AI spending in India to reach $5 billion by 2027: Intel-IDC study

According to the report, entities in India spent $1,703.8 million on AI in 2023, where BFSI, manufacturing, healthcare, telecom, and retail were the highest spending sectors during the year

Spending on artificial intelligence (AI) in India is expected to grow at a compound annual growth rate of 31.5 per cent from 2023 and might reach $5.1 billion by 2027, according to a joint study released on Tuesday by Intel and International Data Corporation (IDC).

The growth in AI spending is set to be the fastest among the eight markets surveyed, including Australia, India, Indonesia, Japan, South Korea, Malaysia, Singapore, and Taiwan.

The AI software sector is projected to be the primary driver of overall market growth, reaching $2.6 billion by 2027, the study revealed.

According to the report, entities in India spent $1,703.8 million on AI in 2023, with banking, financial services and insurance, manufacturing, healthcare, telecommunications, and retail being the highest spending sectors during the year.

 

“2023 was primarily a year of planning, and this year is going to see more expansive AI adoption. We are in the phase where many organisations have conducted pilots, proofs of concept, and by around 2027-2028, we are going to see AI everywhere,” said Sharath Srinivasamurthy, associate vice-president, IDC.

He also highlighted the chances of brain drain of AI talent from India.

“If you look at the overall spending on AI across the globe, 50 per cent of it is coming from the US. There is a huge demand outside India for AI talent as well. So, there is a high possibility that the talent created here (India) might get forced into other countries,” he added.

Spending on AI infrastructure is projected to hit $733 million by 2027, according to the report.

“India is improving its AI infrastructure, and hence, the highest spending is on AI infrastructure provisioning,” said the report.

Chip giant Intel — the other partner in this joint study — is facing tough competition from Nvidia in the AI infrastructure space and recently launched the Gaudi 3 series of chips worldwide to tap into the AI computing market.

Responding to a question on graphics processing unit (GPU) infrastructure and order fulfilment timelines of the company in India compared to Nvidia, Santhosh Viswanathan, vice-president and managing director, India region, Intel, said that the company can fulfil GPU orders much earlier than its competition.

“We don't need to wait 16 weeks; we can do it much faster for any of the products that I’m talking about here,” he said.

Viswanathan, during his presentation, also said that India had 20 per cent of the world’s data produced in the country and is the third biggest global market but lacks in terms of compute requirements to use that data.

On generative AI (GenAI), the study said that despite the hype around the technology, only 19 per cent of Asia-Pacific AI budgets were focused on GenAI, with the majority, 81 per cent, directed towards predictive AI and interpretative AI.