India’s artificial intelligence (AI) market is expected for growth, with expectations to mirror the global AI market’s expansion rate of 25-35 per cent over the next three to four years, according to the 2024 AI Adoption Index released by Nasscom and EY.
Moderate AI Adoption Maturity
Despite the promise of rapid growth, the report found that India’s overall AI adoption maturity remains moderate, with a score of 2.47 on a 4-point scale, a slight increase from 2.45 in 2022. While a majority of Indian organisations have moved towards mid-level AI maturity—characterised by defined AI strategies and initial implementations—many are still in the early stages of scaling these solutions.
While 75 per cent of the surveyed companies have AI strategies at the Proof of Concept (PoC) level, only 40 per cent have shown moderate to high maturity in transitioning from PoC to full-scale production.
AI budgets remain a bright spot, with 40 per cent of companies maintaining dedicated funds for AI initiatives and 64 per cent allocating at least 5 per cent of their technology budgets to AI.
The report identified a significant talent gap, particularly in domain-specific and strategic AI expertise. Despite India’s status as a global AI talent hub, enterprises are increasingly relying on “AI-as-a-service” models due to difficulties in finding specialised skills. The report suggested that Indian companies must develop operating models that blend internal and external talent to effectively scale their AI projects.
“As AI evolves from an emerging technology to a fundamental pillar of business strategy, Indian enterprises have a unique opportunity to lead this transformation. The 2024 AI Adoption Index demonstrates that while we've made significant strides, the journey from experimentation to widespread adoption requires decisive action and sustained commitment,” said Sangeeta Gupta, Sr. Vice President & Chief Strategy Officer at Nasscom.
BFSI And Retail Taking Lead
The survey also revealed sector-specific insights, with industries like BFSI, Retail & CPG, Energy & Utilities, Healthcare and Transportation making strides in AI adoption. These sectors are actively identifying AI use cases and progressing from PoC stages to production.
However, industries such as Manufacturing and Telecom, Media, and Entertainment are ahead in terms of collaborating with industry disruptors to implement AI solutions. Budget strategies vary across sectors, with Manufacturing and Transport and Logistics more likely to have dedicated AI funding compared to other sectors that rely on ad-hoc budgets.
The report also found that commitment from top leadership to drive AI initiatives also remains inconsistent in sectors like Transport and Logistics and Telecom, Media and Entertainment.
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