How artificial intelligence can transform India’s economy

Artificial Intelligence is transforming India’s economy and the way companies do business.

As technology expands, India – already famous for its IT industry – has the potential to play a much bigger role in delivering AI solutions to the rest of the world, say industry experts.

“In the coming years, the contribution of AI to the Indian economy will be extremely significant,” says Ganesh Gopalan, Managing Director of, a Bengaluru-based company that offers AI voice bots for customer service automation.

AI is increasingly being used across industries in India – from banking and healthcare to agriculture and manufacturing – to improve efficiency by harnessing the intelligence of technology and machines to perform tasks.

According to a new report by TeamLease Digital, AI is expected to contribute up to $500 billion to India’s gross domestic product by 2025 and $967 billion by 2035.

AI has become increasingly prevalent in the post-pandemic era, where traction to go digital has become a necessity for most businesses today, says Gyan Pandey, head of digital at Voltas, which is part of the Tata Group.

“We have observed strong demand for AI-based premium products not only from the developed metro markets, but also from smaller cities.”

AI has the potential to significantly boost India’s economy by improving productivity, reducing costs and creating opportunities for innovation and growth, says Anurag Sanghai, senior solutions architect at Intellicus Technologies.

“The country is poised to reap huge gains by investing in the development of AI skills and infrastructure, and ensuring that the benefits are shared across all socio-economic strata,” he says.

To date, most AI development and investment has taken place in the West, but according to the TeamLease report, India’s AI software segment is expected to grow at an annual rate of 18 percent through the end of 2025.

India’s investment in AI is growing at 30.8 percent annually and will reach $881 million this year.

“Currently, most AI-based technologies are developed abroad,” says Vishal Jain, co-founder of Roadcast Tech Solutions.

“It is still at a very young stage in India. Therefore, it will take time to mature. Additionally, as a sector, AI requires extensive research and development (R&D). Therefore, in order to build large-scale products and support constant innovation in AI, players in India must consider massive investments.”

Meanwhile, India has a lot to offer the world when it comes to AI, and Indian companies are already leading this effort, says Mr. Gopalan of

“In the coming years, we are quite confident that India as a country will continue to invest and will soon be a very significant part of the overall AI economy.” started by solving problems for the Indian market before expanding to work with clients in the Middle East, US and other Asian countries, adds Mr. Gopalan.

SwitchOn, also based in the country’s IT hub, Bengaluru, is a company using AI to automate inspections in the manufacturing industry.

The technology is used to identify defective products on high-speed assembly lines that produce more than 10 products per second, including consumer goods and automotive components.

AI can play a key role in boosting India’s manufacturing sector, which is a crucial part of India’s economic growth plans.

Typically, when manufacturers use manual inspections, they would only inspect one product out of several thousand, says Aniruddha Banerjee, co-founder of SwitchOn.

This means that a number of defective products get into the hands of consumers. However, the AI ​​allows inspecting each individual item, he adds.

“By eliminating defective products, we are able to lower supply chain costs and drastically reduce waste for these companies,” says Mr. Banerjee.

His company also works with global companies to deploy its solutions worldwide, he says.

In addition to manufacturing, AI is also playing a growing role in India’s agricultural sector, which accounts for about 20 percent of the economy and is still dominated by smallholder farmers using traditional methods.

“India has seen an exponential increase in AgriTech companies developing and implementing AI for enhanced solutions for the agricultural industry,” said Pushkar Limaye, co-founder and chief technology officer at Carnot Technologies, an Indian agritech company that was acquired by conglomerate Mahindra & Mahindra.

“AI-based solutions in India are designed to help achieve healthier crops, analyze weather-related data, analyze yield by season, monitor soil and growth conditions, and manage supply chains.”

With more and more such startups emerging in the country, India presents a tremendous opportunity to build on its expertise and reputation in the IT sector to strengthen its presence in the global AI industry.

“Every time a disruption occurs, it’s an opportunity to lead and become a technology provider,” said Sachin Bhatia, co-founder and chief growth officer at Exotel, a cloud-based communications engagement company that delivers conversational AI offers products.

“So here India has a very large pool of engineers and technology graduates. We believe that India would provide a very large pool of AI talented engineers. And there was a huge surge of companies making software in India for the global market.”

However, a commonly expressed concern about greater use of AI is the impact it will have on jobs.
With a population of more than 1.4 billion, more than half of whom are under the age of 30, creating jobs is vital for India to lift people out of poverty.

Eventually, however, AI will “lead to more productivity and make more companies perform better,” which will create different types of jobs, says Mr. Gopalan.

The Indian government is also working to boost the country’s AI sector. In this year’s budget, the government announced plans to establish three artificial intelligence centers of excellence.

These initiatives aim to create a conducive ecosystem for AI development, foster research and development, and encourage innovation, says Naren Vijay, executive vice president of growth at Lumenore, which uses AI to perform predictive data analytics.

However, he also acknowledges that there are several challenges associated with the use of AI in India.

This includes privacy and security, especially when it comes to the use of AI in finance and healthcare.

Many parts of India also lack the infrastructure needed for AI, including high-speed internet, computing power and cloud services.

There are also ethical considerations, such as AI systems potentially being trained on biased data, which can lead to discriminatory outcomes, says Mr Vijay.

“There can be a significant ethical issue when using AI in decision-making processes such as hiring, lending and the criminal justice system.”

India is still awaiting its privacy legislation, which means there’s still a regulatory vacuum when it comes to data security, says Rajat Deshpande, CEO and co-founder of FinBox, which uses AI to analyze data and assess risk.

“Because AI models rely so heavily on user data, there are often concerns about their use.”

There is also a hurdle when it comes to human resources. While India has many skilled IT workers, far more talent is needed to realize its potential in AI, experts say.

“India’s shortage of skilled talent represents another important opportunity and challenge,” said Kunal Bhatt, head of automation at CMS IT Services, based in Mumbai.

“This can be solved by funding AI-led education and training programs to improve the skills of current professionals.”

If these issues can be successfully addressed, India is in a prime position to benefit from the global rise of AI.

“India’s artificial intelligence moment is truly here and now,” says Mr. Bhatt.

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