In a groundbreaking report by Intel and IDC, India’s Artificial Intelligence (AI) spending is forecasted to triple, reaching an estimated $5 billion by 2027. This significant growth underscores India’s rapid advancement and strategic positioning in the global AI landscape.
The joint report by Intel and IDC assesses the AI maturity level across eight key markets, including India. It highlights that India’s AI spending is expected to grow at a compound annual growth rate (CAGR) of 31.5% from 2023 to 2027, the fastest among the examined markets. In 2023, AI spending in India was recorded at $1.7 billion, which is projected to soar to $5.1 billion by 2027.
The report categorizes countries based on their AI maturity: Indonesia and Malaysia are at Stage 1 (AI Explorer), India and Taiwan are at Stage 2 (AI Practitioner), Australia, Japan, and South Korea are at Stage 3 (AI Innovator), and Singapore is at Stage 4 (AI Leader). India and Taiwan, currently at Stage 2, are characterized by tactical AI initiatives aimed at short-term goals with some successful use cases but not yet at scale.
India’s strategic position as a global AI leader is reinforced by its robust developer community and skill penetration, which is poised to surpass even the US. Approximately 20% of the world’s data and AI talent comes from India, positioning the country at the forefront of AI innovation.The Indian government has been proactive in supporting AI through initiatives such as the National Strategy for AI, Making AI Work for India, and the INDIAai portal. For FY 2024-25, around $30.7 million is allocated to establish three centres of excellence in AI, focusing on agriculture, health, and sustainable cities. These initiatives aim to foster AI adoption in critical sectors like healthcare, education, agriculture, and manufacturing.
The BFSI (Banking, Financial Services, and Insurance) and manufacturing sectors are emerging as top spenders in AI. The manufacturing industry, particularly electronics and consumer goods, is expected to play a pivotal role in driving economic expansion.
Despite the promising growth trajectory, challenges remain. Only 6% of surveyed organizations view their AI adoptions as central to their competitiveness. Infrastructure development, regulatory compliance, and change management are key areas needing attention. Moreover, India’s per capita investment in AI is relatively low compared to countries like Singapore, highlighting the need for increased investment to enhance national AI maturity.
Santhosh Viswanathan, Vice President and Managing Director, Intel India Region, emphasized India’s readiness for AI: “AI is becoming as essential as the Internet for businesses worldwide. India, with its extensive digitization and robust digital infrastructure, is poised to adopt AI at scale. The potential for AI to transform various sectors in India is immense.”
Sharath Srinivasamurthy, Associate Vice President at IDC, added: “By 2027, AI will be ubiquitous across sectors. Infrastructure provisioning will continue to be the biggest contributor to AI spending.”
India’s AI landscape is on a trajectory of significant growth and transformation. With strong government support, a vast talent pool, and proactive industry initiatives, India is well-positioned to harness the power of AI to drive innovation and economic growth.