AI Could Drive $1–1.7 Trillion Growth for India by 2035, NITI Aayog Says

A recently published report by NITI Aayog, titled AI for Viksit Bharat: The Opportunity for Accelerated Economic Growth, concludes that India has the potential to increase its GDP by $1–1.7 trillion by 2035, if AI adoption accelerates countrywide.

Under this scenario, India would achieve its goal of 8%+ annual growth, reaching a GDP of about $8.3 trillion, compared to a projected $6.6 trillion under the current growth rate of 5.7%. 

BVR Subrahmanyam, CEO of NITI Aayog, emphasizes in the report’s foreword that achieving the Viksit Bharat vision requires “significantly rais[ing] productivity across the economy and unlock[ing] new growth through innovation. AI can be the decisive lever.” 

NITI Aayog report's Major Levers for AI-Led Growth

The NITI Aayog analysis identifies three primary levers through which AI could drive this uplift:

1. Adoption Across Industries

Applying AI broadly in sectors like banking and manufacturing could contribute $500–600 billion by boosting efficiency and productivity. Real-time quality control, predictive maintenance, smart factories, and better fraud detection in financial services are some examples. 

2. Innovation and R&D via Generative AI

Generative AI in drug discovery, automotive design, and software-led innovation could yield an additional $280-475 billion by shortening R&D timelines and enabling leaps in technological breakthroughs. 

3. Upgrading Technology Services

Shifting Indian IT towards higher-value services and new business models can contribute another 15-20% of the incremental GDP growth. This lever involves boosting domestic capability, embracing frontier tech, and exporting these services globally. 

Sectoral Gains & Strategic Initiatives

• Banking & Financial Services expect gains of about $50–55 billion, particularly through more accurate credit scoring, personalized financial offerings, and fraud detection systems. 

• Manufacturing could add $85–100 billion via smart factories, predictive maintenance, and real-time quality control. 

• Pharmaceuticals stand to benefit by reducing R&D timelines, with estimates of up to 30% lower research costs, and major gains in drug discovery efficiency. 

• Automotive sector may also see transformation through AI-driven component design, software-assisted vehicles and increased exports, reducing dependence on imported components. 

NITI Aayog has proposed initiatives like a Frontier Tech Challenge to fund the top 50 innovation ideas and has urged states to embed frontier technologies into governance for real impact. 

Challenges and Enablers

Key Challenges

• Legacy IT systems, fragmented data platforms

• Data privacy, regulatory misalignment

• Skill gaps and shortage of AI-trainable talent

• Inadequate AI infrastructure (compute capacity, data sovereignty) 

What Needs to Be Done

• Investment in compute infrastructure and sovereign data platforms

• Ethical AI frameworks and governance with privacy safeguards

• Upskilling, STEM education, R&D collaboration between academia, government, and industry 

Conclusion

The NITI Aayog’s AI for Viksit Bharat report presents a compelling case for India’s economic future where Artificial Intelligence plays a central role in transforming growth, productivity, and global competitiveness.

By 2035, with accelerated AI adoption, India could close large parts of the productivity gap, reinvent its R&D capabilities, and move its IT industry into high-value terrain—thereby adding up to $1.7 trillion to its GDP and achieving the aspirational 8%+ annual growth envisaged under the Viksit Bharat vision.

Yet, realising this promise depends heavily on effective execution. Challenges around infrastructure, ethics, talent, and regulatory alignment must be overcome. If India succeeds, the result could be transformative—turning innovation into inclusive growth and helping millions access new opportunities.