Will Incredible India Forge Its Own Unique Path in AI Development?
India, being the home of globally leading IT industry with revenues of USD 245 billion and exports of USD 194 billion in 2023, expects enormous potential through building, adopting and exporting Artificial Intelligence (AI) driven systems. After my visit to SAP Labs India in Bengaluru this week, I took the time to analyze what I learned about the potential of AI in India and how the different pieces of India’s AI strategy start to emerge as a complete picture. ?
Discussing the situation or relevance of AI in a country, my take from discussion with companies across all industries, start-ups, think tanks, government officials and university faculty is that the following five factors are the most important:
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The Interplay Between Economic Development and AI Advancement
AI cannot thrive without long-term, significant, and sustained investment. Consequently, progress in AI often reflects a nation's overall capabilities and strength. That’s one of the reasons why in the ranking of nations in terms of their AI capabilities (e.g., in the Global AI Index of the Tortoise Media Group) we mostly see economic power houses in top 10 rankings. India's rapid economic growth over the years has laid a solid foundation for AI development.
Recognized as the world's fastest-growing economy, India's thriving economic status remains resilient amidst global challenges. A decade ago, India was ranked nineth in the ranking of the world's largest economies. However, recent data suggest that it has risen to fifth place, boasting an estimated GDP of $3.9 trillion. Forecasts suggest that India is on track to overtake Japan and Germany, positioning itself as the world's third-largest economy by 2027.
In return, AI also plays a significant role in advancing economic development. According to a report by Ernst & Young, India could potentially increase its GDP by US$359 billion to US$438 billion due to the adoption of GenAI in 2029-30, surpassing its baseline estimates. This represents an additional 5.9-7.2% of GDP. In essence, this could result in a cumulative GDP of between US$1.2 trillion and US$1.5 trillion over a seven-year period (2023-24 to 2029-30), leading to an additional compound annual growth rate (CAGR) of 0.9-1.1% for the Indian economy, according to EY. The impact is expected to vary across different sectors, with business services, finance, transportation, education, retail, and healthcare anticipated to receive the greatest benefits.
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Policy Guidance on AI is of Paramount Importance for its Development.
In 2018, the National Strategy for Artificial Intelligence (NSAI), released by NITI Aayog, a public policy think tank of the Indian Government, aimed to foster a collaborative effort called "AI4ALL" in India, with the government providing substantial leadership. This initiative placed India among the second wave of nations globally to launch comprehensive national AI policies.
In May 2022, the National AI Mission was launched with a focus on fostering research and development collaborations. A key feature of this mission was the 'INDIAai' portal, recognized as the National AI Portal of India.
A significant advancement occurred on Mar 7, 2024, when Union Minister Piyush Goyal announced the cabinet's approval of the India AI mission with a budget allocation of Rs 10,372 crore for five years. This marked a significant stride toward bolstering the development of AI in India; it also allocated significant funding equaling 1.3 billion USD to the promotion of AI in India. ?This fund is aimed specifically at the availability of computing power and data for research and start-ups.
Subsequently, India's Ministry of Electronics and Information Industry (MEITy) issued an advisory for intermediaries and platforms, urging them to conduct due diligence under the existing IT Act and rules. A new advisory, dated March 15, 2024, further instructed intermediaries and platforms to ensure due diligence in the use of algorithms, AI models, large language models (LLMs), GenAI, and software, in accordance with the existing IT Act and rules.
India was among the first nations to define a national AI strategy and after many years of ground work, it has now also outlined the details of this strategy and funded it substantially. From a policy point of view, one could argue that India came back into a globally leading position of having a framework, an actionable policy, and funding. It also supported a clear purpose in recent years—making the benefits of AI available to more people, entrepreneurs and agencies.
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Exploring the Disparity in India's AI Talent and Patent Contributions
Given the enormous scale of India’s AI talent base, it is somewhat surprising that the Global AI Index puts India on Rank #30 for research and #21 for development. In my discussion in Bangalore this week, many experts attributed this to the application focus of universities, which means that universities focus on applying AI technology that already exists over carrying out research to develop new technology. International IP, publications, and patents have never been focus of Indian institutes. In the European Patent Office (EPO), India is listed as country of origin of about 800 patents in 2022, about 0.4% of all patents. This figure, however, needs to be compared to Japan’s 11% or China’s 10% of all patent applications at the EPO. In the area of AI patents specifically, the latest Stanford AI Index report found, that while 61% of all AI patents in 2023 originated from China, this number stands at 0.23% for India.
Many observers argue that there are significant investments required not only in AI-based research and development, but also in the patent eco system in India. The urgent need for investment in the patent ecosystem was also recognized in a report by the advisory council of the Prime Minister of India. ???
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The Accelerating Adoption of AI Across Key Indian Industries
A survey from Deloitte places India at the top among 13 Asia Pacific countries for the topic of sentiment toward GenAI use and adoption. About 75% of Indians believe in GenAI’s economic benefits, and 83% see it as improving social outcomes.
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According to data from the staffing firm Teamlease Digital, the rate of AI adoption in key industries across India reached approximately 48% in financial year 2024 and this rate is expected to expand by an additional 5-7% in financial year 2025.
