AI Will Define the Next Era: Will India Capitalize on the Opportunity?

Artificial Intelligence (AI) is not just a technology. It is emerging as a foundation of growth, resilience, and relevance for nations, corporations, and individuals alike. There may no longer be a global narrative without AI. These facts underscore the criticality of a credible AI strategy, with a commensurate execution framework, in India’s journey to becoming a $10 trillion economy within a decade ¹.

Every pivotal innovation that went on to reshape the world started with an opportunity. Those who recognized its potential early and acted with intent went on to become architects of the next era. In the 18^th century, this was the steam engine—igniting the Industrial Revolution and transforming not just factories, but economies, geopolitics, and power structures.

AI is the steam engine of the 21^st century, but with a critical material difference.

This time, it is not muscle that is being scaled.

It is cognition.

Perhaps, for the first time in history, intelligence itself is becoming an exponentially scalable infrastructure.

AI agents can code entire platforms, simulate scientific discovery, and perform tasks once reserved for highly-trained professionals. So, the question is not what this technology can do, but rather, who will shape its trajectory?

So far, the global spotlight has largely been on the US and China, racing ahead in chips and trillion-parameter models. But India is emerging as a third force. While it may not yet lead in foundational research or hardware innovation, India’s leading role in AI deployment—across global enterprises and sectors—is irrefutable.

Pegged by Goldman Sachs Research to grow at ~6.3% in 2025 ², India is the fastest growing major economy in the world. Its demographic dividend as the world’s most populous country, with a median age of ~28 years and diverse, English-speaking STEM talent ³, enables the country to capitalize on the growing global demand for technology talent. India’s emergence as a global AI deployment hub is closely linked to its rising dominance in the services sector that continues to be the steadiest contributor to its burgeoning economy. In fact, services exports have become the country’s powerhouse, growing to ~$387 billion in 2024, at a compound annual growth rate of ~11% from 2005 to 2024 ^{4 & 5}, nearly double the global average and significantly outpacing goods exports. By 2030, India’s services exports are projected to touch ~11% of GDP and to be valued at ~$800 billion ⁵.

This ascent reflects more than just scale. India is the emerging services factory of the world, with its share in global services exports more than doubling over the last 18 years ⁵. The composition of these exports is also shifting—from traditional IT services to higher-value engineering and AI-led capabilities. Value addition from Engineering, Research, and Development (ER&D) services has grown steadily, reinforcing India’s ability to move up the global services value chain.

At the heart of this is a ~$250 billion ⁶ IT and business services industry deeply integrated into global enterprises. And within this, the Global Capability Centers (GCCs) are creating a tectonic shift. With more than 1,700 GCCs in the country currently and projected to grow into a ~$110 billion sector by 2030 with ~2,200-2,500 GCCs ⁷, these centers play a central role in global organizational AI deployment— managing everything from multilingual prompt engineering and fine-tuning of foundational models, to building governance protocols and integrating AI into enterprise workflows.

India’s external balances are being cushioned by a surge in services, a growing trade surplus, and strong remittance inflows. As global demand for AI-powered transformation accelerates, the well-established services sector is naturally positioned to benefit—driving growth in adjacent industries such as financial services, insurance, and travel. GCCs are amplifying this momentum, generating a threefold return on every rupee spent and creating a fivefold impact on job creation across roles ¹⁴ like office administration, hospitality, security, and transportation. These sectors are not only key beneficiaries of the GCC ecosystem but are also being reshaped by AI-driven productivity gains.

Generative AI is expected to add $1.2-$1.5 trillion to India’s GDP by 2030 ⁸. Over 80% of Indian enterprises are actively exploring the development of autonomous agents, marking a decisive shift from experimentation to execution ⁹.

But will India enterprises travel the curve from implementation to strategy? Can AI go from being the muscle to becoming the cognition? Will India be the world’s front office for AI?

India’s policy and innovation ecosystem is beginning to align. The newly launched IndiaAI Mission—with a corpus of $1.25 billion—aims to establish a National Compute Grid, support indigenous AI model development, and launch a network of AI innovation centers across the country ¹⁰. Several top Indian universities are introducing specialized AI programs, while public and private skilling efforts are targeting over a million professionals.

