Introduction
The Indian economy is rapidly and significantly changing due to artificial intelligence (AI), which is also revolutionising traditional management techniques. The enormous potential is shown by projections from the McKinsey Global Institute, which predict that AI will have a startling $15.7 trillion economic impact on India by 2035. Additionally, the rapidly growing AI industry is expected to be a job-creating engine. The industry association NASSCOM projects that by 2025, India will have added almost 400,000 new jobs, demonstrating the radical changes that AI has already made to the world of work.
A PwC analysis found that by 2035, AI may add 9 million new employment to India. This enormous potential for job creation demonstrates the important role artificial intelligence (AI) can play in meeting employment needs and promoting economic growth in the nation. Aiming to raise AI spending to 1% of GDP by 2030, the Indian government has set lofty goals to support this. The third-largest start-up environment in the world, where several start-ups’ are leading the way in cutting-edge AI-powered solutions, serves as further proof of India's strong commitment to investing in AI. The National Strategy on Artificial Intelligence and the AI for India project are only two of the major initiatives the Indian government has launched in support of this ambition, reflecting the nation's dedication to advancing the field.
In the Indian context, the impact of AI can already be seen in a wide range of organisations and industries. Businesses are using AI to improve operations across all industries, including the financial industry, retail, and manufacturing. Indian banks are using AI, for instance, to strengthen fraud detection systems and improve customer service, delivering a more secure and seamless experience. Similar to this, Indian retailers are using AI to improve supply chains, personalise recommendations, and ensure maximum efficiency. AI is being used by Indian manufacturers to raise quality control standards and promote cost effectiveness, demonstrating the many benefits that AI can provide.
Despite the myriad advantages of AI, worries about potential negative effects loom large. Concerns like job loss and the rise of moral conundrums demand considerable thought and proactive policy formulation. Maintaining a balance that maximises AI's positive effects while reducing its hazards remains essential for long-term growth and development.
This study article aims to present a comprehensive analysis of AI's effects on the Indian economy and management practises, taking into account both its advantages and potential drawbacks. This study aims to illuminate the complex dynamics of AI's impact on India's managerial and economic environments by gleaning knowledge from a variety of trustworthy sources, such as academic papers, industry reports, and government publications.
Impact on the Indian Economy
The impact of AI on the Indian economy can be studied under the following heads:
GDP growth
According to estimates made by the National Council of Applied Economic Research (NCAER), India's GDP will increase by 7.4% between 2022 and 2023. AI is projected to have a significant impact on India's GDP growth in the future years.
The Role of AI in GDP Growth
According to the National Association of Software and Service Companies (NASSCOM), AI would contribute $967 billion to the Indian economy by 2035. This will help India reach its $5 trillion GDP objective by 2025 by 10%.1
The growth pathway
In the upcoming years, it's anticipated that AI's effect on India's GDP development will increase. A World Economic Forum estimate claims that by 2030, AI would have produced 40 million new employment in India.
The survey also predicted that by 2035, AI would boost India's economy by $957 billion.2
AI and GDP Growth Forecasts for India
According to the National Association of Software and Service Companies (NASSCOM), AI would contribute $967 billion to the Indian economy by 2035. This will help India reach its $5 trillion GDP objective by 2025 by 10%.1
According to a projection from the World Economic Forum, AI might generate 40 million new employment in India by 2030. The survey also predicted that by 2035, AI would boost India's economy by $957 billion.2
According to these forecasts, AI is anticipated to have a considerable and favourable impact on India's GDP development in the years to come. By boosting productivity, facilitating the creation of new goods and services, and enhancing global competitiveness, AI is predicted to increase GDP growth.
