Even though Indian CEOs are going big on artificial intelligence (AI) to drive long-term growth and innovations, some big issues are posing as major hurdles that is preventing Indian organizations from embracing AI fully, a global study by IBM’s Institute for Business Value has found. According to the study, the two primary issues are budget constraints and skill shortages.

The annual IBM CEO study, which surveyed 2,000 CEOs worldwide, including a significant cohort from India, shows that a whopping 51%, or more than half, of Indian CEOs are actively adopting AI agents today and preparing for large-scale implementation. Yet, despite the hype, many AI efforts in India have failed to deliver.

“Indian CEOs are at the forefront of a massive transformation fuelled by technological advancements like generative AI and Agentic AI. It is no longer if they should adopt AI but where it can deliver the strongest competitive edge, and accelerated growth,” said Sandip Patel, Managing Director, IBM India & South Asia. “To lead in this era, CEOs must see disruption as opportunity, focusing on tangible business outcomes while navigating constant change. At IBM, we’re helping Indian enterprises scale AI responsibly and drive seamless AI adoption for long-term growth,” he added. 

As per the study, although Indian CEOs are very excited about working with, and integrating AI, there are some important concern areas. Less than a third of AI initiatives have met RoI expectations, with a meagre 25% of AI initiatives having delivered expected ROI over the last few years, and only 15% have scaled enterprise wide.

Importantly, the study found that 74% of Indian CEOs believe more budget flexibility is needed to capitalize on digital opportunities that foster sustainable innovation. Nearly half (44%) admit their organizations struggle to balance funding between existing operations and new innovation during times of unexpected change.

Data infrastructure remains a critical focus, with 58% of Indian CEOs identifying integrated enterprise-wide data architecture as essential for cross-functional collaboration. Meanwhile, 71% see proprietary data as key to unlocking generative AI’s value. However, 53% acknowledge that rapid investments have resulted in disconnected and piecemeal technology environments, potentially hindering AI’s full potential.

Indian CEOs are also prioritizing strategic leadership and talent development to sustain growth. About 67% say success depends on leaders who combine strategic insight with decision-making authority, while 61% emphasize the importance of placing the right expertise in the right roles with appropriate incentives. Addressing skill gaps through automation is expected by 68% of respondents, and 54% report hiring for AI-related roles that did not exist a year ago.

The study also found that 62% of Indian CEOs focus AI investments on use cases with clear ROI, and 66% have established metrics to measure innovation outcomes effectively. Furthermore, 64% report realizing value from generative AI beyond mere cost reduction.

Despite the challenges, Indian CEOs remain optimistic about AI’s future impact. By 2027, 84% expect scaled AI investments to yield positive ROI through efficiency and cost savings, while 78% anticipate gains from AI-driven growth and expansion.