NITI Aayog projects AI could add up to $1 trillion to India’s GDP by 2035, but success depends on sovereign infrastructure, skilling, and responsible adoption
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The IndiaAI Mission, with a budget of over ₹10,000 crore, is a step in this direction.
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A new report by the NITI Aayog provides a road map for accelerated economic growth through the adoption of artificial intelligence (AI). It projects an additional contribution of $500-600 billion to gross domestic product by 2035 from productivity improvements alone, and of another $280-475 billion by leapfrogging innovation in research & development (R&D). India’s unique combination of a large tech-oriented workforce, an expanding digital infrastructure, and a growing R&D ecosystem gives it the potential to capture 10-15 per cent of the global AI value pool. But opportunity alone is not enough. A strong linkage among the government, industry and academia is needed to build a strong and inclusive AI ecosystem.
The IndiaAI Mission, with a budget of over ₹10,000 crore, is a step in this direction. It focuses on deploying data labs and graphics processing units, or GPUs, developing India-specific large language models, and integrating AI into the national skilling agenda. This initiative lays the foundation for sovereign data infrastructure and responsible, large-scale AI adoption. Among the prospects highlighted by the report is India’s potential to become the global data capital. Data can power next-generation AI models and unlock growth across sectors such as manufacturing, pharmaceuticals, financial services, and automotive industries.
The pharmaceutical sector presents a particularly transformative opportunity. Today, 80 per cent of India’s pharma market revolves around generics, given high R&D costs and long development timelines. AI offers a solution by reducing drug-discovery costs and development timelines, potentially transitioning India from a generics producer to a global innovator. Leveraging its rich genetic pool and domain expertise in pharmacology, the country can reposition itself as a hub for innovative drug development. Similarly, the automotive sector stands on the cusp of a revolution with software-assisted vehicles, where AI can drive design, testing, and component assembly. By establishing AI-ready industrial parks, combining clean-energy factories, high-performance computing labs, and skills centres, India can catalyse rapid innovation and position itself as a global leader in next-generation mobility.
However, as Union Finance Minister Nirmala Sitharaman pointed out at the launch of the report, there is a twofold challenge — accelerating technology adoption and building regulatory frameworks that safeguard citizens without stifling innovation. The upcoming detailed regulations under the Digital Personal Data Protection (DPDP) Act will provide much-needed clarity on data privacy, helping address one of the biggest concerns in the AI ecosystem. Moreover, the report underscores a critical human-capital challenge. While AI is set to create several high-skilled roles, it might simultaneously displace many jobs, mainly in routine, low-skill segments. A coordinated approach is needed to upskill the workforce, reskill displaced workers, and democratise access to AI capabilities, particularly for small businesses and underrepresented regions. India must aim for responsible AI adoption. By investing in sovereign infrastructure, developing sector-specific data platforms like the manufacturing data grid, fostering an adaptable AI-skilling ecosystem, and ensuring equitable access, the country can not only unlock economic growth but also build resilient businesses.
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