AI-driven adoption to support India’s GDP growth through services sector: Report

New Delhi, June 13 (IANS) India’s services sector is among the most exposed to artificial intelligence‑driven productivity gains among the emerging economies, positioning the country to benefit from stronger GDP growth as AI adoption accelerates, a report said Saturday.

The report from Equirus Economics said the current wave of AI adoption — concentrated in software-driven applications such as large language models (LLMs), generative AI tools, coding assistants and workflow automation systems — disproportionately benefits service‑led economies.

Hence, the current wave of AI adoption is fundamentally different from previous technology cycles, the report said, adding that India’s financial, IT and professional services, which account for around 23 per cent of gross value added, make the country one of the most AI-exposed large emerging markets.

“India’s financial, IT, and professional services account for roughly 23 per cent of GVA, and it is precisely this slice that is most exposed to AI-driven unit cost compression and productivity gains,” the report noted.

The report highlighted that researchers broadly agree on the positive relationship between AI adoption and labour productivity, although estimates vary regarding the eventual scale of the gains.

Researchers are broadly in consensus on a positive relationship between AI adoption and labour productivity. However, the degree of impact is divergent, from moderate productivity gains to large output increases.

AI-driven productivity improvements could have broader economic implications beyond operational efficiency.

The productivity gains to GDP and unit cost benefits would greatly work in favour of service-led economies like India.

However, the report cautioned that the inflation benefits from AI adoption may be more limited in the near term.

While productivity gains could lower costs across service-orientated industries, the categories that dominate India’s inflation basket remain largely outside the current AI adoption curve.

“The categories that dominate India’s CPI basket (food, commodities, physical services) still remain outside this umbrella,” the report noted, adding that the case for broad-based AI-led disinflation remains relatively weaker at present.

It cautioned that AI’s benefits are unlikely to be evenly distributed across sectors, saying “factory-floor AI requires capital-intensive deployment (robotics, predictive maintenance, process automation) with a much longer adoption curve than software tools.”

India’s large and globally competitive services ecosystem places it in a favourable position to capture the benefits of the current AI adoption cycle.

The report forecasted that AI’s productivity dividend across emerging markets is expected to be real but highly uneven.

—IANS

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