India Inc in the AI Era: Building an innovation-first economy
By Saurabh Sanyal, Secretary General, ASSOCHAM
Artificial Intelligence is changing the way the world works. It is transforming industries, reshaping business models, and creating new opportunities for growth. Just as electricity and the internet changed economies in the past, AI is now becoming the next big driver of productivity and innovation. According to the IMF, AI could influence nearly 40% of jobs worldwide. Industry estimates including from NITI Aayog, suggest AI led productivity gains could add USD 500–600 billion to India’s GDP by 2035 with manufacturing and financial services among the biggest beneficiaries.
For India, this is more than a technological shift. It is a chance to become a global leader in innovation. The real opportunity for India Inc. is not just to use AI but to build AI-powered solutions that can compete with the best in the world.
India is well placed to benefit from the AI revolution. The country has one of the world’s largest digital ecosystems, a fast growing startup community, a strong IT industry, and a large pool of skilled technology professionals. The country’s Digital Public Infrastructure including Aadhaar, UPI, ONDC and the Account Aggregator framework has shown how technology can transform governance and business at scale. Government initiatives such as the IndiaAI Mission, backed by an outlay of ₹10,372 crore, along with the Semiconductor Mission and Digital India, are creating the foundation for AI led growth.
Today, AI is no longer limited to technology companies. It has become an essential business tool across industries. Manufacturers are using AI to improve production efficiency, anticipate equipment failures and reduce downtime. Banks are strengthening fraud detection and offering personalised financial services. Hospitals are using AI to support faster diagnosis and better patient care. Retailers are improving customer experiences, while logistics companies are making supply chains smarter and more resilient. Indian companies have already begun demonstrating AI’s potential. AI is becoming a strategic business priority rather than just another technology investment.
However, simply adopting AI is not enough. To build an innovation first economy, businesses must think beyond automation. They need to invest in research, encourage experimentation and develop new products and technologies. India has earned global recognition as a leader in IT services but the next stage of growth will depend on creating globally competitive AI products, enterprise software, semiconductor technologies and deep tech innovations. Success will come from owning intellectual property, building globally scalable platforms and creating technology that solves real world problems.
India also needs to overcome several important challenges. Although the country produces a large number of engineering graduates every year, there is still a shortage of advanced AI researchers, machine learning experts and experienced AI professionals. According to industry estimates, demand for AI talent is growing much faster than the available skilled workforce. Bridging this gap will require stronger collaboration between universities and industry, updated curricula, and continuous upskilling and reskilling programmes for employees across sectors.
Another priority is increasing investment in research and development. Greater investment from both the government and the private sector is essential to strengthen AI research, encourage collaboration between academia and industry and support commercialisation of new technologies. Expanding access to high performance computing, cloud infrastructure and advanced semiconductor capabilities will also enable Indian enterprises to build globally competitive AI solutions.
The benefits of AI should not be limited to large corporations. Micro, small and medium enterprises which contribute around 31.1% of India’s GDP and account for nearly 48% of exports must also be part of this transformation. Many MSMEs still face barriers such as high technology costs, limited digital capabilities and shortages of skilled talent. Affordable AI solutions, easier access to digital infrastructure and targeted capacity building programmes can significantly improve their productivity and global competitiveness.
As AI becomes deeply integrated into business operations, responsible innovation must remain a priority. Companies need to ensure that AI systems are transparent, secure and ethical. Strong data governance, cybersecurity and responsible AI practices will build trust among customers, reduce risks and encourage wider adoption. Innovation and trust must grow together.
The AI era offers India Inc. a unique opportunity to redefine the country’s economic future. Companies that use AI to create new products, services and business models not just automate existing processes will lead the next wave of growth. By investing in talent, strengthening research and development, supporting startups and MSMEs and promoting responsible AI, India can move beyond being the world’s technology service provider to becoming a global hub for AI driven innovation.
The future will belong to businesses that use AI to create new ideas, solve complex problems and generate lasting value. By putting innovation at the heart of business strategy, India Inc. can help build a stronger, more competitive and globally respected economy that not only embraces the opportunities of the AI era but also emerges as a global leader in innovation.