Impact on the Industry
There are numerous Indian industries that AI is anticipated to have a substantial impact on, including:
Agriculture: AI can increase crop yields, lower crop losses, and raise the quality of agricultural outputs. AI is being applied in India, for instance, to create early detection systems for pests and diseases as well as to optimise irrigation and fertiliser use.3
Manufacturing: AI can assist in automating production procedures, enhancing product quality, and cutting costs. AI is being utilised, for instance, in India to automate assembly line processes and to anticipate and stop equipment faults. 3
Healthcare: AI has the potential to personalise healthcare delivery, improve disease diagnosis and treatment, and create new medications and treatments. For instance, AI is being applied in India to create novel imaging algorithms for medical usage and to create individualised cancer treatment regimens.3
Education: AI has the potential to personalise learning, raise educational standards, and increase accessibility. AI is being utilised, for instance, in India to create personalised learning plans for students and to give instructors feedback in real time.3
Finance: AI can assist with the automation of financial services, increased effectiveness of financial markets, and less fraud. For instance, AI is being utilised in India to detect and prevent financial fraud as well as automate loan processing.3
The Indian government is making efforts to encourage the use of AI to its maximum extent. The government has started a variety of programmes to encourage AI research and development and to provide workers with AI training. For instance, the government has established the AI for India programme, which offers financial support for AI research initiatives. The NITI Aayog AI for All programme, which seeks to train 1 million people in AI capabilities by 2025, has also been launched by the government.4
Challenges and a Plan of Action
Even though AI can considerably increase India's GDP development, several issues must be resolved. The shortage of skilled labour is one difficulty. Since AI is a sector that is continuously expanding, there is a dearth of experienced individuals in India who can create and implement AI solutions.3
Data access is another issue that needs to be addressed. Data is used to train AI systems, and the quantity and quality of that data can significantly affect how well an algorithm performs. However, access to high-quality data is limited for many Indian enterprises and institutions of government.3
Despite these challenges, AI has a lot of potential in India. Businesses and investors are growing more and more interested in AI, and the Indian government is taking steps to promote its usage in the country. India also boasts a significant pool of potential AI workers thanks to its young, growing population.3
India has to solve the adoption problems of AI and create a complete AI strategy to maximise the benefits of AI. By funding AI research and development, assisting in the training of AI professionals, and establishing regulatory frameworks that are friendly to the use of AI, the Indian government may play a significant role in this.3
Businesses and investors must also help to encourage the use of AI in India. Businesses can spend money on artificial intelligence (AI) solutions to increase productivity, create new goods and services, and strengthen their position in the global market. Investors can put money into AI-focused venture capital firms and enterprises.3
AI's Impact on Productivity
AI is anticipated to significantly increase productivity in India. AI can aid organisations with task automation, better decision-making, and process optimisation. Significant productivity increases may result from this, which would then increase GDP growth. 3
AI is currently being applied in India, for instance, to personalise marketing campaigns and automate customer support activities.3
Here are some concrete instances of how AI is being applied in India to raise productivity:
An Indian retailer has automated its customer assistance processes using artificial intelligence. Client wait times have been drastically decreased as a result, freeing up human customer support representatives to focus on more challenging tasks.
AI is being used by an Indian manufacturer to enhance its production methods. As a result, there are now fewer flaws, more products are produced, and costs are going down.
AI is being used by an Indian e-commerce company to customise its marketing tactics. Sales, clickthrough rates, and conversion rates have all increased as a result of this.
In several Indian economic sectors, artificial intelligence (AI) has the potential to greatly boost production. By 2030, the adoption of AI could boost India's GDP by an estimated $957 billion, with better productivity contributing around 15% of this growth, according to a McKinsey Global Institute report. 1
There are many ways that AI increases productivity, including:
Automation of Tasks: AI can automate a variety of tasks, from simple cognitive processes to complex manual chores. This automation frees up human resources to devote themselves to more innovative and strategic projects.
Enhanced Decision-Making: AI equips professionals to make wise choices by offering insightful analyses and suggestions based on extensive data analysis.
Process optimisation: AI helps companies streamline their operations by locating and addressing process inefficiencies.
Typical Cases of AI-Driven Productivity Increases in India
Manufacturing Sector: AI is progressively automating activities like assembly, quality control, and proactive maintenance in the manufacturing sector. This automation boosts operational effectiveness while cutting expenses.
Agriculture Sector: The use of AI in agriculture includes generating new crop types, improving irrigation systems, and early pest and disease detection. These AI-powered tools help farmers increase yields while reducing losses.
