India is poised to transform its economy through artificial intelligence (AI). A recent NITI Aayog report projects AI to add $500-600 billion to India’s GDP by 2035 through productivity gains. Innovation in research and development (R&D) could add another $280-475 billion. India’s large tech workforce, growing digital infrastructure, and expanding R&D ecosystem provide a strong foundation to capture 10-15 per cent of the global AI value pool.
AI’s Economic Potential in India
AI is expected to drive massive economic growth by improving productivity across sectors. India’s unique strengths include a young, tech-savvy population and a rapidly expanding digital network. The country can leverage these to become player in the global AI market. However, success depends on collaboration between government, industry, and academia.
IndiaAI Mission and Infrastructure Development
The IndiaAI Mission, backed by a budget exceeding ₹10,000 crore, aims to build a robust AI ecosystem. It focuses on deploying data labs, GPUs, and developing India-specific large language models. Integrating AI into national skill development is a priority. This mission also aims to create sovereign data infrastructure for responsible AI adoption at scale.
Sectoral Opportunities – Pharmaceuticals and Automotive
The pharmaceutical industry can benefit greatly from AI. Currently dominated by generics, India can use AI to reduce drug discovery costs and timelines. This may shift the country toward innovative drug development, leveraging its genetic diversity and pharmacological expertise. Similarly, the automotive sector is set for transformation through AI-driven design, testing, and manufacturing of software-assisted vehicles.
Challenges – Regulation and Workforce Transition
Balancing rapid AI adoption with citizen protection is a key challenge. The Digital Personal Data Protection (DPDP) Act will clarify data privacy rules, crucial for trust in AI systems. Another challenge is workforce disruption. AI will create high-skilled jobs but may displace routine low-skill roles. A coordinated approach to upskilling and reskilling is essential to ensure inclusive growth.
Building a Responsible and Inclusive AI Ecosystem
India aims to promote responsible AI use by investing in sovereign infrastructure and sector-specific data platforms like the manufacturing data grid. Developing an adaptable AI-skilling ecosystem and ensuring access for small businesses and underrepresented regions are priorities. These efforts will help build resilient businesses and unlock long-term economic benefits.
Questions for UPSC:
- Taking examples of India’s AI initiatives, discuss the role of government-industry-academia collaboration in technological innovation.
- Examine the impact of AI on employment patterns in developing economies. How can policy frameworks balance job creation and displacement?
- Analyse the significance of data privacy laws such as the Digital Personal Data Protection Act in encouraging trust in emerging technologies.
- Critically discuss the potential of artificial intelligence to transform traditional sectors like pharmaceuticals and automotive industries in India.
