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

The AI spend growth is set to be the fastest amongst eight markets surveyed including Australia, India, Indonesia, Japan, 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, where BFSI, manufacturing, healthcare, telecom, and retail were the highest spending sectors during the year.

“2023 was primarily a year of planning and this year is going to be more expansive AI adoption. We are in that phase where a lot of organisations have done pilots, proof of concepts (POCs) 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 to other regions across the world.

“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 that gets 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 Gaudi3 series of chips worldwide to tap into the AI compute market.

Responding to a question on GPU infrastructure and order fulfilment timelines of the company in India when compared to Nvidia, Intel India head Santhosh Viswanathan 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 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 a majority 81 per cent directed toward predictive AI and interpretative AI.

First Published: May 14 2024 | 7:49 PM IST

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