Accelerated adoption of AI can contribute $500-600 billion to India's GDP by 2035: NITI Aayog report

A NITI Aayog in its report titled 'AI for Viksit Bharat: The Opportunity for Accelerated Economic Growth' has said that accelerated adoption of Artificial Intelligence (AI) across industries can contribute $500-600 billion to India's GDP by 2035 on the back of increased productivity and efficiency in the workforce. The report further said that over the next decade, the adoption of AI across sectors is expected to add $17–26 trillion to the global economy.

It said ‘India's combination of a large STEM workforce, expanding R&D ecosystem, and growing digital and technology capabilities positions the country to participate in this transformation, with the potential to capture 10-15% of global AI value’.

According to the Aayog, projections show that while AI will create many new roles, it will also displace many existing jobs, particularly in clerical, routine, and low-skill segments. It said the analysis shows that financial services and manufacturing can be most impacted and might have up to 20-25% of their sectoral GDP attributed to AI by 2035.

AI-led productivity and efficiency improvement could unlock $50-55 billion in financial services, over and above the current estimated growth for the sector by 2035. The report said ‘AI could power automated compliance, fraud detection, and risk management through advanced anomaly detection techniques and privacy-preserving analytics such as secure multi-party computation and federated learning’.

According to the report, AI-enabled systems can reshape credit decisioning, collections, and portfolio management. By leveraging alternative data sources, banks can make more accurate, dynamic, and inclusive lending decisions. It noted that potential AI opportunities for India presently include accelerating AI adoption across industries to improve productivity and efficiency, potentially bridging 30-35% of the gap. It said these effects are expected to materialise across both domestic consumption and export markets.

The report also observed that innovation in technology services, strengthening India's reputation as a technology services leader, contributing another 15-20% to the step up, could drive the development of higher-value solutions and new business models, enhancing India's competitiveness in the global market.

In manufacturing, the report said $85-100 billion could be driven by AI-led productivity and efficiency improvement over and above India's current growth by 2035. At its current growth rate of 5.7%, India's GDP is projected to reach $6.6 trillion by 2035.

However, it said under the aspirational 8% growth trajectory outlined in the government's vision for the nation, known as Viksit Bharat, India's GDP could increase to $8.3 trillion, representing an incremental $1.7 trillion compared with the current growth path.