India AI Market outlook to 2030

India AI Market Overview

• The Indian AI Market was valued at USD 5 billion in 2023. This growth is driven by the increased adoption of AI technologies across various sectors such as healthcare, finance, retail, and manufacturing. Factors contributing to this surge include advancements in AI technologies, increased investment in AI startups, and the growing demand for AI-powered solutions in business operations and consumer services.
• Key players in the Indian AI market include IBM India Pvt. Ltd., Accenture, Tata Consultancy Services (TCS), Infosys Limited, and Wipro Limited. These companies are leading the development and deployment of AI solutions across various sectors, leveraging their robust technological infrastructure and extensive R&D capabilities. Their strong R&D capabilities and strategic partnerships with global tech firms bolster their market positions.
• In November 2023, Tata Consultancy Services (TCS) announced the launch of a new AI-driven Cyber Insights Platform, platform designed to enhance customer experiences in the banking sector. The platform leverages machine learning and natural language processing to provide personalized financial advice and automated customer support, aiming to revolutionize how banks interact with their clients. This development highlights the ongoing innovation and investment in AI technologies within the Indian market.
• Bangalore, often referred to as the "Silicon Valley of India," is the leading city in the Indian AI market. The city's dominance is attributed to its thriving tech ecosystem, presence of major IT companies, and a robust network of AI startups. In 2023, Bangalore accounted for over 40% of the AI market share in India, driven by its favorable business environment and access to top tech talent.

India AI Market Segmentation

The India AI Market is segmented into different factors like by technology, by end user industry and by region.

By Technology: The market is segmented by technology into machine learning, natural language processing (NLP), and robotic process automation (RPA). In 2023, Machine learning dominated the market due to its broad applications in predictive analytics, customer segmentation, and automated decision-making. Its widespread adoption across various industries has solidified its leading position in the market.

By End-User Industry: The market is segmented by end-user industry into healthcare, finance and retail. In 2023, healthcare, such as diagnostic tools and personalized medicine, have driven significant growth. The increasing focus on healthcare innovation and patient care is contributing to the sector's dominance due to the significant impact of AI in enhancing diagnostic accuracy and reducing human error.

By Region: The market is segmented by region into north, south, east and west. Southern region was dominating the market in 2023. The city's dominance can be attributed to its status as India's tech hub, housing numerous AI startups, research institutions, and tech giants. The presence of a well-established IT infrastructure, a large pool of skilled professionals, and favorable government policies have created an ecosystem conducive to AI innovation and growth.

India AI Market Competitive Landscape

• Infosys: In 2024, Infosys is currently spearheading 225 generative AI programs for its clients. Over 250,000 employees have been trained in GenAI technologies, positioning Infosys as a leading adopter of GitHub Copilot globally. In FY24, Infosys filed over 46 AI patents and developed more than 70 AI client advocacies, showcasing the company's commitment to innovation.
• Wipro Limited: In 2023, Wipro announce a partnership with the Indian Institute of Technology (IIT) Delhi to establish a Center of Excellence focused on Generative AI. This initiative is aimed at advancing research and development in AI and is part of Wipro's broader commitment to invest $1 billion in AI-led innovation through its ai360 ecosystem.

India AI Market Analysis

India AI Market Growth Drivers

• Increasing AI Investments: After experiencing a sharp decline in 2023, with Indian AI startups' funding dropping to around INR 13,900 croredown nearly 71% from the previous yearinvestments are now on the rise. Venture capitalists and major tech companies are increasingly recognizing AIs transformative potential. Additionally, the Indian government's 2024 budget allocates INR 10,372 crore to the 'AI Mission,' with plans to boost this to INR 20,000 crore, further fueling market growth.
• Rising Adoption in Healthcare: The healthcare sector in India is rapidly adopting AI technologies to improve patient outcomes and operational efficiency. In 2024, AI-driven diagnostic tools have reduced diagnosis times by 30% and enhanced accuracy. Hospitals and healthcare providers are increasingly investing in AI solutions to streamline processes, which is driving market expansion.
• AI Integration in Financial Services: The financial sector is leveraging AI for fraud detection, risk management, and customer service. In 2023, global fraud costs reached $485 billion, highlighting the significant financial impact of fraud across various markets, including India. The integration of AI in financial services is expected to enhance operational efficiency and reduce costs, contributing to the market's growth.

India AI Market Challenges

• Shortage of Skilled AI Professionals: The India AI market faces a significant shortage of skilled professionals, which hinders the implementation and adoption of AI technologies. The lack of adequately trained personnel in AI and machine learning poses a barrier to the market's growth, as companies struggle to find the expertise needed to develop and deploy AI solutions effectively.
• Data Privacy and Security Concerns: As AI technologies are increasingly used in sensitive areas such as healthcare and finance, concerns about data privacy and security have become more prominent. Ensuring that AI systems adhere to stringent data protection regulations and effectively manage sensitive information is crucial to maintaining public trust and preventing data breaches.

India AI Market Government Initiatives

• "AI for All" Initiative: The India AI Mission, launched by the Ministry of Electronics and Information Technology in 2024, aims to establish a robust AI computing infrastructure in India. With a budgetary allocation of 551.75 crore INR, the mission focuses on enhancing domestic AI development and reducing reliance on foreign hardware. The initiative includes the procurement of over 10,000 GPUs to support AI startups and research, development of foundational AI models, and creation of an AI marketplace for resources, thereby fostering an innovative AI ecosystem in India.
• IndiaAI Mission Launch: In March 2024, the Cabinet approved the IndiaAI mission with a budget of Rs.10,371.92 crore. This initiative aims to create a robust AI innovation ecosystem through strategic public-private partnerships. Key components include developing AI infrastructure, indigenous models, streamlined dataset access, promoting AI in critical sectors, skilling programs, startup funding, and responsible AI frameworks.

India AI Market Future Outlook

The India AI Market is anticipated to grow substantially by 2028. The proliferation of AI applications in emerging sectors such as agriculture, education, and smart cities, combined with supportive government policies and initiatives, will drive this expansion. Advances in AI research and increasing collaboration between academia and industry will further enhance the market's growth prospects.

Market Trends

• Expansion of AI in Healthcare: Over the next five years, AI will play an increasingly vital role in the healthcare sector. By 2028, AI-driven diagnostic tools are expected to reduce diagnosis times and improve accuracy. The integration of AI in telemedicine and personalized treatment plans will enhance patient care and operational efficiency.
• AI-Driven Innovations in Retail: The retail sector will witness significant AI-driven innovations, enhancing customer experiences and operational efficiency. By 2028, AI-powered personalized marketing and inventory management systems are expected to increase retail sales annually. AI will enable retailers to offer more tailored shopping experiences and streamline supply chains.