Can Artificial Intelligence Add $550 Billion to India’s Economy by 2035? Experts Weigh In

As Artificial Intelligence (AI) reshapes global economies, a key question is emerging: Can AI realistically contribute USD 550 billion to India’s GDP by 2035, or are such projections driven more by optimism than measurable outcomes?

This debate took center stage at the India Today AI Summit in New Delhi, where PwC India unveiled its AI Edge for Viksit Bharat study, projecting a potential USD 550 billion economic boost across five critical sectors of India’s economy over the next decade. The figure sparked animated discussions among business leaders, policymakers, and technology executives.

According to Mukesh Aghi, President and CEO of the US-India Strategic Partnership Forum, the projection reflects “a combination of hype and reality.” He cautioned that while AI is undoubtedly transformative, it is premature to pinpoint exactly where and how deeply its economic impact will materialize.

Aghi highlighted visible changes in India’s BPO and IT services sectors, where AI-driven automation and analytics are already enhancing productivity and reducing costs. However, he noted that outcomes remain uncertain in complex industries such as pharmaceutical research, healthcare innovation, and energy transformation.

“USD 550 billion is a very large number,” Aghi said, urging businesses and policymakers to remain cautious and avoid being swept away by hype-driven expectations. At the same time, he warned that ignoring AI would be even more costly. Failure to make AI accessible, affordable, and scalable could harm India’s economic competitiveness and social progress.

Energy: India’s Strategic Advantage in the AI Race?

The growth of the AI economy depends heavily on scalable data centers, high-performance computing, and stable electricity supply. Sumant Sinha, CEO of Renew Power, argued that India may be better positioned than commonly assumed in this regard.

“Significant efforts have been made to ensure energy sufficiency, especially in the power sector,” Sinha noted. If demand for data centers rises sharply, he believes India has the capacity to meet that demand.

He placed the USD 550 billion projection into macroeconomic perspective. If India’s GDP reaches USD 15–17 trillion by 2035, AI’s contribution would account for roughly 3–4 percent of total output. “That is not unrealistic,” he said, suggesting that such an expansion is within reach if the right ecosystem develops.

Sinha further proposed that India could move beyond domestic AI consumption and begin “exporting intelligence” — effectively exporting computing power and digital infrastructure. In this model, India would not just produce electricity but convert it into AI-driven value for global markets.

Data Centres, Localisation and Digital Sovereignty

Vineet Mittal, Chairman of Avaada Group, highlighted a critical structural imbalance. While India generates nearly 20 percent of the world’s data, it accounts for only about 3 percent of global data center capacity. A significant portion of Indian user data is currently stored overseas.

With evolving data protection regulations and increasing focus on digital sovereignty, Mittal argued that localisation policies could trigger rapid expansion of domestic data center infrastructure. Contrary to common concerns, he asserted that electricity supply would not be the bottleneck.

India has significantly expanded its power generation capacity in recent years, alongside ambitious renewable energy projects. “We are self-sufficient,” Mittal stated, contrasting India’s position with the United States, where data center demand is growing faster than grid expansion.

He warned of “opportunity loss” if India fails to act swiftly. By strengthening domestic infrastructure, the country could position itself as a preferred platform for global hyperscalers and cloud providers.

AI ‘Feudalism’ and India’s Innovation Challenge

While infrastructure and energy are critical, innovation remains the defining variable. Currently, the United States and china account for nearly 80 percent of global AI infrastructure, chips, and foundational models. The question remains: Can India convert its large data reserves and user base into a competitive advantage?

Aghi introduced the concept of “AI feudalism,” warning that a handful of global technology giants control core AI infrastructure and semiconductor design. This concentration of power risks creating dependency for emerging economies.

According to him, India’s comparative strength lies not in hardware manufacturing but in software engineering and application development. “The plumbing will replace the hardware. The application layer will drive global solution availability,” he emphasized.

However, he stressed the urgent need for higher investment in research and development. India currently spends around 1 percent of its GDP on R&D, significantly lower than the United States (approximately 3.5 percent) and countries like Israel, which invest even more. Without increased funding, affordable capital for startups, and regulatory reform, India risks remaining a service provider rather than an innovation leader.

Government as Enabler, Not Central Architect

Panelists at the summit broadly agreed that the government cannot single-handedly build large-scale AI models or drive private-sector innovation. Instead, its role is to create enabling conditions.

This includes protecting data sovereignty, strengthening digital infrastructure, modernizing the national grid, facilitating semiconductor access through trade partnerships, and ensuring clear, innovation-friendly regulations.

“The government cannot do what entrepreneurs need to do,” Sinha observed. Its primary responsibility is to guarantee the infrastructure and regulatory stability that allow private enterprises to experiment, scale, and compete globally.

There was also a shared concern that India’s IT services sector cannot rely indefinitely on wage arbitrage and outsourcing. As AI automates coding, testing, and development workflows, traditional service models could face disruption unless the industry moves up the value chain into product innovation and intellectual property creation.

Missed Opportunity or India’s Second Y2K Moment?

Has India already fallen behind in the global AI race? Opinions differed.

Sinha adopted a balanced view, acknowledging that the United States and China currently lead in foundational AI development. However, he argued that India is far from being left behind. With its young demographic profile, expanding talent pool, and growing integration into global markets, India has the ingredients for a strong AI startup wave.

Aghi drew parallels with the late 1990s, when India’s IT sector capitalized on the Y2K opportunity despite limited government direction. “This is the second Y2K moment for Indian industry,” he said.

If policymakers create a supportive ecosystem — including affordable capital, regulatory clarity, and incentives for innovation — India could replicate that success story in the AI era.

Ultimately, the India Today AI Summit did not definitively resolve whether USD 550 billion is an inevitable outcome or an optimistic projection. What it did clarify is that AI’s impact extends beyond algorithms and processors. The real battleground lies in energy security, digital infrastructure, policy decisions, capital allocation, and India’s ability to transform data abundance into sustained innovation.

The coming decade will determine whether artificial intelligence becomes a transformative economic engine for India – or a missed opportunity in an increasingly digital global order.