Gen AI can potentially add a cumulative $1.2-1.5 trillion to India's GDP by FY29-30, as per the EY report.
A recent report by Ernst & Young India, titled “The AIdea of India: Generative AI’s potential to accelerate India’s digital transformation,” paints a promising picture of the country’s economic future. It predicts that generative AI technologies have the potential to unlock a staggering $1.2-1.5 trillion in cumulative GDP growth over the next seven years. This represents a significant boost, pushing India’s economic output upwards by an estimated 5.9-7.2% beyond baseline projections. In the years 2029-30, Gen AI could potentially add $359-438 billion to India’s GDP on its own.
The EY report delves deeper, analysing the Indian industry’s current preparedness for embracing this transformational technology. By identifying both existing strengths and potential roadblocks, it aims to guide strategic decisions and pave the way for harnessing the immense potential of generative AI. While this technology holds immense promise, successfully integrating it into various sectors demands careful planning and collaborative efforts from both private and public stakeholders.
“The cumulative impact on GDP may range from US$1.2 trillion to US$1.5 trillion, contributing an additional 0.9% to 1.1% in annual CAGR. Given the immense capability of Gen AI with respect to its productivity and efficiency enhancing effects, its adoption has the potential to accelerate India’s growth trajectory,” said the report.
“Organisations are swiftly adopting an AI-first approach to digital transformation, aiming to enhance customer engagement, increase productivity, and achieve greater agility in delivering digital capabilities using innovative foundation models and AI-first solutions,” stated Mahesh Makhija, technology consulting leader, EY India.
He further added, “Although in the early stages, there is a tremendous sense of optimism in AI to realise its full potential, India must significantly elevate its efforts in terms of increased government role in its development and deployment.”
Gen AI impact on retail
According to the EY report, the survey in India indicates that a mere 6% have currently integrated Gen AI, but a remarkable 71% within the retail industry intend to embrace it in the coming 12 months, highlighting its recognized significance.
The report further states that, “By 2025, Gen AI could potentially elevate the retail sector’s profitability by 20%.”
Gen AI impact on healthcare and life sciences
After surveys from the healthcare industry, it has been discovered that the organisation’s productivity will increase by 84% whereas there will be new opportunities to amplify existing workforce potential by 60%.
Stating about life sciences, the report said, “numerous Gen AI applications are now contributing to drug development and highly targeted therapies, which is likely to put India on the global clinical trial map. There is likely fast followership in Gen AI in process optimization across value chains, such as supply and demand planning and operational efficiency improvement, to enhance the efficiency and productivity.”
Gen AI impact on customer service
“Gen AI has the potential to disrupt existing customer service approaches by understanding complex inquiries. In a recent Stanford-MIT study of a Fortune 500 tech company, a Gen AI-based conversational assistant was introduced in a staggered manner, using data from over 5,000 customer support agents. Access to the tool increased productivity (issues resolved per hour), by 14% on average,” says the report.
Gen AI policy agenda for India
Countries differ in their approaches to AI regulation, with some prioritising promotion and development, while others focus on mitigating implementation risks.
“As subsequent measures bring clarity to the regulatory framework, the government can support innovation by facilitating interventions to improve access to data, chips, talent, computing resources etc.,” says the report.
NITI Aayog released the Principles of Responsible AI, which were finalised in 20214. These principles were designed to provide a framework that would serve as an enabling environment for promoting a responsible AI ecosystem in India.
The study involved 200 C-suite participants across various sectors such as technology, media, entertainment, financial services, government, health, retail, and manufacturing. Approximately 60% of the surveyed organisations admitted that Gen AI had influenced their operations.
