The Growth of Artificial Intelligence in India 

by anahita sharma 

Artificial Intelligence (AI) is poised to play a pivotal role in India’s economic growth and development, with its potential to significantly transform various sectors, from manufacturing to healthcare, and from education to public safety. Despite India’s tech-savvy talent pool, renowned universities, healthy levels of entrepreneurship, and strong corporations, the country lags behind many other G20 countries in AI development. However, the stakes are high for India, as AI has the potential to add US$957 billion, or 15 percent of India’s current gross value, by 2035. 

It’s clear that the country is at a critical juncture where it can either seize the opportunity or risk being left behind. The era of AI is now, and its integration into various sectors promises extraordinary growth should the country choose to invest in it. For big companies and industries, AI can boost growth and profitability, transforming businesses. For instance, the manufacturing sector could see a share-of-profit increase of 39 percent due to AI-powered systems that can learn, adapt, and evolve over time, eliminating faulty machines and idle equipment. Entrepreneurs and young companies can use AI as a tool to compete with larger incumbents, while society can benefit from improved public safety and even life-saving applications of AI. 

To foster growth and innovation in AI while safeguarding consumer rights and ethical considerations, India’s AI stakeholders should consider several recommendations. These include forging a national AI plan and multi-stakeholder partnerships in key sectors, strengthening India’s AI research and development ecosystem through better international cooperation, creating a workforce of the AI future, fostering inclusive workforce models, enabling and broadening access to data, and embracing smart regulation to safeguard responsible AI.

Well-developed AI ecosystems are based on five pillars: universities, large companies, startups, policy makers, and multi-stakeholder partnerships. The relative role of these five varies from market to market, partly depending on the maturity of specific industries and the political culture of each country. For India, the guiding principle should be to create “people first” policies and business strategies, centered on using AI to augment and extend people’s capabilities for the benefit of humankind. 

India’s investments in AI are growing by 30.8 per cent annually and will reach $881 million this year. “Currently, most AI-based technology is being developed overseas,” says Vishal Jain, co-founder of Roadcast Tech Solutions. “In India, it is at a very nascent stage. Therefore, it will take some time to mature. Besides this, AI as a sector requires substantial research and development (R&D). Therefore, to build large-scale products and support constant innovation in AI, players in India need to look at massive investments” 3. 

AI is expected to add up to $500 billion to India’s gross domestic product by 2025 and $967 billion by 2035, according to a new report by TeamLease Digital. AI has become more prevalent in the post-pandemic era where traction to move digital has become the need for most businesses today, says Gyan Pandey, head of digital at Voltas, which is part of the Tata Group. “We have observed a strong demand for premium AI-based products not only from the developed metro markets, but also from smaller towns”. 

Artificial intelligence is transforming India’s economy and the way companies do business. As the technology expands, India — already famed for its IT industry — has the potential to play a much larger role in providing AI solutions to the rest of the world, industry experts say. “In the coming years,

the contribution from AI to the Indian economy is going to be extremely significant,” says Ganesh Gopalan, chief executive of Gnani.ai, a Bengaluru-based company that provides conversational AI voice bots for customer service automation. 

AI can play a key role in boosting India’s manufacturing sector, which is a critical part of India’s economic growth plans. When manufacturers use manual inspections, they would typically only inspect one out of several thousand products. This means that a number of defective products end up in the hands of consumers. However, AI allows each and every item to be inspected, he adds. “By eliminating defective products, we are able to reduce supply chain costs and drastically reduce wastage for these companies,” says Mr Banerjee. 

Along with manufacturing, AI is also playing a growing role in India’s agriculture sector, which makes up about 20 per cent of the economy and is still dominated by small farmers using traditional methods. “India has witnessed an exponential increase in AgriTech businesses that are developing and implementing AI for enhanced solutions for the agricultural industry,” says Pushkar Limaye, co-founder and chief technology officer at Carnot Technologies, an Indian agricultural technology company that was acquired by conglomerate Mahindra & Mahindra. 

AI could generate over 900,000 white-collar jobs and 3.6 million indirect jobs in India by 2030. AI-first software applications, AI application programming interfaces (API), platform BPO services, and data stack services will be major growth areas for India. In 2021, India’s tech industry talent pool was estimated to be 3.8 million. According to the Nasscom report, India is ranked second globally, after China, with a supply of 2.14 million STEM graduates per year. Yet, surprisingly, reskilling accounted for 60-70% of India’s digital talent acquisition in FY21.

The successful adoption of AI includes strategy and implementation, risk management, and an AI-enabled workforce. The digitisation overdrive of Indian companies on the back of the pandemic has spawned a series of challenges. Though the national strategy emphasizes the importance of privacy, no clear policies have been established. To develop innovations and bring them to market, startups, too, 

require a policy framework and additional financial backing and mentorship. The patent application process is lengthy, lasting approximately four years from start to end, and it has to be streamlined. 

In conclusion, the integration of AI in India presents a significant opportunity for economic growth and development. By leveraging its strengths in technology, talent, and entrepreneurship, India can harness the potential of AI to drive innovation, create new economic opportunities, and enhance the quality of life for its citizens. However, to fully realise this potential, India must invest in building a robust AI ecosystem, fostering international cooperation, and ensuring ethical and responsible use of AI technologies.

References

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“Unlocking India’s Potential with AI by Nilekani and Bhojwani.” IMF, Dec. 2023, www.imf.org/en/Publications/fandd/issues/2023/12/POV-unlocking-india-potential with-AI-Nilekani-Bhojwani. Accessed 15 Mar. 2024. 

274. “India Artificial Intelligence.” International Trade Administration | Trade.gov, May 2024, www.trade.gov/market-intelligence/india-artificial-intelligence. Accessed 15 Mar. 2024. 

ETtech. “India’s AI Market Projected to Reach $17 Billion by 2027: Report.” The Economic Times, Economic Times, 20 Feb. 2024, 

economictimes.indiatimes.com/tech/technology/indias-ai-market-projected-to-reach 17-billion-by-2027-report/articleshow/107856845.cms?from=mdr. Accessed 29 July 2024.