AI Set to Add Nearly $1 Trillion to India’s Economy by 2035, Panel Says

Artificial Intelligence (AI) is set to become a defining force in India’s economic trajectory over the next decade, with the potential to reshape productivity, labor markets and industrial competitiveness, a Parliamentary panel has said in a forward-looking assessment of the technology’s impact.

In a report tabled on Monday, the Standing Committee on Communications and Information Technology projected that AI could contribute between $450 billion and $500 billion to India’s GDP in the near term, with longer-term estimates placing its economic impact at nearly $967 billion by 2035—accounting for roughly 10% of the country’s projected economic output.

The report frames AI not merely as a technological upgrade but as a structural economic shift—one that could lift productivity across sectors, reduce inefficiencies and create new engines of growth. Econometric analysis cited by the panel suggests that even a marginal increase in AI adoption could boost total factor productivity among top firms, translating into tens of billions of dollars in incremental value.

A productivity-led growth cycle

At the heart of this transformation is the expectation that AI will move India towards a productivity-driven growth model. In manufacturing, the integration of AI into design, supply chains and predictive maintenance could raise efficiency by 10–15% and add an estimated $200 billion in value by 2030.

In agriculture, AI-enabled analytics—ranging from weather forecasting to precision farming—are expected to increase yields by up to 10%, while addressing systemic losses in the food supply chain. Healthcare, too, stands to benefit, with AI-driven diagnostics and telemedicine platforms projected to deliver cost savings of $6–7 billion by the end of the decade.

Financial services are already witnessing rapid adoption, with AI improving credit assessment, fraud detection and financial inclusion. The report notes that such sectoral gains, when aggregated, could significantly accelerate India’s path towards its $5 trillion economy target.

Labor market disruption and opportunity

Yet, the economic transition is unlikely to be seamless. The report highlights a dual dynamic in the labor market: while AI could transform up to 38 million jobs by 2030, it is also expected to generate millions of new roles in emerging fields.

An estimated 42% of tasks may be augmented by AI, with 24% potentially automated. At the same time, demand for specialized roles—such as AI engineers, data scientists and cybersecurity experts—is projected to outstrip supply, leaving a gap of over one million skilled professionals in the coming years.

This underscores what the committee describes as a “critical policy imperative”: large-scale investment in skilling and reskilling to ensure that workforce disruption does not translate into economic dislocation.

Digital infrastructure as a catalyst

India’s existing digital public infrastructure—spanning Aadhaar, UPI and other platforms—is identified as a key enabler of AI-driven growth. With over 900 million internet users and one of the world’s largest pools of technology talent, the country is uniquely positioned to deploy AI at population scale.

The government’s ₹10,371 crore IndiaAI Mission is central to this strategy, focusing on building compute capacity, improving data access and supporting startups. Early progress includes the creation of large-scale computing infrastructure, development of indigenous AI models and expansion of data platforms.

Balancing growth with governance

Even as the economic upside becomes clearer, the report stresses the need for a balanced regulatory approach. Risks related to data privacy, algorithmic bias and market concentration must be addressed without stifling innovation.

India’s approach, the committee notes, is to rely on existing legal frameworks while developing new governance tools tailored to AI—an approach aimed at maintaining flexibility in a rapidly evolving technological landscape.

The decade ahead

Taken together, the report positions AI as a central pillar of India’s next growth phase—one that could redefine how value is created across the economy. The challenge, however, lies in execution: scaling infrastructure, closing skill gaps and ensuring that the gains from AI are broadly shared.

If managed effectively, the committee suggests, AI could enable India to leapfrog traditional development constraints and emerge not just as a major user of the technology, but as a global leader in shaping its economic future.

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