The Economic Survey 2025–26 highlights that while artificial intelligence (AI) presents significant opportunities for India’s services exports and innovation ecosystem, its implementation comes with substantial challenges and risks. The Survey notes that globally, leveraged AI investments and speculative capital deployment pose potential threats to financial stability, even as AI adoption accelerates.

Leverage and financial vulnerabilities

Citing a December 2025 Financial Times report, the Survey notes that global technology firms have shifted more than $120 billion of data centre spending off their balance sheets using special purpose vehicles funded by Wall Street investors. Combined with doubts expressed by industry leaders about the economics of large language model–based AI, this leverage could trigger cascading effects across financial markets and the real economy. The sharp rise in Japanese government bond yields is flagged as an early warning signal of potential instability.

AI-driven growth in advanced economies

Despite these risks, AI investment is increasingly driving growth in advanced economies. In the US, IT investment—including AI-enabling equipment and software—has accounted for nearly half of GDP growth in recent quarters, offsetting the negative effects of trade tariffs. Yet the Survey cautions that such models rely on sustained capital flows and high-risk assumptions, a situation India may avoid as a late mover.

India’s AI potential and nascent stage

The Survey emphasises that AI adoption in India is still at a nascent stage, with experimental use visible across organisations but broader economic impacts are yet to fully materialise. A McKinsey survey cited in the Survey found that 88% of Indian firms had adopted AI in at least one business function, yet only 7% had fully integrated it across operations. This early-stage adoption offers India a chance to shape AI development in line with domestic priorities.

AI-intensive services exports showing promise

Using balance of payments data from the Reserve bank of India, the Survey finds that India’s AI-intensive services exports—software, business, and financial services—grew roughly 39.5% faster than less AI-exposed services after AI diffusion. Supported by a strong IT-BPM ecosystem and rapidly expanding AI talent base, India is well positioned to leverage these opportunities.

Pragmatic strategy needed amid risks

The Survey cautions against blindly replicating advanced economies’ capital-intensive AI models, which are energy-intensive and financially risky. It calls for a pragmatic, India-specific AI strategy that balances innovation with regulation, invests in skills and social protection, and ensures AI complements human intelligence rather than displacing it.