The world dynamics are changing drastically concerning the progress of every sector. The educational sector is not an exception to it, and India has one of the biggest educational systems progressing towards a better future for its youth, as more than 50% of its population comes under the youth criteria, for such vast system it becomes critically essential to work hand in hand with the latest developing technologies to shape the students to sustain in then growing global demand. The present research explores the Artificial Intelligence (AI) literacy rate among 196 higher education students studying in higher educational institutions of Andhra Pradesh, India, in order to explore the status of AI literacy in the Indian education system. The results show that Male students, students with an urban area background, students with higher educational grades, and non-scholarship-based students have shown better AI literacy when compared to the opposite groups, showing that gender, financial situation, geographical area, and educational grades do significantly affect in attaining AI literacy among students of higher education. © 2025 IEEE.