Healthcare Sector: AI is greatly improving the accuracy of disease diagnosis, enabling personalised treatment regimens, and optimising the efficiency of healthcare service delivery. This results in better patient outcomes and lower expenses.
The sector of Education: AI is used to improve educational quality, personalize learning experiences, and enable greater access to education. Students can learn more successfully and quickly as a result of this.
To increase productivity, the Indian government is actively supporting the use of AI. To support AI research, development, and corporate accessibility, programmes like the National Strategy for Artificial Intelligence have been launched.
To increase their efficiency, private businesses are also making significant investments in AI-powered solutions.
Finally, AI has the potential to greatly raise productivity in India. The adoption of AI is greatly influenced by public policies and investments made by the private sector. The effects are already noticeable in many different industries, and as AI develops, its potential to revolutionise productivity is only going to increase.
Key Takeaway: AI has the ability to revolutionise productivity across a range of industries, making it a critical driver of India's economic development. The deliberate actions taken by the government and the substantial investments made by the corporate sector highlight the crucial part AI will play in determining the future of employment and productivity.
AI's Impact on New Goods and Services
Businesses in India are now able to create brand-new goods and services that were before impossible. As a result, Indian enterprises are finding new markets and business prospects, which is boosting the GDP.3
For instance, AI is being used in India to build personalised educational programmes, new financial solutions, and new medical diagnostic tools.3
Here are some concrete instances of how AI is being applied in India to create new goods and services:
AI is being used by an Indian healthcare company to create new medical diagnostic tools. Doctors may now diagnose illnesses more swiftly and correctly thanks to these instruments.
An Indian education startup is utilising AI to develop individualised instructional programmes. Students that participate in these programs learn faster and more successfully.
AI is being used by an Indian financial services provider to create new financial products. These goods are created to meet the unique requirements of each consumer.
AI's Impact on International Competition
Due to AI, Indian businesses are becoming more competitive in the global market. For instance, AI can help businesses reduce expenses, improve quality, and speed up the creation of new products and services. India benefits from this in terms of increased exports and international investment. 3
Here are some specific instances of how AI is assisting Indian companies to improve their competitiveness in the international market:
AI is being used by an Indian software company to automate the software development process. This has assisted the business in lowering expenses and raising the calibre of its software.
AI is being used by an Indian manufacturing company to enhance supply chain management. The organisation has been able to lower inventory expenses and increase customer satisfaction as a result.
AI is being used by an Indian pharmaceutical company to create new medications and therapies. Due to this, the business is now more competitive in the world pharmaceutical industry.
Impact of AI on Job Creation
Sector-specific Job Creation by AI in India: Transformative Effects and Projections
Artificial intelligence (AI) is being quickly incorporated into many Indian industries, which is greatly advancing both technology and job growth. According to data and analysis, there is a noticeable increase in work prospects in several important areas.
