AI adoption to add $500 billion to India’s GDP by 2025

An integrated adoption of artificial intelligence (AI) and data utilization strategy can add $500 billion to India’s GDP by 2025, suggests a report by the National Association of Software and Services Companies (NASSCOM)

The IT industry association launched the ‘AI Adoption Index‘ for India, which assesses AI adoption trends in four important sectors: banking and finance, consumer products and retail, healthcare, and industrial and automotive. These industries might account for roughly 60% of AI’s potential value addition of $450-500 billion to the country’s GDP by 2025.

“AI’s ability to transition from technology potential to technology impacts its true value. The pandemic has made it critical for organizations to move from data & technology silos to building specialized AI capabilities at scale across sectors, combined with a structured data utilization strategy,” said Debjani Ghosh, president of NASSCOM.

For example, India’s healthcare market has tripled from $110 billion in 2016 to $372 billion in 2022, owing to increased expenditures on cutting-edge healthcare technologies.

According to the paper, the application of AI in enhancing healthcare systems has the potential to deliver $25 billion in economic value added for India by 2025.

According to NASSCOM research, global investments in artificial intelligence have more than doubled in the last two years, rising from $36 billion in 2020 to $77 billion in 2021. Even though AI investments in India are growing at a 30.8 percent CAGR and are expected to reach $881 million by 2023, they will account for only 2.5 percent of total worldwide AI investments of $340 billion.

This opens up a huge potential for Indian businesses to increase investments and AI uses to drive equitable growth. For India to meet its $5 trillion GDP target by FY27, the maturity of AI adoption must be strongly linked.

According to the survey, 65 percent of firms have created an AI strategy at the functional or enterprise level. Although process optimization remains the key driver of AI adoption, there is a growing emphasis on using AI to achieve customer-centric goals.

India is currently the second-largest worldwide hub for AI talent training and employment, a trend that has been exacerbated by the rapid rise of AI applications. While the talent pipeline has expanded in the last two years, the quick increase in talent need has created a supply-demand gap.

Firms are increasingly reliant on contracting and Gig models while concentrating on internal AI talent development through reskilling and upskilling. In India, 44 percent of organizations already have a dedicated or cross-functional AI team structure, with the remaining 25 percent completely reliant on outsourcing.

“With the acceleration in digitization and explosion of data, adoption of AI is also increasing. As industries scale and grow, it will be important to measure and fully understand the impact of AI across critical sectors, and the overall economy,” said Rohini Srivathsa, national technology officer, Microsoft.

According to the ‘AI Adoption Index’, adoption in India has grown rapidly, with 76% of players actively leveraging AI in 2022 – a 3x jump from 2020. “The primary motivators driving this jump are optimization (64%), growth (60%), and innovation (57%). The index will equip organizations to effectively embrace AI while developing a culture of innovation and value creation,” said Vijay Bhaskaran, automation and artificial intelligence leader, EY India.

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