India is at a critical juncture in its artificial intelligence journey, according to a new report by Boston Consulting Group’s tech build and design unit, BCGX, and the Federation of Indian Chambers of Commerce & Industry (FICCI). While the country has emerged as one of the fastest-growing AI markets globally, the report argues that strong adoption has not yet translated into proportionate economic value or deep innovation.
Titled India’s Triple AI Imperative: Succeeding with AI in India, the report highlights what it describes as a persistent gap between AI adoption and measurable business impact. Based on proprietary BCGX research and policy analysis, the study calls for coordinated action by enterprises, startups, MSMEs and policymakers to unlock the next phase of AI-led economic value creation.
According to the report, India’s AI strategy needs to evolve from an “adopt-first” approach—focused largely on deploying existing AI tools—to an “invent-first” mindset that emphasises AI-native business transformation, innovation across the AI stack, and broader access to AI capabilities.
“India’s AI momentum is formidable, driven by ambitious enterprises, national institutions and a vibrant startup ecosystem,” said Nipun Kalra, Managing Director and Senior Partner at BCG, and Head of BCGX India. However, he noted that the gap between adoption and impact remains significant. “True value will come from building AI-first businesses, driving deep innovation and ensuring inclusive access,” Kalra said, adding that the report reflects a shared perspective with FICCI on aligning industry and policy efforts.
The report outlines three strategic priorities it believes are critical for India’s AI future: transforming businesses using AI at scale, investing in AI innovation, and democratising AI access to the last mile.
Challenges in realising value from AI
One of the key findings of the report relates to enterprise-level AI investments. According to the study, nearly 44% of executives allocate less than 10% of their technology budgets to AI, largely due to difficulties in scaling initiatives beyond pilot projects. The report suggests that many organisations restrict AI deployments to narrow use cases that address isolated problems, rather than rethinking processes and operating models end-to-end.
As a result, only about 25% of executives surveyed report realising meaningful value from their AI investments, the report claims. In contrast, organisations classified as “AI future built”—those that embed AI across business functions—are reported to achieve up to 2.7 times higher return on invested capital and 1.7 times higher revenue growth.
The report argues that enterprises that succeed with AI are those that integrate it deeply across the value chain, realigning talent, processes and governance models. It adds that as AI evolves from a support tool to an orchestrator of business operations by 2026, Indian enterprises will need to adopt AI-first operating models to remain competitive.
From AI adopters to AI innovators
While India ranks in the top quartile globally in terms of AI readiness, the report notes that the country contributes less than 1% of global AI patents. According to BCGX and FICCI, this highlights a gap in innovation depth, even as India’s startup ecosystem remains strong in application-led AI solutions.
The report recommends increasing investments across the AI value chain, including foundational models, infrastructure and research, while preserving India’s strengths in affordable and inclusive AI access. It points to initiatives under the IndiaAI Mission, supported by public–private partnerships and startups, as early steps in this direction.
Among the supporting data points cited, the report highlights subsidised access to more than 38,000 GPUs at costs below ₹100 per GPU hour, which it describes as among the lowest globally. It also notes plans to develop indigenous high-end GPUs over the next three to four years, as well as the proposed establishment of over 570 data and AI labs in Tier-2 and Tier-3 cities to decentralise innovation beyond major metros.
Untapped potential at the last mile
The report identifies India’s MSME sector—comprising around 64 million enterprises—as a largely untapped opportunity for AI-driven growth. According to the study, AI adoption in this segment could unlock more than $500 billion in economic value through productivity improvements, cost reductions and enhanced access to credit.
However, the report also points to barriers including limited digital infrastructure, low AI awareness and shortages of skilled talent. To address these challenges, it recommends collaborative efforts between policymakers, startups and MSMEs, including the establishment of AI adoption labs for MSME clusters. These labs, the report suggests, could help develop practical, workflow-specific AI solutions and provide a clearer path to measurable value.
FICCI Director General Jyoti Vij said that India’s AI opportunity lies not just in scale but also in inclusion. “By supporting AI adoption across MSMEs, startups and regional ecosystems, the country can drive productivity gains, generate quality employment and strengthen long-term socio-economic resilience,” she said.
The report concludes that targeted policy incentives for first-time adopters of proven AI solutions, combined with ecosystem-led collaboration, could accelerate AI adoption at the last mile and help India translate AI momentum into sustained economic impact.