Software development and IT
According to a survey by NASSCOM, 1 the Indian IT sector is expected to add 1 million employment related to artificial intelligence by 2025. In addition, a thoughtful poll by NASSCOM revealed that 80% of Indian IT firms intend to hire new AI talent in the future year. 2 The opening of a Google AI research facility in Bengaluru provides additional evidence that hundreds of new employment in AI research and development will be created. 3
Manufacturing
According to estimates from the McKinsey Global Institute, the deployment of AI in the Indian industrial sector might result in up to 950,000 new jobs by 2030. 4 To further support the potential influence on job creation, the Indian government has launched a programme to train 1 million people in AI capabilities, particularly in the manufacturing industry. 5 The incorporation of AI-powered robots by Tata Motors in its production facilities highlights the possibility of new employment opportunities in AI-powered robotics and maintenance. 6
Healthcare
According to estimates from the World Economic Forum, AI has the potential to create up to 1 million new employment in the Indian healthcare sector by 2030. 7 The Indian government's pledge to spend $1 billion on AI research and development for the healthcare industry also contributes to the optimistic prognosis for employment creation. 8 The launch of an AI-powered cancer diagnostic tool by Apollo Hospitals is a prime example of the potential for new job growth in AI-powered medical imaging and diagnostics 9 Education:
According to KPMG's analysis, by 2030, AI might help create up to 5 million new employment in the Indian education industry. 10 This potential is reinforced by the Indian government's aim to create instructional content powered by AI for all pupils in the nation. 11 A prime example of the creation of new jobs in AI-powered educational technology is Byju's, a well-known Indian online education provider that uses AI to personalise learning for its students. 12
Customer service
According to Gartner's study, up to 4 million new jobs could be created in the Indian customer service industry by 2025 as a result of AI. 13 Further supporting the potential for employment creation, a recent KPMG poll shows that 70% of Indian enterprises intend to use AI-powered customer care chatbots within the next year. 14 Notably, Flipkart, a leading Indian e-commerce company, utilizing AI-powered chatbots for customer support, exemplifies how AI is actively generating new job roles in customer service. 15
Other industries
Agribusiness, banking, retail, and transportation are just a few of the industries that AI is transforming. Precision irrigation and crop monitoring systems are two examples of cutting-edge technologies that are being developed in agriculture thanks to AI. In a similar vein, AI is speeding up financial services activities like loan processing and fraud detection. AI in retail is improving supply chain management and personalising the shopping experience. Finally, AI is promoting the development of autonomous vehicles and streamlining traffic.
And finally
In addition to revolutionising businesses, artificial intelligence is creating millions of new jobs in a range of industries in India. AI is transforming work landscapes across industries, offering chances for skill development, economic growth, and higher service quality. This includes IT, healthcare, education, and manufacturing. The revolutionary potential of AI in India's economic and technical progress is highlighted by these noteworthy job creation numbers.
Case Studies: Exposing AI's Deep Effect on the Indian Economy-A case study of TCS
The use of artificial intelligence (AI) is transforming the Indian corporate environment, particularly at organisations like TCS, Reliance Jio, Flipkart, Apollo Hospitals, and Byju. A tremendous impact on the economy and management techniques has been unleashed by the creative integration of AI in numerous domains.
Introduction
Artificial intelligence (AI) has become a powerful force that is changing how businesses are conducted all over the world. Numerous businesses in India have adopted AI, taking advantage of its promise to improve services, streamline operations, and spur growth. A well-known Indian IT behemoth named Tata Consultancy Services (TCS) has made a name for itself as a pioneer in integrating AI to spur creativity, streamline business processes, and accelerate digital transformation inside the IT industry and beyond. This case study explores the effects of TCS's strategic use of AI on the Indian economy and management techniques.
AI-powered solutions
TCS has used AI to provide innovative solutions in a variety of industries, including supply chain management, fraud detection, and customer support. The use of AI in various fields has been demonstrated to considerably improve effectiveness and accuracy. In order to enable prompt intervention and prevention, AI-powered fraud detection algorithms, for instance, can instantly analyse enormous amounts of data to uncover patterns suggestive of fraudulent actions.
Artificial intelligence-powered chatbots and virtual assistants can provide clients with prompt support, enhancing their experience and accelerating response times. Additionally, predictive analytics, inventory optimization, and improved demand forecasting are made possible by the application of AI in supply chain management. When used in tandem, these apps allow TCS to provide its clients with more effective and efficient solutions, bolstering its position in the competitive IT industry. 9
Automating workflows
The automation of crucial processes has been one of the key effects of AI integration at TCS. Numerous processes, including hiring, training, and IT infrastructure management, have been automated using AI. AI algorithms aid in the screening and shortlisting of candidates during recruiting, increasing the effectiveness of the hiring process. AI-driven training systems make it easier to create customised and flexible training curricula that improve employee skill development. Additionally, AI-enabled systems in IT infrastructure management ensure proactive monitoring, quick issue resolution, and efficient resource allocation, leading to simplified processes and enhanced productivity. 10
Measurable effect
TCS's strategic investment of $1 billion in AI research and development demonstrates its dedication to the field. This significant investment highlights TCS's commitment to pushing the boundaries of technology and being at the forefront of the industry, as well as the crucial position that AI plays in the company's growth strategy. This monetary commitment has sparked AI-driven innovations and elevated TCS to the forefront of AI adoption in the Indian business environment. 6
Development of skills and job creation
The adoption of AI by TCS has greatly aided India's employment creation and skill development while also improving productivity and efficiency within the organisation. Employees may now concentrate on higher-value work because AI automates everyday chores, which encourages innovation and creativity. A strong AI talent pool has grown in the nation as a result of the increase in demand for qualified AI workers.
