NITI Aayog: AI Could Boost India’s GDP by $1.9 Trillion by 2035

Artificial Intelligence (AI) is set to reshape India’s economic landscape, with the potential to contribute up to $1.9 trillion to GDP by 2035, according to a recent NITI Aayog report on AI for Viksit Bharat. The report outlines how AI adoption, combined with India’s STEM talent and R&D ecosystem, could significantly accelerate growth, bridging existing gaps and creating new opportunities across sectors.

Global AI Value Potential

The report estimates that global AI adoption could generate $17–26 trillion in value over the next decade, of which India is well-positioned to capture 10–15%. By leveraging technological expertise, research capabilities, and a growing talent pool, India could harness AI to enhance productivity, innovation, and competitiveness across industries.

AI’s Impact on India’s GDP

Under the Viksit Bharat vision, India’s GDP could reach $8.3 trillion by 2035 with sustained 8% growth, compared to $6.6 trillion at the current pace. AI adoption is projected to bridge 30–35% of this growth gap, underlining its transformative potential in shaping India’s economic trajectory.

Key Sectors of Opportunity

The report identifies several high-impact sectors where AI can drive substantial growth and efficiency:

• Banking & Financial Services: AI can enhance risk management, automate processes, and improve customer experiences.

• Manufacturing: Automation and AI-driven predictive maintenance can reduce costs and boost productivity.

• Research-Intensive Industries: Pharmaceuticals, electric vehicles, aerospace, and semiconductors can benefit from generative AI, which can cut R&D costs, lower billion-dollar entry barriers, and accelerate innovation.

• SpaceTech and Auto Components: AI can support complex design, testing, and operational workflows, enabling faster and more cost-effective development.

Government Initiatives to Boost AI

The IndiaAI Mission, backed by the government with a budget exceeding ₹10,000 crore, aims to accelerate AI adoption nationwide:

• Deployment of 38,000 GPUs to support AI research and applications.

• Development of India-specific large language models.

• Expansion of AI labs across Tier-2 and Tier-3 cities to promote inclusive innovation.

These initiatives aim to strengthen India’s position as a global AI hub and a frontier technology leader.

Challenges and Barriers

Despite the opportunities, the report highlights several challenges to AI adoption in India:

• Infrastructure Gaps: MSMEs face limitations in computing resources and data access.

• Talent Shortages: Expertise in robotics, chip design, and battery technologies remains scarce.

• Policy and Data Issues: Ensuring consent-based data sharing and robust regulatory frameworks is essential.

• Workforce Reskilling: AI is expected to reshape 35–40% of jobs globally, necessitating large-scale reskilling and upskilling programs.

Addressing these challenges will be critical to achieving sustainable and inclusive growth while leveraging AI’s full potential.

Collaboration for a Data-Driven Future

The report emphasizes the importance of collaboration between government, industry, and academia. Strategic partnerships can drive innovation, scale AI adoption, and enable India to become the “data capital of the world”. By fostering research, investment, and education in AI, India can strengthen its role in frontier technologies while ensuring equitable growth.

Conclusion

AI offers a transformative opportunity for India, with the potential to add $1.9 trillion to GDP by 2035. By capitalizing on its talent pool, government initiatives like IndiaAI, and sector-specific applications in banking, manufacturing, and research-intensive industries, India can secure a leadership role in the global AI landscape. Effective policy frameworks, reskilling programs, and industry collaboration will be crucial to unlocking AI’s full economic and social potential.