India’s AI Spending to Triple to $5 Bn by 2027

According to a recent report by Intel-IDC, unveiled at the AI for India Conference in Delhi today, India’s spending on AI may reach $5.1 billion by 2027. This surge is largely attributed to AI infrastructure provisioning. This includes spending on hardware such as servers and chips (CPUs, GPUs, and accelerators), as well as software components like frameworks and libraries.

At the event, Santhosh Viswanathan, Vice President and Managing Director, India Region, Intel, said, "With an unmatched talent pool, frugal innovation, and data at scale, India stands poised to lead the global AI revolution,”

Besides infrastructure, the current focus on AI adoption lies in enhanced CX and improved employee productivity, assisting employees to focus on more value-added work and removing mundane, time-consuming tasks.

“India's commitment to AI, underscored by its proactive approach, drives transformative growth. This positions India as a frontrunner in shaping the future of this technology. Intel recognises 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”, he added.  

While, Jaipur leads in AI job growth among Tier 2 cities, with key challenges including infrastructure investments, unclear business outcomes, compliance, skilling, and cost issues.

Notable, the report suggests that in 2023, the leading sectors in India driving AI expenditure include the BFSI (Banking, Financial Services, and Insurance) and manufacturing sectors. The manufacturing industry, in particular, is anticipated to play a pivotal role in driving the country's economic expansion, particularly within sectors such as electronics and consumer goods.

Following closely is the manufacturing sector, spurred by the 'Make in India' initiative. India's ambition to establish itself as a global AI-driven manufacturing hub is a key driver behind the significant AI spending in this sector.

However, challenges persist for sectors like government, healthcare, and telecom in quantifying the return on investment (ROI) concerning AI implementation. The complexities arise from difficulties in quantifying intangible benefits, such as enhanced customer satisfaction and augmented decision-making capabilities, in monetary terms.

Further, the government has allocated approximately $30.7 million in the fiscal year 2024-25 to establish three centres of excellence in AI. These centres will concentrate on agriculture, health, and sustainable cities, aiming to tackle specific challenges within these sectors and pioneer groundbreaking AI solutions.

Certain government initiatives such as the National Strategy for AI, Making AI Work for India, and the INDIAai portal are pivotal in driving research and development (R&D) efforts while fostering the adoption of AI across key sectors including healthcare, education, agriculture, and manufacturing.

Moreover, a report jointly released by the IT industry body Nasscom and consulting firm BCG in early February 2024 sheds further light on India's growing AI market. Projections indicate that by 2027, the AI market in India could potentially reach a remarkable $17 billion, exhibiting an annualized growth rate of 25-35% between 2024 and 2027.

Highlighting India's prowess in AI, the report underscores the nation's leading position in terms of skills penetration as over 420,000 employees currently hold positions in AI job functions.