India to Invest $5.1 billion in AI by 2027, Intel and IDC Report Finds

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Intel and IDC have released an in-depth report evaluating the Artificial Intelligence (AI) maturity levels across eight key markets, including India. The report projects that India will experience the fastest growth in AI spending among these markets, with a forecasted Compound Annual Growth Rate (CAGR) of 31.5 percent from 2023, reaching $5.1 billion by 2027.

Comprehensive AI Maturity Assessment

The Intel and IDC report provides a thorough analysis of AI maturity across enterprise, government, and socio-economic dimensions. The study covers India, Australia, Indonesia, Japan, Korea, Malaysia, Singapore, and Taiwan, placing these countries into specific stages of AI maturity. India, along with Taiwan, is classified as an AI Practitioner (stage 2).

According to the report, “Stage 2 is characterised by tactical AI and innovation initiatives defined by reactive interventions through technology, data, processes, and people to accomplish shorter-term objectives. There are some successful use cases but not at scale.”

Other countries in the study are categorized differently: Indonesia and Malaysia are at stage 1 (AI Explorer), Australia, Japan, and South Korea are at stage 3 (AI Innovator), and Singapore is at stage 4 (AI Leader).

India’s Strategic AI Advantage

India’s position as a burgeoning global AI leader is reinforced by a robust developer community and significant skill penetration. With approximately 20% of the world’s data and AI talent, India is a prominent player in AI innovation.

Investments in AI infrastructure for 2024 and 2025 will prioritize foundational developments, setting the stage for high-value use cases with transformative potential.

The Banking, Financial Services, and Insurance (BFSI) and manufacturing sectors are identified as top spenders in AI within India. Particularly, the manufacturing industry in sectors like electronics and consumer goods is expected to significantly drive the country’s economic growth.

Government Initiatives and Investments

India stands out in the Asia-Pacific region due to its government’s proactive stance on AI.

Approximately $30.7 million has been earmarked in the FY 2024-25 budget to establish three AI centres of excellence focusing on agriculture, health, and sustainable cities. These initiatives are designed to address specific industry needs and foster innovative AI solutions.

Key initiatives such as the National Strategy for AI, Making AI Work for India, and the INDIAai portal are crucial in promoting research and development and encouraging AI adoption in vital sectors like healthcare, education, agriculture, and manufacturing. The government also plans to offer AI training programs and support AI startups through national and state-level funding mechanisms.

Addressing Challenges in AI Deployment

Despite the optimistic growth projections, the report highlights significant challenges in AI deployment. Only 6% of surveyed organizations consider their AI adoptions central to their competitiveness, pointing to the need for improvements in infrastructure, regulatory compliance, and change management.

India’s AI investment per capita is relatively low, at $4.77 per $1,000 of GDP between 2019 and 2023, compared to Singapore’s $15.01. This underlines the necessity for increased investment to enhance national AI maturity.

Additionally, many skilled Indian AI professionals are moving to countries with higher wages, which could hinder future AI advancements.

Santhosh Viswanathan, Vice President and Managing Director of Intel India Region, underscored the transformative potential of AI: “AI is becoming as essential as the Internet for businesses worldwide. Just as every company now relies on the Internet, AI is poised to have a similar impact, touching every sector.”

Viswanathan added, “We would be one of those places that can go adopt AI everywhere…In India, the potential for AI adoption is particularly promising due to the country’s extensive digitisation. India’s robust digital infrastructure, exemplified by the India Stack, provides a solid foundation for AI implementation at scale. And India has the opportunity to harness its vast data resources to drive innovation and improve lives.”

Detailed Study Insights

The report provides a granular analysis of the AI landscape in India, highlighting both the current state and future potential. The focus on developing AI infrastructure over the next few years is aimed at creating a foundation for high-value use cases that can transform various sectors.

The emphasis on BFSI and manufacturing sectors as primary AI spenders points to a strategic approach where industries with significant economic impact are leading the AI adoption.

The manufacturing sector, in particular, is seen as pivotal for economic growth, especially in electronics and consumer goods. Moreover, the government’s allocation of funds to establish AI centres of excellence in agriculture, health, and sustainable cities underscores a targeted approach to solving specific industry challenges through AI.

The report also emphasizes the need for continued investment in AI to overcome the current low per capita investment and retain AI talent within the country. By addressing these challenges, India can further solidify its position as a global leader in AI.

In conclusion, the Intel and IDC report paints a promising picture of India’s AI future, supported by strong government initiatives, a robust talent pool, and strategic investments. With the right focus and continued support, India is poised to lead the AI revolution in the Asia-Pacific region and beyond.