Generative artificial intelligence could boost India’s gross domestic product (GDP) by $359-438 billion by 2030, with a cumulative potential impact across sectors estimated to be $1.2-1.5 trillion over the next seven years, EY said in a report.
The EY report, titled The AIdea of India: Generative AI’s potential to accelerate India’s digital transformation, said generative AI (GenAI) has the potential to add 0.9-1.1% to the annual GDP growth of the country.
The report is based on an in-depth survey covering 200 C-suite executives across India from diverse sectors such as technology, media and entertainment, financial services, government, health, pharma and life sciences, retail, and manufacturing.
Adoption of GenAI has immense potential to enhance India’s productivity and efficiency, enabling it to achieve the target of becoming a $26 trillion economy by 2047 even sooner.
The impact of GenAI will vary across sectors, with business services (including IT, legal, consulting, outsourcing, rental), finance, transportation, education, retail, and healthcare expected to benefit most from IT, the report added.
Well positioned to capitalize on AI’s potential due to digitalization and focus on productivity, efficiency, and personalized experiences, these sectors will contribute 69% of the overall impact of GenAI on India’s GDP.
More investment needed
Indian enterprises are optimistic about GenAI’s potential, with 60% respondents seeing a significant impact on their business. While 75% of those surveyed saw customer experience as the most important facet that GenAI is expected to impact, innovation (68%) and cost reduction (51%) are other two important impacts of GenAI as seen by companies.
The study highlights that around 75% of the businesses in India express a low to moderate level of readiness to harness the benefits of GenAI. To unlock this potential, increased investment in AI research, education, and upskilling is crucial.
With consumer-facing applications progressively incorporating innovative cognitive interfaces, EY said enterprises must enhance their existing technology stack with GenAI tools, bolstering data and application layers to accommodate advancements.
The biggest challenge for companies, especially in the short term, will be a shortage of individuals possessing AI skills, with 52% organizations surveyed seeing skills-gap as a challenge in harnessing the potential of GenAI for businesses.
EY said that the widening gap between skills that companies demand and the existing workforce necessitates strategic talent acquisition, particularly for successful initiation and scalable implementation of prioritized use cases.
The report also outlines a strategic framework for responsible development and deployment of GenAI in India. Realizing GenAI’s full potential requires a proactive regulatory stance that ensures citizen safety, EY said.
Data security and privacy are key concerns, along with worries around safeguards in areas like bias, accuracy, and transparency. The report highlights that 36% organizations see data privacy as the single most important risk of GenAI.
In the survey, the companies agree on the need for GenAI regulation but differ on who should lead—48% tech services companies suggest the government, 25% prefer industry associations and 20% prefer self-regulation.
Policy actions to promote GenAI development
The Indian government recognizes the economic potential of AI and some public figures have called for a sharper India strategy for AI development, the report noted.
In line with the development of Digital Public Infrastructure (DPI) such as the India Stack, Aadhaar, and UPI, the government can consider developing GenAI systems as public goods, it said.
The development of GenAI as Public Goods can be a game changer as it can also be deployed across various sectors of impact such as education, healthcare, agriculture, and smart cities, where the government is a key player.
To promote the development of GenAI, policy actions will have to ensure access to data. The development of indigenous training data sets, especially for local Indian languages, will be very important, EY said.
Besides data, the government could ensure access to critical digital infrastructure through roll-out of 5G, data center development, access to specialized chips, and AI specific compute infrastructure, along with policies that cultivate and attract specialized talent.
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