Growth in the economy and international competition
TCS's strategic application of AI has been essential in boosting India's economic development and international competitiveness. TCS has promoted India's capabilities in AI technology and innovation by providing AI-powered solutions to clients abroad. This reinforces India's status as a major centre for AI technology by luring worldwide partnerships, investments, and collaborations.
Increasing Governance and public Services
The public services and governance have benefited from TCS's AI-driven solutions. For instance, AI-powered data analytics and decision support systems help the government allocate resources and formulate policies more effectively. Society as a whole benefits from enhanced service delivery and governance efficiency as a result.
Case Study - 2: Flipkart - Pioneering AI in E-commerce
Introduction
To improve its operations and improve the consumer experience, Flipkart, a pioneer in the Indian e-commerce space, has been at the forefront of incorporating Artificial Intelligence (AI). This case study explores how Flipkart's strategic use of AI has transformed the Indian e-commerce market and established new benchmarks for user engagement and customer care.
Search revolution in visual
The launch of "Visual Search," a function driven by AI algorithms, is one of Flipkart's ground-breaking AI applications. With this function, customers may quickly see comparable products that are for sale by clicking a photo of a product on the platform. By offering a more dynamic and aesthetically pleasing purchasing experience, this novel technique has considerably increased customer engagement. 1
Impact: Both consumer engagement and conversion rates have significantly increased as a result of the introduction of Visual Search. Customers are more inclined to explore a wider choice of products by streamlining and optimising the search process, which ultimately boosts user satisfaction and drives sales. The ability of AI to completely transform the shopping experience has been demonstrated by the Visual Search function. 1
Making customer support automated
To effectively manage consumer questions and concerns, Flipkart has successfully included AI chatbots in its customer service system. These AI-powered chatbots have been created to quickly and accurately respond to a large number of inquiries. The chatbots decrease human intervention and considerably speed up response times by automating the first part of customer interactions, which leads to a more effective and streamlined customer care process. 2
Impact: The use of AI chatbots in customer care has been shown to significantly reduce the time it takes to resolve issues. The significant 70% reduction in resolution times at Flipkart demonstrates the potency and usefulness of AI in handling and addressing consumer complaints. This improves both customer satisfaction and the customer care team at Flipkart's operational effectiveness. 3
Quantifiable impact
Flipkart's pioneering initiatives in integrating AI have yielded significant and measurable results. The introduction of the Visual Search feature led to a remarkable 20% increase in customer engagement, illustrating the positive influence of AI-driven innovations on user interactions and conversion rates. Additionally, the implementation of AI in customer support resulted in a substantial 70% reduction in resolution times, underscoring the tangible impact of AI on operational efficiency and customer satisfaction. 3
A prime example of how AI may transform the e-commerce industry is Flipkart's proactive integration of AI technologies, such as Visual Search and AI-powered chatbots. It is impossible to overestimate the influence of AI on user experience, customer engagement, and operational efficiency. These improvements have strengthened Flipkart's position as a pioneer in the Indian e-commerce market by improving internal operations as well as the shopping experience for customers.
Case Study- 3: Reliance Jio - AI-Powered Telecom Revolution
Introduction
In order to transform its services, Reliance Jio, a disruptive force in the Indian telecommunications industry, has been a leader in incorporating artificial intelligence (AI). This case study investigates how Reliance Jio's strategic adoption of AI has revolutionised the Indian telecommunications sector, raising customer confidence, improving network efficiency, and ensuring secure transactions.
