Bangalore, 17 December 2023: 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, as outlined in the EY India report, titled The AIdea of India: Generative AI’s potential to accelerate India’s digital transformation.

The report forecasts that by fully capitalizing Gen AI technology and its applications across sectors, India can potentially add US$ 359-438 billion in FY2029-30 alone, reflecting a 5.9% to 7.2% increase over and above baseline GDP. Approximately 69% 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 personalized customer engagement.

The EY report offers insights into the industry's preparedness and challenges in embracing Gen AI. The findings arise from a comprehensive survey that engaged over 200 C-suite participants, revealing that 60% of organizations acknowledge the significant influence of Gen AI on their businesses. However, 75% of them express a low to moderate level of readiness to harness the benefits of Gen AI. The two primary challenges faced by organizations currently are skills-gap (52%) and the availability of unclear use cases (47%), while only 36% organizations see data privacy as the risk of Gen AI.

Moreover, the development of a Gen AI strategy is now deemed essential, with 75% of organizations identifying customer engagement as the most crucial aspect influenced by Gen AI. While 73% of organizations 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 specialized chips and AI specific compute infrastructure), and access to talent and public funding of R&D will help foster Gen AI innovation.

At the same time, clarity on regulatory framework, establishing regulatory sandboxes, watermarking Gen AI content, and setting standards for accountability and liability to build trust in the AI systems will be critical.

Mahesh Makhija, Technology Consulting Leader, EY India, said, “Organizations 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 realize 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.”

Enabling ‘AI for all’

Developing Gen AI systems as a “Public Good” in line with the National Strategy for Artificial Intelligence (2018), which emphasizes an inclusive “AI for ALL” lens will be critical to realise its impact across sectors, including education, healthcare, agriculture, smart cities, and more. Providing access to data and marketplaces, securing digital infrastructure, and facilitating talent access and public funding for R&D can enhance Gen AI innovation in India. Similar to UAE and EU, developing open-source ecosystem for basic algorithms and training datasets can help Indian entities and start-ups develop their own Gen AI products and fast-track indigenous innovation.

EY experts stipulate that while Gen AI’s positive impact is anticipated across industries, its level of influence in each segment will depend on factors like feasibility, adoption rates, and an industry segment’s contribution to India’s economic activity.