Shaping the Trajectory of AI in India

As AI deployments lead to headlines about layoffs, India faces the critical task of ensuring that AI's impacts on jobs, productivity, and the economy are inclusive and beneficial. Key insights from various reports provide a roadmap for this transformation.

AI's Impact on Employment

• Estimates from the ServiceNow–Pearson AI Skills Research 2025 report indicate AI could reshape over 10.35 million jobs and create 3 million new tech roles in India by 2030.
• The 2025 ILO study suggests that AI will likely lead to job evolution rather than disappearance.
• Labour-intensive sectors such as services, contributing 55% to GDP and 31% to employment in FY24, may be significantly impacted.
• The slow pace of skill development and low adoption of competencies hinder effective AI deployment, especially in informal sectors.

AI Pathways: Automation vs. Augmentation

• Economist Daron Acemoglu highlights two AI pathways: 
  1. Automation: Replacing human workers, boosting efficiency but risking job losses.
  2. Augmentation: Enhancing productivity while preserving or expanding employment.

India should focus on the augmentation pathway by prioritizing skilling, reducing inequality through inclusive infrastructure, and fostering entrepreneurship.

Success Stories and Strategies

• Examples of AI augmentation: 
  1. Tata Steel: AI co-pilots support engineers.
  2. Infosys: Large-scale reskilling initiatives.
  3. Siemens: Generative AI to enhance productivity.
• Focus on lifelong learning and embedding digital competencies across educational institutions is essential.
• Strengthening academia-industry-government partnerships is vital.

AI Ecosystems and Market Competitiveness

• ICRIER AI Markets and Competition report warns against platform-era distortions and market dominance by a few firms.
• Ensuring open and competitive markets will require: 
  1. Competitive access to cloud and edge computing.
  2. Open APIs and interoperable systems.
  3. Indigenous development of AI models and vernacular tools.
• Public investment should support sustainable enterprises beyond unicorns.

Conclusion: AI as a Driver for Inclusive Growth

While AI might displace some jobs, with the right policy choices, institutional support, and infrastructure, it can drive inclusive growth, making MSMEs powerful engines of employment-rich growth.