Advantage India! Riding the AI wave

Stanford University’s 6th edition of the AI Index Report (2023) ranks India as the country with highest AI skill penetration rate, followed by the USA and Germany. India along with the United States and Israel also has the highest reported relative AI skill penetration rates for women.

Generative AI technologies such as OpenAI’s GPT-4 and Dall-E 2, Alphabet’s Bard, Adobe’s Firefly and Github’s CoPilot are dominating headlines and driving discussions. However, it’s not a window with a crystal-clear pane. Amid the surge of interest as well as euphoria in AI (artificial intelligence) applications because of the potential shown by LLMs (Large Language Models), there is the fear of the unknowns in this rapidly-evolving space.

Regardless of the myriads of opinions, this rapidly advancing technology is undoubtedly revolutionising industries worldwide, giving businesses possibilities of greater efficiency, cost reduction, and faster delivery. While in India, AI has emerged as a powerful tool for start-ups to disrupt traditional business models, revolutionise processes, and create new avenues for growth.


The 2023 “State of MLOps” survey report indicated that human expertise has been a key component to all AI efforts, which requires human intelligence and insight to solve edge cases. India is especially well positioned to capitalize on this future, having more than 12 per cent of the global workforce dedicated to AI development.

Stanford University’s sixth edition of the AI Index Report (2023) included India this year in recognition of the increasingly important role it plays in the AI ecosystem and ranked India as the country with highest AI skill penetration rate followed by the United States of America and Germany. India along with the United States and Israel also has the highest reported relative AI skill penetration rates for women.

In addition, India is the only emerging economy apart from Brazil in the top 15. While the bulk of the private investment is in the US and China at USD 248.90 billion and USD 95.11 billion, India still finds a spot in the top 15 with an investment of USD 7.73 billion.

In 2022, funding soared to USD 2.65B across a record-high 110 deals. But unfortunately, a very small percentage came here in India. Investments in AI-enabled fintech start-ups in India was USD 306 million in 2022. Still it seems to be the only bright spot in the emerging economies, with 296 newly funded AI companies.

India ranked first in terms of Artificial Intelligence (AI) skill penetration and AI talent concentration and 5th in AI scientific publications,

According to the report titled, “State of Data Science and AI Skills in India: Data and the Art of Smart Intelligence”, prepared by Nasscom in association with Salesforce and Draup, India’s AI Skills Penetration Factor at 3.09 is the highest among all G20 and OECD countries. This means the country’s tech talent was three times more likely to have or report AI skills than other countries. The current demand-supply gap in AI and Data Science stands at 51 per cent, significantly lower than major economies such as the US, as per the study.

The wealth of talent and expertise along with the entrepreneurial ecosystem, therefore, positions India well in the race to build an AI-powered world.


India has remained a consistent overperformer relative to its GDP in technology and innovation. It is ranked 67 positions ahead of its expected position corresponding to per capita income in the UNCTAD Technology and Innovation Report 2023, up from 65 positions ahead of expectations in the 2021 report.

The UNCTAD Technology and Innovation Report 2023 highlights that frontier technologies such as AI, drones, electric vehicles, solar photovoltaic, internet of things are poised to grow to a USD 9.5 trillion market from the present USD 1.5 trillion. Developing economies do not yet have the capacity to take advantage of these frontier technologies, but some developing countries are outliers and India is the foremost one among them. It performs well for R&D and ICT, which is reflected in abundant supplies of qualified and highly skilled human resources available at a comparatively low cost.


India ranks 40th among the developing countries ready to use, adopt or adapt to frontier technologies. It is one of the top countries that are enhancing artificial intelligence innovation and development at a rapid scale. Reports suggest that most businesses will shift to AI-powered systems, applications, security systems, data analysis, and other applications in the future. 

The market for AI in healthcare in India is projected to reach USD 335 million by 2024, while e-commerce sales in India are expected to reach USD 200 billion by 2026 with start-ups using AI algorithms to analyse customer behaviour, predict buying patterns, and provide personalised product recommendations. Similarly, the market for AI in manufacturing in India is projected to grow at a CAGR of over 45 per cent from 2023 to 2026. Generative AI start-ups are also addressing critical challenges faced by farmers and driving sustainable agricultural practices in its agrarian economy. The ‘Uzhavan’ app of Tamil Nadu State Government is helping farmers to diagnose pest infections in their crops and provide remedial measures. The State has also developed e-Paarvai, an intelligent AI-powered mobile application that detects cataracts, to overcome the shortage of ophthalmologists. 

According to a PwC report, AI applications in India’s smart cities could generate a market worth USD 31 billion by 2025. e-Paarvai, an intelligent AI-powered mobile application that detects cataracts, has been developed by Tamil Nadu to overcome the shortage of ophthalmologists. 

Around 2026, AI-led disruption across sectors could add $500 billion to India’s economy. 


Although India does not have an official AI policy yet, it has taken some significant steps to establish a strong basis for future regulations, development, and adoption. The National AI Strategy is aimed at making India a global AI leader by focusing on research and development, skills enhancement, and creating a robust AI ecosystem. A National Single Window System was created in 2021 to obtain necessary business approvals and clearances across governments for AI development and deployment. The government has also announced the establishment of three Centres of Excellence focused on outcome-based development of AI skilling and design thinking. On the other hand, initiatives like the AI Garage, AI4ALL, and Atal Innovation Mission are nurturing AI start-ups and promoting innovation.

Recently, Government-backed India AI has signed a Memorandum of Understanding (MoU) with social media giant Meta to foster collaboration in the fields of artificial intelligence (AI) and other emerging technologies. This partnership is poised to leverage Meta’s open-source AI models and research, such as LlaMA, Massively Multilingual Speech, and No Language Left Behind, to promote innovation, inclusivity, and economic growth in India. However, this is not the first time that the social media juggernaut has collaborated with Indian authorities on an AI-related initiative. In June this year, Meta announced a USD 250K fund for Indian start-ups and developers focussed on building products for the mixed reality segment. It has shortlisted 120 start-ups for its XR start-up accelerator programme, which aims to back 40 early-stage XR start-ups with a grant of Rs 20 lakh each.

Borrowing from Minister Mr. Rajeev Chandrasekhar’s speech at the GPAI conference, “With the national programme on AI in place, a national data governance framework policy, and one of the world’s largest publicly accessible data sets programmes in the works, India is committed to the efficient use of AI to catalyse innovation ecosystems around AI, trusted applications for the citizens and the world at large.”

In a nutshell, India eyes a promising future with AI driven by a combination of market potential, government support, skilled workforce, and sector-specific opportunities. 

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