2008 qualifying rivals Scotland.
Scotland are the biggest climbers in the top 20, leaping nine places to 14th thanks to the France win and a 3-1 qualifying victory over Lithuania.
England have returned to the top 10, going above European Championship qualifying Group D rivals Croatia to claim ninth spot.
Croatia still lead England in the race for Euro 2008 but gained less rankings points last month following wins over lower-ranked opposition.
England chalked up 3-0 victories over Israel and Russia while the Croatians beat Estonia 2-0 and handed out a 6-0 thrashing to Andorra.