In parallel, India’s AI startup ecosystem is seeing early momentum, particularly in areas like vernacular AI, healthcare, and public governance—domains with both domestic relevance and global potential.

India’s talent must rise to the occasion.

While demographics and talent remain India’s crown jewels in seizing the AI opportunity, the headwinds are material.

India’s role in AI research and IP creation remains limited. Despite producing over 1.5 million engineering graduates annually, only a fraction is trained on cutting-edge AI techniques ¹¹.

By 2027, India's AI sector could create over 2.3 million job openings, yet current projections suggest the available talent pool may reach only around 1.2 million. This discrepancy highlights not a shortfall, but an opportunity—to scale, reskill, and future-proof over a million professionals ¹².

At the highest levels of research, the gap is more pronounced. India’s share of PhD-level AI researchers is minuscule, and the brain drain is real. Unless India creates deeper local ecosystems for AI talent to grow—not just work—it will keep losing its best minds to the very countries it seeks to compete with.

Beyond talent, the global landscape itself is shifting. The ripple effects of the US trade policies are starting to show.

The US is considering broader controls—not just on semiconductors and hardware, but potentially on AI models, algorithms, and services. Coupled with increasing discourse around digital services taxes, data localization demands, and divergent regulatory regimes, India must prepare for a future where digital trade is no longer frictionless.

While the baseline tariff on services remains unchanged so far, the uncertainty is enough to impact corporate investment decisions. Any downward revisions to the US GDP forecast due to trade friction may further impact global tech spending cycles. ¹³.

Separating noise from signal.

Although the recent US rhetoric around tariffs may impact goods and manufacturing supply chains, the impact on India’s AI-led services exports is so far limited. However, diverging regulations, data localization demands, and geopolitical tensions could squeeze India’s margins.

And this is where the country’s credibility and scale become strategic assets. As Western firms accelerate AI adoption, India is widely seen as a democratic, trustworthy, and operationally reliable partner. Unlike many of its peers, India is investing in the foundational infrastructure of a digital-first economy—from Aadhaar to UPI, and now, with the IndiaAI Mission, into compute infrastructure and indigenous model development.

Capturing the opportunity.

AI is not just a technology—it is a philosophy of governance, a new grammar for decision-making, and the foundation of a new economic architecture.

India’s strength in deployment has earned it a seat at the global AI table. Moving from deployer to architect will require greater investment in research, innovation, and intellectual property—underpinned by timebound execution and collaboration across industry, academia, and the public sector. As the global AI landscape continues to evolve, India’s trajectory will help shape not just its own economic future, but also the broader contours of an AI-enabled world.

The opportunity to lead is clear, and it is only pertinent to act immediately!

 

 

Additional Reading:

1.     Business Today; Business World (March 2025)

2.     GS Research Report; Government of India - Press Information Bureau (May 2025)

3.     Ernst & Young - Reaping the demographic dividend (April 2023)

4.     Times of India – Services exports rise 14% to record $387.5 billion (May 2025)

5.     Goldman Sachs Insights- How India’s services economy became a world leader (June 2024)

6.     Economic Times - Can India’s $250 billion IT industry survive the AI revolution? (March 2025)

7.     Ernst & Young – Harnessing the growth of India’s energy GCCs in the global energy transition (March 2025)

8.     CNBC TV; Economic Times- India’s Gen AI Revolution: A $1.5 trillion opportunity by 2030 (January 2025)

9.     Deloitte State of GenAI report (April 2025)

10.   India Brand Equity Foundation – Cabinet nod for India AI Mission with US$1.25 billion outlay for five years (March 2024)

11.  BW People - Only 10% Of India’s 1.5 Million Engineering Graduates To Secure Jobs This Year (September 2024)

12.  Business Standard - India may face an AI talent shortfall of over 1 million by 2027: Report (March 2025)

13.  CNBC TV18 - Trump Tariff Pause: 10% baseline tariff remains in place for all, including India — Here's what it means (April 2025)

14.  NASSCOM Deloitte GCC Value Proposition for India (June 2021)

 

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