India to Spend Over $5 Billion in AI By 2027

AI for India

India is preparing to make substantial investments in artificial intelligence (AI), with projected spending exceeding $5 billion by 2027, as reported by Intel and IDC. This anticipated growth represents an annual average rate of 31.5%, marking the highest among the eight markets surveyed.

The report underscores the pivotal role of the manufacturing industry in propelling India’s economic expansion, particularly within sectors like electronics and consumer goods. Among the countries surveyed, including Australia, Indonesia, Japan, Korea, Malaysia, Singapore, and Taiwan, India stands out with the most rapid increase in AI spending.

Key sectors such as banking, financial services, and insurance (BFSI) have been identified as significant investors in AI technology in India. Additionally, the Indian government has allocated $30.7 million in the fiscal year 2024-25 to establish three centres of excellence in AI, focusing on agriculture, health, and sustainable cities.

India is currently categorized as an AI Practitioner (stage 2) according to the joint study by Intel and IDC. The report foresees a surge in enterprise spending on AI across various sectors, with the AI software sector driving primary growth. By 2027, AI infrastructure spending is predicted to reach $733 million.

While large organizations in India are increasingly adopting AI and machine learning (ML) technologies to enhance business outcomes, only a small percentage consider AI adoption as central to their competitiveness. However, India’s abundant talent pool, culture of frugal innovation, and access to extensive data position the country well to lead the global AI revolution.

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Santhosh Viswanathan

Santhosh Viswanathan, Vice President and Managing Director of Intel, India Region, expressed confidence in India’s readiness for AI adoption. He highlighted India’s status as the third-largest global market and its leading position in terms of technical skill availability.

The report also highlights spending patterns in 2023, indicating significant investments in AI infrastructure provisioning and related software. Other areas of notable expenditure include augmented customer service agents, digital assistance, augmented threat intelligence, and program advisors recommendation systems.

However, concerns have been raised about the potential brain drain of AI talent from India, with half of global AI spending originating from the US. The report emphasizes the importance of India retaining its AI expertise to leverage the growing opportunities in the AI sector.

In response to the escalating demand for AI infrastructure, Intel recently launched the Gaudi 3 series of chips globally, targeting the expanding AI computing market. Despite facing competition from Nvidia in the AI infrastructure space, Intel remains optimistic about its ability to fulfill GPU orders promptly.

Overall, the report presents an optimistic outlook for India’s AI landscape, highlighting the country’s proactive approach and commitment to shaping the future of technology. With appropriate investments and strategic initiatives, India is poised to emerge as a global leader in AI innovation and adoption.