Surging share prices coupled with a stronger rupee have helped Ambani's net worth surge 2 1/2 times in the past year to US$49 billion, the magazine said in a statement Thursday. Mittal's wealth totaled US$51 billion as of Nov. 2, it said.
In March, when Forbes released its 2007 rankings of world's richest people, Ambani trailed Mittal by US$12 billion.
Ambani's wealth grew faster as share prices of his Reliance Industries, which is largely focused on oil refining and petrochemicals, more than doubled in the past year and the rupee appreciated about 12 percent against the U.S. dollar.
Mittal's business is not listed on the Indian stock market, one of the world's fastest growing.
The stock boom coupled with rising real estate prices helped India add 18 new billionaires in the past year, taking the total to 54.
Their collective net worth was estimated at US$351 billion, making them the wealthiest group in Asia, the Forbes statement said, contrasting sharply with the 400 million Indians who still live on less than a dollar a day.
The methodology of the rankings remains similar to the practice Forbes followed in previous years.
The worth of an individual's holdings in public companies was based on the Nov. 2 closing stock price, and the value of private companies was estimated by evaluating comparable public firms in the industry and by consulting with experts in the field.
Ambani's estranged brother, Anil Ambani, whose conglomerate has interests in telecommunications, finance and power generation, came third with a net worth of US$45 billion.
Moving up the billionaires' list was Kushal Pal Singh, who has emerged the world's richest real estate developer after listing his flagship company DLF Ltd.
The top four in the Indian list were worth more than the 40 richest Chinese combined, Forbes said.
"Had these four been worth as much in March, when we published our annual list of the world's billionaires, they all would have ranked among the world's 10 richest," it said.
Mittal took fifth place in the March list, while the Ambani brothers ranked 14 and 18 respectively.