The role of artificial intelligence in India’s economic and digital growth

This is particularly essential for fast-emerging market economies like India, characterised by rapid economic growth, a large and growing consumer market, and expanding industrialization. As the recent phase of advancements in virtual infrastructure is ostensibly marked by the expansion of the transformative power of Artificial Intelligence (AI), it has become rather indispensable for the governments to weave AI into their development process.

Understanding this need, over the past few years, India has integrated the AI mission into every aspect of its public good deliverables, whether it is education, skill training, employment generation, institution building, or governance. Though the Indian private sector is booming at a fast pace, as evident from the vast number of AI-driven start-ups, the government has assumed it as its prerogative to actively shape an AI ecosystem where computing power, GPUs, and research opportunities are accessible at an affordable cost for everyone.

Given the novelty of the technology, capacity building and skill training are fundamental for economic development through AI. Experts also opine that India needs to boost its high-end AI research capabilities through investments in upskilling to grow as an exporter of AI talent. The government is accomplishing this task through formal training opportunities through academic as well as vocational channels. The AI education is being institutionally expanded across undergraduate, postgraduate, and Ph.D. programs under the IndiaAI Future Skills initiative. This is helping in creating an enabling ecosystem to produce AI-equipped human capital, that is not able to just meet domestic demands but also global needs for highly skilled AI professionals. For the same, the Indian government has installed the IndiaAI Innovation Centre (IAIC) as the leading academic institution to ensure streamlined implementation and retention of top research talent.

Moreover, to inculcate a research ecosystem and contribute to the growing body of knowledge, the Indian government has announced fellowships for Ph.D. scholars researching AI in highly ranked Indian educational institutes. Besides, to bridge the regional digital divide in AI adoption and extensive penetration of AI, Data and AI Labs are being established in Tier 2 and Tier 3 cities across the country.

Moreover, to generate a create a general know-how about AI and ensure seamless access and adoption of AI without formal enrolment, the Indian government has launched an ‘AI For All’ programme. This is a self-learning online program designed to raise public awareness about AI. It aims to demystify AI for students, stay-at-home parents, professionals, and the elderly, fostering a ‘Digital First Mindset’ and helping people understand and appreciate AI.

Through these measures, India is fast emerging as an AI Talent hub, ranking amongst the top five fastest-growing AI talent hubs, with the AI talent concentration in the country grown by 263% since 2016. In the field of business, NASSCOM report informs that fuelled by B2B and agentic AI startups, Indian GenAI startup funding has surged over six times quarter-on-quarter, reaching USD 51 million in quarter 2 of FY2025.

Hinging development to the startup ecosystem, India houses 520+ tech incubators and accelerators, where AI-focused accelerators like T-Hub MATH provide crucial mentorship in product development, business strategy, and scaling.

An important feature of India’s AI mission is the facilitating role played by the government in developing the AI ecosystem for all. Crediting the buttressing role assumed by the government, 10 cutting-edge Indian AI startups have been selected for a prestigious international acceleration program in partnership with Station F, Paris, which is the world’s largest startup campus, and HEC Paris under the IndiaAI Startups Global Initiative. Through this, the government is creating an opportunity for Startups to tap into the international markets, forge global alliances, and create scalable, impactful solutions in the AI ecosystem.

Furthering its enabling role fiscally, the Indian government has earmarked INR 10,300 Crore for the IndiaAI Mission to empower AI Startups and expand Compute Infrastructure Access. The funding will enable IAIC to help promote innovation in the specific emphasis on indigenous Large Multimodal Models (LMMs) and domain-specific models, leveraging edge and distributed computing for optimal efficiency. The success of the mission lies in its scalability. Hence, to boost the IndiaAI Compute Capacity, the project is working on installing a cutting-edge, scalable AI computing infrastructure, deploying over 10,000 Graphics Processing Units (GPUs) through strategic public-private collaborations.

With over 0.6 million AI professionals and 700 million internet users, India is contributing 16 percent to the global AI talent pool, leveraging its highly talented STEM-oriented human capital and favourable demographic dividend.

AI is being incorporated into India’s broader development strategy, with aims to contribute to both economic growth and social advancement. This approach builds on the country’s existing public digital infrastructure, including initiatives like UIDAI and AADHAR, as well as platforms such as the IndiaAI Datasets Platform, which seeks to improve the accessibility and quality of public sector data. Efforts are also being made to support AI-driven private enterprises and educational programs. Through various government-led initiatives, India is working toward increasing its role in the global AI landscape, with an emphasis on responsible deployment and broader access to AI benefits across different segments of society.