India is poised for a revolution in generative artificial intelligence (Gen AI), which has the potential to revolutionize sectors, spur digital innovation, and boost the country’s GDP by up to $1.5 trillion by 2030. India’s distinct advantages, such as its talent pool and digital infrastructure, make it a worldwide leader in utilizing AI technology, according to the study The AIdea of India, which was released by EY on Tuesday, January 14.
India’s Strategic Advantages
Platforms like Aadhaar, UPI, and India Stack support India’s strong digital ecosystem, which offers a strong basis for large-scale AI applications. Additionally, the nation is the world’s second-largest producer of digital data, which is essential for AI model training. India provides a perfect testing ground for AI-driven advancements because of its sizable population and expanding economy.
Neha Sharma, Partner, People Advisory Services, EY India, said, “Over the last 12 to 15 months, there’s been so much discussion around jobs and [AI’s] impact on jobs — Elon Musk [saying] all human jobs are going to taken away by AI, even Bill Gates saying that we will probably move towards a three-day working week … from an EY standpoint, we sort of wanted to get a little deeper into this and really understand what the impact on jobs really means, and how should organisations or individuals prepare for this.”
According to her, we examined more than 10,000 jobs that span several businesses and sectors and support the functioning of the Indian economy. “We examined these activities from three perspectives: intensity, complementarity, and exposure. According to our research, 24% of these jobs can be fully automated, while 42% can be enhanced. This suggests that they should be eliminated from our workflow within the next three to five years, Sharma continued.
India’s thriving start-up environment and large STEM talent pool are highlighted in the research as important factors facilitating AI adoption and innovation. AI may flourish in this atmosphere because of these elements as well as the country’s economic goals.
Economic Impact of Gen AI
According to projections, generative AI would boost India’s GDP by $359–438 billion in 2029–2030 alone, adding 0.9–1.1% to yearly growth. Gen AI has the potential to boost the economy by $1.2 trillion to $1.5 trillion over the next seven years, making it a major factor in determining India’s future economic course.
Rajnish Gupta, Partner, Tax & Economic Policy Group, EY India, said, “One of the things that we have done in the report is to actually try and put a number on to what will be the economy-wide improvement in the efficiency … we looked at the KLEMS database which is published by the RBI … when you look at the output of a sector, there are five things which go into it — labour, capital, energy, material, and other services.”
Nearly 70% of the economic effect of Gen AI is anticipated to come from six major sectors:
Business Services: There will be notable increases in the productivity of legal, consulting, IT, and outsourced services.
Financial Services: AI will enhance fraud detection, risk assessment, and consumer personalization.
Healthcare: Customized treatment regimens, clinical paperwork, and diagnostics will all undergo changes.
Retail: Customer interaction, inventory control, and hyper-personalized marketing will all be improved.
Education: AI tutors will create curricular content and provide individualized learning experiences.
Transportation and Logistics: Efficiency will be increased through route optimization and intelligent fleet management.
Challenges to Overcome
Despite its promise, India has a number of obstacles to overcome before it can fully utilize Gen AI’s capabilities:
1. Talent Shortages: AI-specific expertise is lacking, especially in fields like model fine-tuning and prompt engineering.
2. Data Access: Structured datasets are still hard to come by, particularly in local languages.
3. High Infrastructure Costs: Due to the high cost of compute resources like GPUs and specialized CPUs, smaller players are hindered.
4. Regulatory Uncertainty: To promote innovation, clear regulations on data protection, intellectual property, and AI governance are required.
Policy Recommendations
The paper offers India a thorough policy plan to solve these issues:
Access to Data: Establish public data markets and provide native datasets for Indian languages.
Public Goods: Create large language models (LLMs) in India that resemble the Falcon in the United Arab Emirates and implement Gen AI technologies in public services.
Infrastructure Development: Invest in the production of AI chips domestically and provide startup companies with computing resource subsidies.
Talent Development: Create Centers of Excellence for Gen AI and draw in top AI talent from across the world.
Regulatory Framework: Provide unambiguous responsibility frameworks, watermarking for content produced by AI, and sandboxes for AI testing.
India’s Global Role in AI
India might become a worldwide leader in AI innovation if it takes a proactive approach to Gen AI. The research suggests that comparable AI efforts might produce revolutionary outcomes by drawing comparisons with programs like Aadhaar and UPI. For instance, creating Indian LLMs and digitizing regional languages may increase the inclusivity and accessibility of AI systems.
AI agendas are already being advanced by nations and economic areas such as China, the US, and the EU. India may have a competitive advantage in the global AI market thanks to its emphasis on developing AI as a public good and its thriving entrepreneurial community.
The Road Ahead
Adoption of Gen AI offers a once-in-a-generation chance to reimagine sectors, boost productivity, and drive economic growth as India gets ready for the next wave of digital transformation. To overcome obstacles and realize AI’s full potential, however, cooperation between the public and corporate sectors as well as academics will be necessary for success.
According to the research, India has the potential to become a worldwide center for AI innovation and set a standard for the world in utilizing revolutionary technologies, in addition to using Gen AI for local growth with the correct policies and investments.
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