The ICC rankings table reflects the results of all Test series completed since August more than three years ago. For example, right now the table reflects all series since August 2006. The next revision, due any time now, will drop all matches played between August 2006 and August 2007.
Since that year wasn't particularly good for India, the removal of statistics relating to that period will help it retain the top spot in ICC rankings even it loses the current series 2-0.
The data on wins, draws and losses (against both higher ranked and lower ranked teams) is assigned weights in accordance with a formula. Recent results (over the past one year) are given more weight. A win over a team with higher rating gets the winner more points.
A rating above 120 suggests consistently strong performances. India, Australia, South Africa and Sri Lanka are currently in this band. A rating above 130 suggests a high degree of dominance over all other teams.