AI Could Boost India's GDP by 1.3%, But Low Research Output Poses Job Risk

Artificial intelligence (AI) could add 1.3% to gross domestic product (GDP) by 2035, however, it would affect employment unless acted upon. A report from the Acuité Ratings & Research highlighted that India's AI research output remains very limited, making up only 9.2% of global AI research publications.

As per the report, India secured $1.4bn in private AI investment in 2023, ranking 10th globally. It remains one of the only two major emerging economies, alongside China, with significant AI funding. Additionally, the Indian government approved the India AI Mission in 2024, committing Rs 10,300 crore over five years to strengthen AI infrastructure, talent development and research.

Despite this, India's AI research output remains limited, with only a few academic institutions driving efforts at varying capabilities. The credit rating agency stated that key contributors include the Indian Institutes of Technology (particularly IIT Bombay, IIT Delhi and IIT Madras), Indian Institutes of Information Technology (IIITs) and Indian Institute of Science (IISc), all of which run active AI research programs. However, India currently accounts for just 9.2% of global AI research publications, far behind China’s 23.2% and the US' 15.2%.

Sankar Chakraborti, MD and CEO of Acuité Ratings and Research, noted that AI will kill the routine tasks soon, as 40% of the working hours will be automated by 2030, thus having a potential impact on millions of jobs.

"India can consider this huge disruption as an opportunity to create new jobs that will require specialised skills to develop and manage AI. The effective utilisation of funds and policies should be in this direction of reskilling and upskilling the workforce," he said.

The report also sees India’s large and youthful population presenting a challenge as well as an opportunity in the AI era. Furthermore, with AI efforts being concentrated in the urban areas, the urban-rural divide could widen further, as AI ecosystems currently concentrate in metropolitan hubs.

To support this, the report said, India has a sturdy foundation for nationwide AI implementation. India’s mobile internet usage has touched 796mn users and 16.4 GB average monthly data consumption per user, which is the highest globally. India’s digital infrastructure also holds a massive advantage for an expedited AI penetration. Systems like Aadhaar, which has created one of the world’s largest digital identities by enrolling almost 99% of the adult Indian population, and digital public infrastructure like UPI, which is growing at 46% year-on-year.

The report underlined that India already has an inherent advantage with 40-50% lower AI development costs as compared to the US and Europe. The country also carries tremendous opportunities to boost productivity by equipping the young workforce with AI-relevant skills. This would require a push towards education and skilling in the new age technology.