As per the IDC (International Data Corporation) Asia/Pacific AI Maturity Study 2024, India’s spending on AI may reach $5.1 billion by 2027. The report says that the overall AI spending in India is forecast to grow at the highest CAGR (Compound annual growth rate) in Asia Pacific, with 31.5% from 2023, to reach $5.1 billion by 2027. The AI software sector will steer overall AI market growth and reach $2.6 billion by 2027 at a CAGR of 37.5%, led by AI application development and deployment and AI system infrastructure software. AI services, encompassing IT and business services, will grow at 33.8% CAGR by 2027. 

According to the report, key initiatives like the National Strategy for AI, Making AI Work for India, and the INDIAai portal stimulate R&D and encourage AI adoption in critical sectors such as healthcare, education, agriculture, and manufacturing. 

The report mentions that The Ministry of Electronics and IT has set up four committees to develop an AI policy framework to progress in areas such as AI for national missions, cybersecurity, safety, and ethics. The government is also committed to offering AI training programs and nurturing a supportive ecosystem for AI startups through national and state-level funding mechanisms.

According to the report, India is improving its AI infrastructure, and hence, the highest spending is on AI infrastructure provisioning. This includes spending on hardware such as servers and chips (CPUs, GPUs, and accelerators) and software components like frameworks and libraries. Apart from 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.

In India, the top AI spenders are BFSI (Banking, Financial Services, and Insurance) at 30.7%, manufacturing at 24.6%, followed by healthcare at 15.9%. BFSI is transitioning from robotic process automation (RPA) to AI-driven automation, focusing on security, productivity, and CX (Customer Experience). Boosted by the ‘Make in India’ initiative, manufacturing is the second largest AI spender, and it is taking steps towards becoming a global AI-powered manufacturing hub. 

The report suggests that India is proactively infusing AI into healthcare, government, telecom, and other industries; however, the current challenge is the difficulty in measuring the ROI. Due to challenges such as quantifying intangible benefits like improved customer satisfaction and decision-making capabilities in monetary terms, it is difficult to see the results of AI in these industries.

As per the report, strong government support, a vast talent base, and many enterprises proactively implementing AI are helping India become an AI innovator, starting from currently being an AI practitioner. The exponential increase in AI is set to revolutionize sectors like education, healthcare, manufacturing, and agriculture.

According to the report, the next two years will be critical for India to step up its AI maturity. Pivotal to its success will be how it invests and develops its technology infrastructure and AI skills while establishing a solid regulatory framework for responsible AI. 

India strongly outperforms the Asia-Pacific average in this government dimension with the current government’s pro-AI stance. About $30.7 million has been allocated in FY 2024-25 to establish three centres of excellence in AI, focusing on agriculture, health, and sustainable cities, to address defined needs within these industries and develop innovative AI solutions.

The report also suggests that the Indian government is adopting a flexible approach in dealing with the challenges around AI adoption. Strong partnerships with private enterprises might help deal with challenges around compliance, skills, costs, and processes. The report applauds India’s unmatched startup ecosystem and talent pool which can help attract local and international investments. 

Source:

IDC

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