Abstract Xanthomonas species have been extensively studied as major and model pathogens of plants. However, there is an increasing recognition of the complex and large world of non-pathogenic species of Xanthomonas in the recent decades. One pathogenic Xanthomonas species has been known in rice for the last hundred years, yet in recent years, three non-pathogenic Xanthomonas (NPX) species have been reported. Thus, there is a need to understand the species-level diversity of NPXs like their pathogenic counterparts. In the present study, we report isolation and investigation into the genomic diversity of Xanthomonas indica , a newly discovered NPX species from rice. The study allowed us to establish the relationship of X. indica strains within clade I of Xanthomonads. All the strains formed a distinct but diverse clade compared to clades corresponding to other NPX species from rice and other hosts. X. indica lacks major virulence factors found in their pathogenic counterparts. Identification of highly diverse strains and open-pan genome indicates ongoing selection to acquire new functions for adaptation. X. indica also harbours large-scale interstrain variations in the lipopolysaccharide O-antigen biosynthetic gene cluster, which hints at the selection at this locus. Interestingly, all the diverse strains of X. indica were able to protect rice from bacterial leaf blight pathogen of rice upon leaf clip inoculation. Comparative genomics revealed the association of a RiPP, a metalloprotease and a bacterial-killing type IV secretion system conserved across its related member species, including X. sontii , in the clade I with in-vivo anti-pathogenic properties. Overall the study has provided novel evolutionary insights into an important NPX member species. The findings and genomic resources will allow further systematic molecular studies to understand its interaction with the host plant.