AI could contribute nearly $1 trillion to Indian economy by 2035

In light of rapidly developing Artificial Intelligence (AI) technologies, markets across the world are ramping up investment in the sector in order to fully capitalise. According to a new report from Accenture, maximizing AI potential could add nearly $1 trillion to India’s GDP by 2035.

As technology develops, so does its use in business. This is particularly true of AI systems, which offer a range of benefits in the business environment, not only by reducing the cost of and improving basic functions, but also by integrating functions across various departments of a business to create holistic outcomes.

Businesses have increasingly been moving to capitalise on this potential. According to a new report from strategy consultancy Accenture, titled ‘Rewire for Growth,’ firms across the world have begun large-scale adoption of AI systems, particularly in the G20 countries.

As per the report, the number of patented AI technologies among the G20 nations has grown at a compounded annual growth rate (CAGR) of more than 26% since 2010, demonstrating the rapid nature of growth in the segment. This has driven up the funding for the sector, with investments for AI startups increasing at a staggering CAGR of 60% over the same period.

Across the world, large, labour intensive economies such as India and China have especially promising economic potential when it comes to AI. As per the report, India’s Gross Value Added (GVA) could receive a boost of $957 billion if AI potential is realised by 2035. In essence, where the baseline GVA would be at $6,397 billion without AI capabilities, it would jump to $7,354 billion with AI.

This number is second only to China, and considerably higher than other developed countries such as the US, Canada, the UK, and Germany. Within the segment, augmentation of AI technologies would contribute the most economically, at $597 billion, whereas Intelligent automation will contribute $277 billion. Meanwhile, Total factor Productivity would generate $83 billion.

However, this is merely a potential figure. As per the consulting firm, India is still relatively ill equipped when it comes to indicators of AI development. While India is one of the most competitive economies in Asia, and is set to become the second largest economy in the world, it lags behind a number of G20 countries in terms of AI capacity. The report attributes this to a lack of involvement in the segment from the policy and academic world.

Nevertheless, in terms of investment in the segment, the country appears to have a promising future. According to a survey conducted by Accenture among the business community in India, 53% of firms in India are gearing up for extensive investment in AI technologies. A further 35% anticipate moderate change, while 9% expect modest change and a mere 3% expect little or no change.

Moreover, a rapid growth of the digital arena in India as a whole means that this investment is set to have transformative effects. As per the survey, 34% of firms in India expect a complete transformation of their organisation due to AI in the next three years. An even greater 46% anticipate a significant, if not complete, change, while 15% still expect moderate change. Meanwhile, 4% expect slight change, and 1% expect no change at all.

Commenting on the findings, Rekha Menon, Senior Managing Director and Chairman for Accenture in India said, “There's strong early evidence that AI can play a key role in unlocking socioeconomic value here. What's needed is a clear, long-term vision, and a multi-stakeholder action plan that balances growth with the ethical questions posed by AI.”