Budget 2025: Need to maintain upward trend in AI and tech-specific investments | Business News
Despite multiple challenges and uncertainties, India’s Gross Development Product (GDP) growth rate has rebounded, largely driven by the services sector, which accounts for approximately 55 percent of the current GDP, according to the Ministry of Statistics and Programme Implementation. This growth is particularly notable in the IT sector, which contributes about 56 percent of India’s total services exports on the national landscape, as per a report by the Global Trade Research Initiative (GTRI).
As reported by World Bank, the US$3.5 trillion Indian economy enters 2025 with immense potential in areas such as healthcare and insurance, infrastructure, Electric Vehicles (EVs), Fast-moving Consumer Goods (FMCG) and renewable energy. It is expected to be another exciting year for the technology sector, which will continue to play a pivotal role in the previously mentioned (but not limited to) areas.
Notably, the rise of AI/GenAI in the tech space is revolutionising various aspects of governance, economy, security and society at large.
Journey of AI and its role in Indian IT
According to Nasscom, India’s AI market noted a CAGR of 25–35 percent and is projected to reach about US$17 billion by 2027. AI’s growth in India is supported by a robust ecosystem comprising start-ups, academic institutions, government initiatives and MNCs.
India’s IT services and Global Capability Centres (GCCs) are expected to grow to US$100 billion by 2030, as per a report by Inductus. They are also setting up AI/GenAI Centres of Excellence (CoEs), signalling an uptrend for AI/GenAI technologies and associated workforce training.
Government bodies and public-sector organisations have been some of the early adopters of AI.
Spending on AI software for digital government services is expected to reach US$6 billion by 2027, as per International Data Corporation (IDC).
AI in India and the government’s push
The Government of India has been bullish on new-age advancements. Investments in the semi-conductor space (~US$10 billion investment, according to the Ministry of Electronics & Information Technology), Quantum technologies (~US$0.7 billion investment, as per the National Quantum Mission (NQM) by the Department of Science & Technology) and AI/GenAI (commitment of ~US$1.2 billion investment, as per the Government of India) underscore the government’s focus on high-tech.
In 2018–19, the Finance Minister mandated the National Institution for Transforming India (NITI) Aayog to establish the National Programme on AI, which aims to guide the R&D of emerging technologies. NITI Aayog released the National AI Strategy, outlining the government’s vision for AI development in the country.
In March 2024, the cabinet approved the comprehensive national-level IndiaAI Mission with a budget outlay of US$8.8 billion. This step further boosts the vision of “Making AI in India” and “Making AI Work for India.”
To realise “Vision 2047,” the government must continue its push on AI, as India is a rewarding destination considering its skilled talent pool. Per a Deloitte report on Generative AI in Asia Pacific, India leads in GenAI adoption across Asia Pacific, with 93 percent of students and 83 percent of employees actively engaging with the technology.
Key sectors for AI
The government must establish AI research centres and innovation hubs that help solve specific healthcare, agriculture and education challenges. For example, the agri-industry could benefit from AI through precision farming, pest and disease detection, crop yield optimisation, smart rainwater harvesting and AI-powered drones.
Other applications of AI are in the manufacturing sector, such as predictive maintenance, quality control, supply chain optimisation and smart manufacturing. AI can also help deploy social and welfare programmes through improved identification of beneficiaries, personalised welfare programmes, fraud detection and effective resource allocation.
Budget expectations
For FY2024–25, the Indian government allocated INR551.75 crore to the IndiaAI Mission to strengthen the country’s AI infrastructure.
This allocation is expected to increase as India aims to position itself strategically as a high-tech destination on the global map. While all industries stand to benefit from an AI push, advancements in sectors such as healthcare and education would lead to significant social
impact.
AI in healthcare could assist in areas such as early diagnosis and detection, telemedicine, targeted interventions and chronic disease management. Similarly, the education sector should benefit from personalised tutoring, e-learning in regional languages and AI-driven counselling.
The government should provide benefits and incentives to solidify a strong R&D ecosystem that fosters economic growth and job creation.
Conclusion
The government must continue with an upward trend in AI and tech-specific investments with a special focus on key industries. There could not be a more opportune time to position India as an AI innovation hub.
The author is Partner, Deloitte India.
