Generative AI to potentially add $1.2-1.5 trillion to India’s GDP by FY30: EY report

Generative AI (Gen AI) has the potential to add a cumulative US$1.2-1.5 trillion to India’s Gross Domestic Product over the next seven years, according to EY India report.

The report titled The AIdea of India: Generative AI’s potential to accelerate India’s digital transformation forecasts that by fully capitalising Gen AI technology and its applications across sectors, India can potentially add $359-438 billion in FY30 alone, reflecting a 5.9 per cent to 7.2 per cent increase over and above baseline GDP.

Approximately 69 per cent of the overall impact is expected to be derived from sectors such as business services (including IT, legal, consulting, outsourcing, rental of machinery and equipment, and others), financial services, education, retail, and healthcare. The expected impact encompasses improvements in employee productivity, enhanced operational efficiency, and personalised customer engagement.

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Mahesh Makhija, Technology Consulting Leader, EY India, said, “Organisations are swiftly adopting to 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.”

Although in early stages, there is a tremendous sense of optimism in AI and to realise its full potential, India must significantly elevate its efforts in terms of increased government role in development and deployment. Moreover, providing critical compute ecosystem for continuous innovation and growth will be vital for India to stay competitive in this evolving landscape, he added.

The report reveals that 60 per cent of organisations acknowledge the significant influence of Gen AI on their businesses. However, 75 per cent of them express a low to moderate level of readiness to harness the benefits of Gen AI. The two primary challenges faced by organisations currently are skills-gap (52 per cent) and the availability of unclear use cases (47 per cent), while only 36 per cent organisations see data privacy as the risk of Gen AI.

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Moreover, the development of a Gen AI strategy is now deemed essential, with 75 per cent of organisations identifying customer engagement as the most crucial aspect influenced by Gen AI. While 73 per cent of organisations prefer to collaborate with external tech providers for its implementation.

Considering Gen AI’s immense potential to act as an economic growth catalyst, Governments worldwide are actively pursuing measures to promote and regulate AI. Implementing measures like enabling access to training data and marketplaces, deployment of Gen AI systems as Public Goods, securing critical digital infrastructure (through roll-out of 5G, data centers, access to specialised chips and AI specific compute infrastructure), and access to talent and public funding of R&D will help foster Gen AI innovation, said the report.

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