As the global momentum of the Generative AI (Gen AI) wave continues to grow, India is poised to witness a substantial increase in its Gross Domestic Product (GDP) by an estimated $1.2-1.5 trillion over the next seven years by adoption of Gen AI technology and its applications across sectors, according to a report released by EY India on December 17.

“The cumulative impact on GDP may range from $1.2 trillion to $1.5 trillion, contributing an additional 0.9% to 1.1% in annual CAGR,” the report states.

The report, titled 'The AIdea of India: Generative AI’s potential to accelerate India’s digital transformation,' projects that by fully leveraging Gen AI technology across various sectors, India could potentially contribute $359-438 billion in the fiscal year 2029-30 alone. This reflects a 5.9 - 7.2% increase over the baseline GDP.

“In India, 100% of the respondents plan to make significant investments in Gen AI. 84% of Indian CEOs recognize the urgency to move quickly with Gen AI. Around 80% of Indian CEOs acknowledge the uncertainty surrounding Gen AI posing a challenge for a swift roll-out of their AI strategy,” the report reflects.

The report identifies that approximately 69% of this growth will be propelled by enterprise adoption in sectors such as business services, financial services, education, retail, and healthcare. The anticipated impact is expected to result from enhancements in employee productivity, improved operational efficiency, and personalised customer engagement.

“Approximately 69% of the overall impact is expected to derive from business services (including IT, legal, consulting, outsourcing, rental, etc.) financial services, transportation and logistics, education, retail trade, and healthcare,” the report states.

In recent times, technology giants like Google, Microsoft, Amazon, and IBM are actively working on advanced enterprise-grade generative AI solutions. Notably, Google recently launched its largest AI model, Gemini, aimed at competing with OpenAI's GPT-4 and Meta's Llama 2.

Regarding Gen AI strategy, the report reveals that 75% of the 200 C-suite participants surveyed consider having a Gen AI strategy essential for organisations, with customer engagement identified as the most crucial aspect. Interestingly, 73% of organisations plan to seek external tech providers for Gen AI implementation.

“Three in five respondents see Gen AI having a significant impact on their business,” the report indicates.

The report emphasises that while nearly 60% of organisations recognise the significant influence of Gen AI on their businesses, 75% express a low to moderate level of readiness to harness its benefits. The primary challenges identified include a skills gap (52%) and unclear use cases (47%), with only 36% of organisations viewing data privacy as a risk.

“Almost 60% of our survey respondents from the Healthcare and Life Sciences sector believe that Gen AI will have a very high impact on the entire value chain, making it more efficient and responsive to market dynamics,” it reports.

The report views Gen AI as a catalyst for economic growth, especially as governments worldwide actively pursue measures to promote and regulate AI. It suggests that enabling access to training data and marketplaces, deploying Gen AI systems as public goods, securing critical digital infrastructure, and supporting public funding of R&D can foster Gen AI innovation.

“India has emerged as the 2nd largest generator of digital data, behind only China, and this gives it an advantage when it comes to training Gen AI models that need vast amounts of data to learn before they can perform their magic,” the report mentions.

In terms of public sector adoption, the report anticipates Gen AI systems being utilised for the public good, aligning with the National Strategy for Artificial Intelligence (2018). This inclusive approach aims to impact various sectors, including education, healthcare, agriculture, and smart cities.

Google unveiled MedPaLM 2, with a specific emphasis on the healthcare sector, as per the report.

The report states that UAE developed its own open source Gen AI model ‘FALCON’ with the aim of helping Emirati enterprises drive efficiency, leveraging Gen AI tools for applications relating to language translations, virtual assistants etc.

The report proposes that enhancing Gen AI innovation in India involves gaining access to data and marketplaces, securing digital infrastructure, and facilitating talent access and public funding for R&D.

Follow us on Facebook, X, YouTube, Instagram and WhatsApp to never miss an update from Fortune India. To buy a copy, visit Amazon.