The potential impact of Generative AI (Gen AI) on India’s Gross Domestic Product (GDP) could reach a cumulative US$1.2-1.5 trillion over the next seven years, according to a report by EY India titled “The AIdea of India: Generative AI’s potential to accelerate India’s digital transformation.” By fully leveraging Gen AI technology across various sectors, the report suggests that India could potentially add $359-438 billion in fiscal year 2030 alone, reflecting a 5.9% to 7.2% increase over the baseline GDP.
The anticipated impact is expected to be widespread, with approximately 69% of the overall influence coming from sectors such as business services (including IT, legal, consulting, outsourcing, and more), financial services, education, retail, and healthcare. The expected positive effects include improvements in employee productivity, enhanced operational efficiency, and personalized customer engagement.
Mahesh Makhija, Technology Consulting Leader at EY India, highlighted the swift adoption of an AI-first approach to digital transformation by organizations. This approach aims to enhance customer engagement, increase productivity, and achieve greater agility in delivering digital capabilities through innovative foundational models and AI-first solutions.
While acknowledging the significant influence of Gen AI on their businesses, 75% of organizations express a low to moderate level of readiness to harness its benefits. The two primary challenges faced by organizations are a skills gap (52%) and the availability of unclear use cases (47%), with only 36% seeing data privacy as a risk associated with Gen AI.
The report emphasizes the need for India to elevate its efforts in terms of increased government involvement in the development and deployment of AI. It also highlights the importance of providing a critical compute ecosystem for continuous innovation and growth to ensure India remains competitive in this evolving landscape.
The development of a Gen AI strategy is now considered essential, with 75% of organizations identifying customer engagement as the most crucial aspect influenced by Gen AI. Additionally, 73% of organizations prefer to collaborate with external tech providers for the implementation of Gen AI.
Recognizing Gen AI’s potential as an economic growth catalyst, governments worldwide are actively pursuing measures to promote and regulate AI. The report suggests implementing measures such as enabling access to training data and marketplaces, deploying Gen AI systems as public goods, securing critical digital infrastructure (through the rollout of 5G, data centers, access to specialized chips, and AI-specific compute infrastructure), and providing access to talent and public funding for R&D. These measures are seen as crucial for fostering Gen AI innovation.
In conclusion, the report underscores the transformative potential of Gen AI on India’s economy and calls for a collaborative effort involving government, businesses, and external tech providers to overcome challenges and fully realize the benefits of Generative AI in driving economic growth and digital transformation.
