AI Spending In India To Hit $5 Billion By 2027: Report

AI spending in India is set to undergo the swiftest expansion among the eight surveyed markets – Australia, India, Indonesia, Japan, Korea, Malaysia, Singapore, and Taiwan.

Enterprise spending on AI is anticipated to exhibit the highest growth rate amongst the surveyed markets.

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According to a joint report released on Tuesday by Intel and International Data Corporation (IDC), spending on artificial intelligence (AI) in India is projected to expand at a compound annual growth rate of 31.5 per cent from 2023, potentially reaching $5.1 billion by 2027. The growth in AI spending is expected to be the fastest among the eight markets surveyed, which includes India, Australia, Indonesia, Japan, South Korea, Malaysia, Singapore, and Taiwan.

India Poised To Emerge As The Next AI Powerhouse

AI spending in India is set to undergo the swiftest expansion among the eight surveyed markets – Australia, India, Indonesia, Japan, Korea, Malaysia, Singapore, and Taiwan, with an estimated Compound Annual Growth Rate (CAGR) of 31.5 per cent from 2023, forecasted to reach a significant $5.1 billion by 2027. Boasting 20 per cent of the world's data and AI talent, India's strategic position as a global AI leader is reinforced by its robust developer community and skill penetration, poised to surpass even the US.

Investments in AI for the years 2024 and 2025 will prioritise the development of AI infrastructure, laying the foundation for high-value use cases that promise transformative impacts in the future. Notably, the BFSI (Banking, Financial Services, and Insurance) and manufacturing sectors are emerging as the top spenders in India. The manufacturing industry, in particular, is anticipated to play a pivotal role in driving the country's economic expansion, particularly within sectors such as electronics and consumer goods.

As Indian businesses increasingly recognise the advantages of AI adoption, enterprise spending on AI is anticipated to exhibit the highest growth rate amongst the surveyed markets. AI software sector will be the primary driver of overall market growth, reaching $2.6 billion by 2027, with AI infrastructure spending projected to hit $733 million by the same year.

India's focus remains on enhancing employee productivity and elevating customer experiences through AI-driven applications. However, while 80 per cent of surveyed large organisations utilise AI/ML to enhance business outcomes, merely 6 per cent view their AI adoptions as central to their competitiveness. This substantial gap underscores the challenges in AI deployment and underscores the critical role of change management. 

India strongly outperforms the Asia/ Pacific average in the government dimension because of the current government’s pro-AI stance. $30.7 million is earmarked in FY 2024-25 to establish three centers of excellence in AI in India focusing on agriculture, health, and sustainable cities.

"Amazing India reflects the massive opportunity AI unlocks for our country. With an unmatched talent pool, frugal innovation and data at scale, India stands poised to lead the global AI revolution. India's commitment to AI, underscored by its proactive approach, is driving transformative growth. This positions India it as a frontrunner in shaping the future of this technology. Intel recognises this extraordinary opportunity, elevating India as a distinct geography for our business operations. We're proud to be part of India's journey towards AI excellence and building an Amazing India," Santhosh Viswanathan, Vice President and Managing Director, India Region, Intel, said in a statement.