In a recent report titled ‘AIdea of India: Generative AI’s potential to accelerate India’s digital transformation,’ Ernst & Young (EY) highlights the substantial contribution Generative Artificial Intelligence (GenAI) can make to India’s Gross Domestic Product (GDP) over the next seven years. The report suggests that GenAI has the potential to add a cumulative $1.2-1.5 trillion to India’s GDP by 2030.
For the fiscal year 2029-30 alone, EY estimates that GenAI could contribute an additional $359-438 billion to India’s GDP. The sectors anticipated to benefit the most include business services (encompassing IT, legal, consulting, outsourcing, rental of machinery and equipment, among others), financial services, education, retail, and healthcare, which together are expected to account for around 69% of GenAI’s impact on India’s GDP.
Mahesh Makhija, Technology Consulting Leader at EY India, notes, “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.”
Despite the optimism surrounding AI, the report emphasizes the need for increased government involvement in the development and deployment of AI technologies to unlock their full potential. The study indicates that approximately 75% of businesses in India express a low to moderate level of readiness to harness the benefits of GenAI.
The survey, conducted among 200 C-suite participants across various sectors, revealed that 52% of organizations view a skills gap as a significant challenge in harnessing GenAI’s potential, while 42% find the lack of clear use cases to be a hurdle.
To foster GenAI innovation, the report suggests implementing measures such as enabling access to training data and marketplaces, deploying GenAI systems as public goods, securing critical digital infrastructure, and providing access to talent and public funding for research and development.
On the issue of data privacy, the report highlights that 36% of organizations consider it the most significant risk associated with GenAI, followed by hallucination or fabricated answers (24%), biased responses (21%), and cybersecurity (16%).
The study also reveals that 75% of organizations believe that customer engagement is the segment most influenced by generative AI. Furthermore, 73% of organizations prefer partnering with external tech providers for GenAI implementation.
The report emphasizes that the extent of GenAI’s influence in each sector will depend on factors such as feasibility, rates of adoption, and the respective contribution of each industry segment to India’s economic activity.
The experts suggest adopting a ‘light touch’ regulatory approach to create a responsive environment that balances innovation and risk management, providing clarity on the regulatory framework and establishing standards for accountability and liability to build trust in AI systems.