Network optimisation using AI
Reliance Jio has used AI to dynamically optimise its network, a crucial component in ensuring its consumers always have connectivity, especially during periods of high consumption. In order to dynamically optimise the network and provide optimal connectivity for all users, AI algorithms examine a variety of criteria, including user traffic, data consumption habits, and network congestion. This proactive approach has resulted in a significant 15% decrease in congestion-related call drops and a surprising 25% gain in network efficiency. 7
Impact
The AI-driven network optimisation has significantly raised Jio subscribers' satisfaction with their service. The decrease in call dropouts brought on by congestion demonstrates how AI may improve customer experience, which is crucial in the cutthroat telecoms sector.
AI in fraud detection
Using AI for fraud detection Jio uses AI algorithms to identify fraud, especially when protecting JioMoney consumers' transactions. JioMoney can quickly spot fraudulent activity and take the appropriate steps to stop unauthorised transactions by utilising AI's pattern recognition and anomaly detection skills.8 As a result, its consumers may be sure that their digital transactions are secure.
The use of AI in fraud detection has significantly decreased the number of fraud cases. The JioMoney platform's users now have more faith and confidence since they know that their transactions are secure. This supports consumer loyalty and accelerates the adoption of digital transactions, in line with India's aspirations for digital transformation.
Quantifiable impact
Dependence on Quantifiable Impact Jio has seen significant and measurable results as a result of its strategic integration of AI throughout its operations. An extraordinary 50% decrease in network-related complaints has been achieved as a result of AI's inclusion in network optimisation and fraud detection, showing a major increase in service quality. A noteworthy 35% decrease in fraud incidents has also been noted, demonstrating how efficient AI is at boosting security and confidence in digital transactions.9
The proactive adoption of AI technology by Reliance Jio in its telecoms services is an excellent example of how AI can completely transform the sector. Service quality, network efficiency, and user trust have all considerably increased as a result of AI's impact on fraud detection and network optimisation. Due to these developments, Reliance Jio is now a market leader in the Indian telecoms industry, setting new benchmarks for the safe and effective delivery of services to the nation's millions of consumers.
Figure 2
Description of the graph: The graph above shows the share prices of JIO in the past years. AI in JIO was introduced in 2020. Since then the share prices have been seen increasing. (As the company does not release their revenue publicly stock prices are all we can get.)
Final Remark
The comprehensive case studies offered here give insight into the significant and less well-known effects of AI in Indian businesses. AI is transforming a variety of industries in India, from e-commerce to retail to telecommunications services, demonstrating its revolutionary potential in boosting output, efficiency, and user pleasure.
Technological advances are launching Indian businesses into a new era of innovation and growth as we continue to see the integration of AI across industries. A game-changer, AI's capacity to automate jobs, boost operations, and improve decision-making opens up previously unimaginable potential for organisations to prosper in an environment of escalating competition.
The experiences of Tata Consultancy Services (TCS), Flipkart, and Reliance Jio highlight how AI technologies when strategically applied, result in concrete benefits, ranging from enhanced consumer interaction and streamlined processes to much lower rates of fraud cases and network-related complaints. These success tales provide insightful information about how AI may be used to solve certain problems, increase productivity, and ultimately help the Indian economy become richer and technologically advanced.
Businesses must remain at the forefront of innovation as AI develops to remain competitive and satisfy the changing needs of their customers. This means embracing and utilising AI technologies. The path to realising AI's full potential is still being travelled, but this incredible technology will continue to revolutionise and grow the Indian corporate environment.
Conclusion
In conclusion, this study highlights the significant influence artificial intelligence (AI) has had on the Indian economy. The main conclusions of this study highlight AI's potential to significantly boost productivity, expand employment possibilities, and drive development in India's GDP. The case studies given show how AI is being efficiently used in a variety of industries, such as telecoms, e-commerce, and IT services, with measurable results including streamlined processes, higher consumer engagement, and increased network efficiency. The incorporation of AI has significant ramifications. AI can increase India's economic competitiveness and resilience globally. However, closing the skill gap and guaranteeing ethical AI use are important issues that demand attention. In order to maximise the potential benefits of this game-changing technology while reducing related dangers, ethical AI deployment in conjunction with talent development will play a crucial role.