Indian companies have gradually begun to incorporate GenAI. The level of incorporation varies across enterprises, with some sectors, particularly those with a strong digital focus, demonstrating significant progress in this regard. A report from Ernst & Young revealed that between 30% and 40% of proof of concepts (POCs) implemented by Global Capability Centers (GCCs) have transitioned into production. However, for domestic enterprises, this figure stands at 15% to 20%.
Approximately one-third of the use cases are centered on employing GenAI to perform specific tasks through intelligent assistants. An additional 25% pertains to marketing automation using a variety of tools, which are facilitated by text generation and multimodal capabilities like text-to-image and text-to-video conversions.
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Ola Krutrim: India's First AI Unicorn and the Emerging Landscape of GenAI Applications
With investment led by Matrix Partners India and other notable investors, Ola Krutrim became India's first AI unicorn in January 2024.
The Indian start-up community has been optimistic about Indian LLMs for some time. The focus of well-known Gen AI stack start-ups like sarvam.ai and CoRover.ai is on making GenAI foundation models available in most of the 22 Indian languages—a capability for which other models coming from the US or China have clear “white spots,” although ChatGPT already covers the 10 main Indian languages.
The ecosystem is also gearing up to focus on enterprise applications of AI and GenAI, and a few key themes are emerging in this space as the technology has evolved from pure LLMs to large vision models (LVMs) and multimodal models. The key themes and some start-ups and initiatives in this space are as follows:
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Finally – a Brief Look at the Talent Side
According to the Stanford University Artificial Intelligence Index Report 2024, from 2015 to 2023, India, with 2.75, had the highest rates of AI skill penetration and the most significant rise of 263% in AI talent concentration. India also made the second-largest contribution to GitHub AI projects, accounting for 19.0% of the total. As a result the above cited Global AI Index ranks India second globally in terms of talent base, far better than the country’s overall ranking, which stands at #14.
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Closing the Digital Divide and Narrowing Social Inequality Through AI – can India Take on Global Leadership?
When I moved with my family to India 25 years ago, there was ongoing discussion among scholars, NGOs, and industry about closing the "digital divide" between those with access to PCs and IT skills and those without. A unique initiative was the production of the so-called Simputer, a simple, inexpensive, and multi-language computer. These Linux-based handheld devices aimed to cost less than 10,000 INR (around 220 USD back then).
While the Simputer was never a commercial success, it highlighted India's belief that computing skills and digital access shouldn't be limited to those with expensive IT equipment.
Today, experts are divided on whether AI will widen or narrow the digital divide and inequality. In a recent optimistic article in The Economist, AI promises a future in which technology significantly narrows gaps in health, education, and economic development between low-income and developed countries. However, researchers, including the IMF, argue that AI will widen the gap between rich and poor nations. Nobel prize winner Joseph Stiglitz believes that inequality within the workforce will widen if AI is not regulated, a view shared by other researchers.
As the Financial Times writes , as “AI continues to advance, policymakers, businesses, and society as a whole must proactively prepare for its impact.”
The Financial Times put it well. In my view, India is presented with a unique opportunity. Housing the world's second largest AI talent pool, and with a policy focus on democratizing AI, India's innovative start-ups are making strides in sectors like healthcare, education, and agriculture. This could help reduce the digital divide, extend AI benefits to all social strata, and potentially enable the "Global South" to gain more from AI.? ?
I have learned a lot from insightful discussions on AI innovation with our Indian engineers. There is no doubt, that SAP Labs India will significantly bolster SAP's Business AI strategy. Witnessing India's swift digital adoption and simplified digital processes firsthand, I believe India, leveraging its immense talent pool, could redefine the term "Global AI Superpower", focusing less on patents and investment metrics and more on fostering an inclusive, AI-driven society with enormous global impact.
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(Disclaimer: The ideas, views, and opinions expressed in my LinkedIn posts, articles, videos, and profiles represent my own views, not those of my current or previous employers or any organizations with which I am associated. Additionally, any and all comments on my posts from respondents/commenters to my postings belong to and only to the responder posting the comment.)
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Building Generative AI , Single and Multiple Agents for SAP Enterprises | Mentor | Agentic AI expert | SAP BTP &AI| Advisor | Gen AI Lead/Architect | SAP Business AI |Joule | Authoring Gen AI Agents Book
6 个月It's inspiring to see such enthusiasm and forward-thinking around AI in India—did you come across any surprising applications or innovations during your visit?
VP - SAP Marketplaces
6 个月The single most important currency for successful Ai is data and having access to that data. India has both of this- if they can partner successfully with the private sector and have a robust set of guard rails, its success is assured.
Connecting the Best for a Better World
6 个月Sounds to be an excellent match for the next AsiaBerlin Summit, our first Christmas edition from 25 to 29 November 24!
Vice President - Head of Strategy & Operations at SAP Labs India Pvt Ltd
6 个月I would like to express my deep appreciation for your insightful article on AI in India. Your thorough analysis and perspective of the evolving AI landscape in India is brilliant. Your expert analysis not only highlights the potential of AI to transform industries but also underscores India's pivotal role in this global revolution. It was great hosting you in India and thank you for this insightful article.