India's AI Growth is Driven by an Increase in Talent and Sustained Investment in AI Ecosystem

With robust support systems, including an exceptional startup ecosystem and a vast pool of talent, India is well-positioned to harness the potential of AI and advance up the AI maturity ladder. According to an IDC study, India is currently at the AI Practitioner stage.

As Indian businesses increasingly recognize the benefits of AI adoption, enterprise spending on AI is expected to grow at the highest rate among the surveyed markets. The AI software sector will be the main driver of overall market growth, anticipated to reach $2.6 billion by 2027 while spending on AI infrastructure is projected to reach $733 million by the same year.

India is concentrating on improving employee productivity and enhancing customer experiences through AI-driven applications. Despite 80% of surveyed large organizations using AI/ML to improve business outcomes, only 6% consider their AI adoptions crucial for their competitiveness. This significant gap highlights the challenges in AI deployment and the critical importance of change management.

India Poised to Become the Next AI Powerhouse

AI spending in India is expected to experience the fastest growth among the eight examined markets—Australia, India, Indonesia, Japan, Korea, Malaysia, Singapore, and Taiwan—with an estimated Compound Annual Growth Rate (CAGR) of 31.5% from 2023, projected to reach $5.1 billion by 2027. With 20% of the world's data and AI talent, India's strategic position as a global AI leader is bolstered by its strong developer community and high skill penetration, positioning it to surpass the US potentially.

AI spending in India is projected to expand the fastest among the eight examined markets—Australia, India, Indonesia, Japan, Korea, Malaysia, Singapore, and Taiwan. With an estimated Compound Annual Growth Rate (CAGR) of 31.5% from 2023, it is forecasted to reach $5.1 billion by 2027.

In 2024 and 2025, investments in AI will focus on developing AI infrastructure, setting the stage for high-value use cases with transformative potential. The BFSI (Banking, Financial Services, and Insurance) and manufacturing sectors are emerging as the top spenders in India. The manufacturing industry, especially in electronics and consumer goods, is expected to play a crucial role in driving the country's economic growth.

India significantly outperforms the Asia-Pacific average in the government dimension due to the current administration's pro-AI stance. For FY 2024-25, $30.7 million has been allocated to establish three AI centers of excellence in India, focusing on agriculture, health, and sustainable cities.

The findings were unveiled at the AI for India Conference on May 14, 2024, where Mr. Santhosh Viswanathan, Vice President and Managing Director of the India Region, and Sharath Srinivasamurthy, Associate Vice President at IDC, discussed the study's results.

"Amazing India reflects the massive opportunity AI unlocks for our country. With an unmatched talent pool, frugal innovation, and data at scale, India stands poised to lead the global AI revolution. India's commitment to AI, underscored by its proactive approach, is driving transformative growth. This positions India it as a frontrunner in shaping the future of this technology. Intel recognizes this extraordinary opportunity, elevating India as a distinct geography for our business operations. We're proud to be part of India's journey towards AI excellence and building an Amazing India”, said Santhosh Viswanathan, Vice President and Managing Director, of India Region. 

As AI becomes increasingly integrated into various industries, the AI For India Conference emphasized the significance of embracing this technology to remain competitive and flourish in a constantly evolving digital environment. The conference program was structured around the theme of "Bringing AI Everywhere."