Indian companies to spend over $5 billion in AI technologies by 2027: All key details

India's AI sector is growing rapidly due to talent and investment, with AI software expected to reach $2.6 billion and infrastructure $733 million by 2027, an IDC study reveals.

India's AI sector grows rapidly with talent and investment, projected to reach $5.1 billion by 2027. (Pixabay)

 A study by a leading analyst firm highlights the rapid expansion of India's artificial intelligence (AI) sector, driven by growing talent and investment in the AI ecosystem. The AI software market is projected to reach $2.6 billion by 2027.

AI infrastructure spending is expected to reach $733 million by 2027, placing India at the forefront of AI adoption. The country benefits from strong support systems, including a significant startup ecosystem and a large pool of talent. The IDC study identifies India as an AI Practitioner, indicating its progress on the AI maturity scale.

Enterprise Focus on AI Applications for Productivity and Customer Experience

Indian enterprises are recognising the transformative potential of AI, with enterprise spending on AI predicted to grow the fastest among surveyed markets. The focus is on improving employee productivity and enhancing customer experiences through AI-driven applications. However, despite the broad adoption of AI/ML technologies in large organisations, only 6 percent see AI adoption as central to their competitiveness, highlighting challenges in deployment and change management.

India's Path to Global AI Leadership

India is set to become a global AI leader, with AI spending projected to grow at a Compound Annual Growth Rate (CAGR) of 31.5 percent from 2023, reaching $5.1 billion by 2027. With 20 percent of the world's data and AI talent, India's strong developer community and skill penetration are expected to position it ahead of the US in AI leadership.

Investments in AI infrastructure in 2024 and 2025 will support high-value use cases with significant future impacts. Key sectors driving AI spending include Banking, Financial Services, and Insurance (BFSI) and manufacturing, especially electronics and consumer goods, which are crucial to India's economic growth.

India's performance in the government dimension surpasses the Asia/Pacific average due to the current government's supportive AI policies. Significant allocations in FY 2024-25 aim to establish three AI centres of excellence focusing on agriculture, health, and sustainable cities.

The findings were presented at the AI for India Conference on Tuesday, with industry leaders discussing the study's implications for India's AI development.

"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 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,” said Santhosh Viswanathan, Vice President and Managing Director, India Region.