The rise of agentic AI presents both opportunities and challenges for India's economic future. Agentic AI, built upon large language models (LLMs), can access its environment through APIs, sensors, and online data, enabling it to perform tasks more comprehensively than standard LLMs. This technology marks a significant step toward creating AI coworkers capable of handling multiple tasks autonomously. As India strives for a $5 trillion economy, the integration of AI agents could be a transformative enabler, driving growth and innovation across various sectors.

Economic Opportunities

AI has the potential to significantly boost India's GDP. NASSCOM estimates that AI could add $450–500 billion to India's GDP by 2025. PwC predicts that AI could add nearly $1 trillion to India’s economy by 2030 through higher productivity and more efficient industries. EY forecasts that generative AI could potentially add $359b–$438b to India's GDP by 2030. A more ambitious estimate suggests that generative AI could unlock USD 621 billion of productive capacity in India, equivalent to almost one-fifth of its 2021 GDP. The Indian artificial intelligence market is likely to grow at 25 to 35% annually and reach nearly $17 to $20 billion by 2027.

AI can enhance productivity across various sectors. In the IT sector, AI can automate repetitive tasks, freeing up human workers for higher-level problem-solving and innovation. AI is also revolutionizing Indian farming through smart farming techniques using drones and sensors, predictive analytics for crop yield and weather forecasts, and AI tools for market access and supply chain efficiency. AI agents are also transforming the insurance sector by streamlining claims processing, fraud detection, risk assessment, and policy personalization. In the financial sector, AI is being used for fraud detection, credit risk management, and customer service. Moreover, AI applications are transforming quality control, production lines, and supply chain management in manufacturing.

Challenges and Concerns

Despite the potential benefits, the rise of AI agents also raises concerns about job displacement. As AI agents become capable of handling tasks previously performed by humans, job displacement may not be one-to-one and could be substantially higher. Some experts believe that the real disruption is hitting knowledge workers the hardest, creating a scenario where coders and content creators may be more vulnerable than those in manual labor roles. It's estimated that India will create over 2.3 million jobs within the AI sector, but the talent pool may only grow to 1.2 million, representing a significant opportunity for upskilling and reskilling for professionals.

To mitigate these challenges, strategic policy interventions are necessary. The government aims to increase AI spending to 1% of GDP by 2030. Initiatives such as the IndiaAI mission, coupled with growing private sector investments, are laying the groundwork for a thriving AI ecosystem. The key lies in moving from experimentation to large-scale deployment of AI, building trust in AI systems by addressing concerns about errors, bias, and data quality through strong governance.

The Way Forward

To fully harness the economic potential of AI agents, India needs to focus on upskilling and reskilling its workforce. The IT workforce needs to transition from routine coding tasks to specialized roles requiring creativity, critical thinking, and advanced AI knowledge. Emphasis should be placed on training individuals to work alongside AI, viewing it as a collaborative partner rather than a replacement.

Moreover, India can leverage its strengths in exporting DPI (Digital Public Infrastructure) services and solutions to integrate AI in public services, enabling countries in the Global South to leapfrog in AI adoption. India's global capability centers (GCCs) have become global innovation engines, with a significant percentage developing AI centers of excellence. By fostering trusted global partnerships, India can position itself as a solution provider for the Global South, promoting the inclusive and sustainable adoption of AI.