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Background One of the main causes of end-stage renal disease and chronic kidney disease (CKD) in people with type 2 diabetes mellitus (T2DM) is diabetic nephropathy. The clinical value of the protein-creatinine ratio (PCR) and derived renal risk indices for comprehensive renal risk assessment has not been adequately investigated, despite microalbuminuria being a recognised indicator of early renal injury. Derived renal risk markers (novel renal indices, including the albumin-protein ratio (APR), albumin-creatinine ratio (ACR)/eGFR index (ACR/eGFR), protein/eGFR index (PCR/eGFR), and a composite renal risk score (RRS)) were calculated to comprehensively assess proteinuria relative to renal function and estimate the severity of renal impairment. Methods A one-year hospital-based cross-sectional study from January 2025 to January 2026 was conducted among 150 adults with T2DM individuals with T2DM who were enrolled in Vinayaka Mission Medical College & Hospital, Karaikal, and participated in the cross-sectional study. Blood pressure, body mass index (BMI), serum creatinine, HbA1c, and length of diabetes were among the clinical and biochemical markers that were noted. Spot urine PCR was calculated, and urinary microalbumin was quantified using an immunoturbidimetric technique. The CKD-EPI equation was used to determine the estimated glomerular filtration rate (eGFR). To evaluate renal involvement, derived renal indices such as the urine APR, ACR, albumin/eGFR index, and protein/eGFR index were computed. Associations between renal indices and clinical parameters were assessed using multivariable regression analysis and Pearson correlation, with statistical significance established at p < 0.05. Results Of the 150 individuals, 21.3% had macroalbuminuria, 38.7% microalbuminuria, and 40.0% had normoalbuminuria. As albuminuria worsened, PCR, APR, ACR/eGFR, PCR/eGFR, and renal risk score all significantly increased while eGFR decreased (p < 0.001). PCR and microalbuminuria had a significant positive connection (r = 0.72, p < 0.001). Renal impairment was substantially correlated with HbA1c, length of diabetes, hypertension, and BMI. HbA1c and PCR were found to be independent predictors of diabetic nephropathy using multivariable regression. Conclusion In individuals with T2DM, PCR and derived renal indices showed strong correlations with renal involvement and could be helpful supplements to traditional indicators for evaluating diabetic nephropathy.