Accelerated adoption of Artificial Intelligence (AI) across industries can contribute US $500-600 billion to India’s GDP by 2035 on the back of increased productivity and efficiency in the workforce, a NITI Aayog report said on Monday.
The report titled “AI for Viksit Bharat: The Opportunity for Accelerated Economic Growth” further said that over the next decade, the adoption of AI across sectors is expected to add US $17-26 trillion to the global economy.
"India’s combination of a large STEM workforce, expanding R&D ecosystem and growing digital and technological capabilities position the country to participate in this transformation with a potential to capture 10-15 per cent of global AI value," it said.
According to the Aayog, projections show that while AI will create many new roles, it will also displace many existing jobs, particularly in clerical, routine and low-skill segments. "Accelerated adoption of AI across industries can contribute US $500-600 billion over and above India’s current GDP growth by 2035, driven by increased productivity and efficiency in the workforce," the report said. It said the analysis shows that financial services and manufacturing can be most impacted and might have up to 20-25 per cent of their sectoral GDP attributed to AI by 2035.
AI-led productivity and efficiency improvement could unlock US $50-55 billion in financial services, over and above the current estimated growth for the sector by 2035. "AI could power automated compliance, fraud detection and risk management through advanced anomaly detection techniques and privacy-preserving analytics such as secure multi-party computation and federated learning," the report said.
According to the report, AI-enabled systems can reshape credit decisioning, collections and portfolio management. By leveraging alternative data sources, banks can make more accurate, dynamic and inclusive lending decisions. The report noted that potential AI opportunities for India include accelerating AI adoption across industries to improve productivity and efficiency, potentially bridging 30-35 per cent of the gap. "These effects are expected to materialise across both domestic consumption and export markets," it said.
The report also observed that innovation in technology services could strengthen India’s reputation as a technology services leader and drive the development of higher-value solutions and new business models, enhancing India’s competitiveness in the global market.
In manufacturing, the report said US $85-100 billion could be driven by AI-led productivity and efficiency improvement over and above India’s current growth by 2035. At its current growth rate of 5.7 per cent, India’s GDP is projected to reach US $6.6 trillion by 2035.
However, the report said that under the aspirational 8 per cent growth trajectory outlined in the government’s vision, India’s GDP could increase to USD 8.3 trillion, representing an incremental US $1.7 trillion as compared with the current growth path.
Releasing the report, Finance Minister Nirmala Sitharaman emphasised the need for regulations that foster technology innovations for the common good, particularly in artificial intelligence (AI), but not stifle them. "We do not want regulations that literally wipe out technology itself. We want regulations because we want a responsible application," she said after releasing the report prepared by Niti Aayog.
Sandboxes provide a testing ground for regulatory mechanisms, enabling a balanced approach that fosters innovation while ensuring necessary oversight, she said, adding that this helps prevent over-regulation that could kill the technology itself.
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