EY Report: Generative AI set to propel India’s GDP by $1.2-1.5 trillion in 7 years

A recent report by EY suggests that Generative AI (GenAI) has the potential to contribute $1.2-1.5 trillion to India’s GDP over the next seven years. Titled ‘AIdea of India: Generative AI’s potential to accelerate India’s digital transformation,’ the report indicates that, in the fiscal year 2029-30 alone, GenAI could add $359-438 billion to India’s GDP.

The report emphasises that approximately 69 per cent of GenAI’s impact on India’s GDP will likely stem from sectors such as business services (including IT, legal, consulting, outsourcing, rental of machinery and equipment, and others), financial services, education, retail, and healthcare.

Mahesh Makhija, Technology Consulting Leader at EY India, notes that organisations are swiftly adopting an AI-first approach to digital transformation, aiming to enhance customer engagement, increase productivity, and achieve greater agility in delivering digital capabilities using innovative foundation models and AI-first solutions. Although in the early stages, there is a tremendous sense of optimism in AI to realise its full potential, India must significantly elevate its efforts in terms of increased government role in its development and deployment.

The study reveals that 75 per cent of businesses in India express a low to moderate level of readiness to harness the benefits of GenAI. Among the challenges cited, 52 per cent of organisations believe a skills gap is hindering the potential of GenAI, while 42 per cent find unclear use cases to be another hurdle.

The report recommends measures such as enabling access to training data and marketplaces, deploying GenAI systems as public goods, securing critical digital infrastructure, and facilitating access to talent and public funding of R&D to foster GenAI innovation.

On the data privacy front, the report indicates that 36 per cent of organisations view data privacy as the single most important risk of GenAI, followed by concerns about hallucination or fabricated answers (24 per cent), biased responses (21 per cent), and cybersecurity (16 per cent).

Moreover, 75 per cent of organisations identify customer engagement as the segment most influenced by generative AI. Additionally, the report notes that 73 per cent of organisations prefer partnering with external tech providers for GenAI implementation.