Generative AI To Potentially Add $1.2–1.5 Trillion To India GDP By FY30, Says EY

Generative artificial intelligence has the potential to add a cumulative $1.2–1.5 trillion to India's gross domestic product over the next seven years, according to a report by EY India. The report forecasts that by fully capitalising on Gen AI technology and its applications across sectors, India can potentially add $359–438 billion in FY 2029–30 alone, reflecting a 5.9–7.2% increase over and above the baseline GDP.

Approximately 69% of the overall impact is expected to be derived from sectors such as business services (including IT, legal, consulting, outsourcing, and rental of machinery and equipment), financial services, education, retail and healthcare, the report found. The expected impact includes improvements in employee productivity, enhanced operational efficiency and personalised customer engagement.

The report is based on a survey of over 200 C-suite executives, revealing that 60% of organisations acknowledge the significant influence of Gen AI on their businesses. However, 75% of them expressed a low to moderate level of readiness to harness the benefits of Gen AI. The two main challenges faced by organisations are skills gap (52%) and the availability of unclear use cases (47%). Only 36% organisations see data privacy as the risk of Gen AI.

The report found that the development of a Gen AI strategy is now considered essential, with 75% of organisations identifying customer engagement as the most crucial aspect influenced by Gen AI. Of those surveyed, 73% preferred to collaborate with external tech providers for its implementation.

Considering Gen AI's potential to act as an economic growth catalyst, governments are actively pursuing measures to promote and regulate AI. Implementing measures like enabling access to training data and marketplaces, deployment of Gen AI systems as public goods, securing critical digital infrastructure (through rollout of 5G, data centres, access to specialised chips and AI-specific compute infrastructure), access to talent and public funding of research and development will help foster Gen AI innovation. 

At the same time, clarity on regulatory framework, establishing regulatory sandboxes, watermarking Gen AI content and setting standards for accountability and liability to build trust in the AI systems will be important, the report noted. 

Mahesh Makhija, technology consulting leader at EY India, said, “Organisations are swiftly adopting AI-first approach to digital transformation, aiming to enhance customer engagement, increase productivity and achieve greater agility in delivering digital capabilities using innovative foundation models and AI-first solutions.”

“Although in early stages, there is a tremendous sense of optimism in AI, and to realise its full potential, India must significantly elevate its efforts in terms of increased government role in development and deployment. Moreover, providing critical compute ecosystem for continuous innovation and growth will be vital for India to stay competitive in this evolving landscape,” Makhija added.