A new report by NITI Aayog has placed artificial intelligence (AI) at the heart of India’s economic aspirations, stating that sustained growth of over 8 percent is possible if the country successfully leverages AI at scale. The report positions AI as central to the transformation required to realise the vision of Viksit Bharat, highlighting the need to unlock both productivity and innovation across multiple sectors.
According to the analysis, India’s growth ambitions require bold steps in AI adoption and frontier innovation. The roadmap outlined in the report identifies specific areas where AI can directly contribute to growth and provides estimates of the potential economic value that could be created in key industries by 2035.
Two Major Growth Unlocks Identified
The report highlights two major unlocks that are critical to reaching the aspirational 8 percent growth trajectory. The first is accelerating AI adoption across industries, which could account for 30 to 35 percent of the overall growth step-up. The second is transforming research and development (R&D) with generative AI, which has the potential to contribute another 20 to 30 percent.
Together, these initiatives could substantially boost India’s economic growth while positioning the country as a global leader in AI-driven innovation.
Banking and Manufacturing to Benefit Immediately
Among the sectors identified, banking and manufacturing stand out as immediate beneficiaries of AI adoption.
In the financial services sector, AI applications are expected to transform customer interactions and operational efficiency. AI could enable hyper-personalised customer experiences, advanced fraud detection mechanisms, and more inclusive lending practices. These advances are projected to unlock additional value of USD 50 to 55 billion by 2035.
Manufacturing is another sector with significant potential for AI-driven gains. The report estimates that AI integration into manufacturing processes can deliver productivity improvements, predictive maintenance capabilities, and intelligent product design. Such advancements are projected to add between USD 85 and 100 billion in value by 2035.
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Frontier Innovation as the Next Phase
While adoption across industries is essential, the report stresses that India must also focus on nurturing frontier innovation. This includes AI-enabled breakthroughs that could reshape industries and establish India’s leadership in next-generation technologies.
Some of the highlighted areas include drug discovery, software-assisted vehicles, and next-generation automotive components. Each of these innovations has the potential to deliver transformative benefits, not only for domestic growth but also for export competitiveness and global standing.
AI in Pharmaceuticals
Pharmaceuticals is one of the sectors identified as a major beneficiary of AI. The report notes that AI can substantially reduce the costs and timelines associated with drug discovery. Specifically, AI has the potential to lower drug discovery costs by up to 30 percent while also shortening development timelines by as much as 80 percent.
This capability could enable India to transition from a market largely focused on generics to one that achieves innovation-led leadership. By making pharmaceutical R&D faster and more cost-effective, AI can open new pathways for Indian companies to move higher up the global value chain.
AI in the Automotive Sector
The automotive industry is also expected to undergo significant transformation with AI integration. According to the roadmap presented in the report, India could have 18 to 20 million software-assisted vehicles on its roads by 2035.
This vision is supported by plans to develop smart corridors and digital testing parks, which would provide the infrastructure required for such a large-scale shift. The impact of this transformation extends beyond domestic use. The report estimates that innovations in the automotive sector could generate export gains and import substitution valued at USD 20 to 25 billion.
Export and Import Substitution Potential
AI-enabled innovations in automotive and other advanced manufacturing segments could reduce India’s reliance on imports while simultaneously boosting exports. By building capabilities in frontier technologies, India can improve its trade balance and enhance global competitiveness.
The estimates provided in the report underscore the potential for significant economic gains. In addition to direct industry benefits, AI integration could stimulate secondary industries, create new job categories, and strengthen the ecosystem of startups and technology firms.
Leadership Perspective from NITI Aayog
The report features strong statements from NITI Aayog leadership on the importance of AI integration. Debjani Ghosh, Distinguished Fellow at NITI Aayog and Chief Architect of the Frontier Tech, emphasised that India’s mission to achieve sustained 8 percent plus growth is anchored in bold and pervasive AI integration.
She noted that innovation must become a core national priority and that AI is central to this transformation. According to her, the vision of Viksit Bharat can only be realised if India commits itself fully to responsible AI adoption and tireless innovation.
Responsible Governance and Infrastructure
Beyond the technological aspects, the report also underlines the importance of supportive infrastructure, governance, and collaboration. Robust infrastructure will be critical to scaling AI across industries. At the same time, responsible governance mechanisms must ensure that AI adoption is ethical, secure, and inclusive.
Collaboration between industry and academia is also highlighted as a key enabler. By fostering strong partnerships, India can accelerate research, develop talent, and ensure that AI solutions are practical and widely applicable.
Towards a New Model of Growth
The NITI Aayog report concludes that India has the potential to pioneer a new model of growth based on AI-driven productivity and innovation. With the right mix of adoption, frontier innovation, governance, and collaboration, the country could set a global benchmark for using AI to drive sustainable and inclusive economic development.
The report’s projections make it clear that AI is not just a tool for efficiency but a cornerstone for long-term growth. By unlocking productivity gains across existing industries and spearheading innovations in emerging sectors, AI could transform India’s economic landscape over the next decade.
Conclusion
The NITI Aayog report lays out a clear roadmap for India’s economic future, where artificial intelligence plays a central role in achieving the ambitious target of 8 percent plus sustained growth. The two key growth unlocks identified — large-scale AI adoption and generative AI in R&D — together offer the potential to deliver substantial economic gains.
With sectors like banking and manufacturing already positioned to benefit, and frontier innovations in pharmaceuticals and automotive on the horizon, AI could reshape India’s industrial and technological profile.
Debjani Ghosh’s statement encapsulates the spirit of the report: India’s growth mission must be anchored in AI integration and relentless innovation. If implemented with the right infrastructure, governance, and collaborations, India could move closer to its vision of Viksit Bharat and establish itself as a pioneer in AI-led growth.
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