India's $1 trillion AI bet: Is it a boom, bust, or just hype?

The rapid adoption of AI is bringing difficult questions to the forefront — especially around job losses and how much value it actually delivers to the bottom line. While companies increasingly experiment with AI tools, many are still figuring out how to integrate them at scale.

“The real thing about AI is, can you generate value to the bottom line? Can you change your operating margin? Can you change the cash that you are able to get?” says Ram Menon, founder and CEO of Avaamo, an enterprise AI solutions company. Menon highlights that businesses are increasingly using AI to reduce costs, but many are yet to publicly quantify these savings. “Most customers are interested now in using AI to reduce costs, but they don't want to talk about how much they've reduced costs just yet... It is a sensitive issue,” he adds.

India’s AI industry is set to reach $1 trillion by 2030, driven by rising enterprise adoption and emerging applications across sectors like healthcare, consumer goods, and manufacturing. Yet, the transition is not without consequences. “The reality is there will be job displacement,” says Menon, pointing to reports suggesting that over 1.6 million workers could be displaced due to AI. However, he argues that new opportunities will emerge, particularly in underserved sectors. “The newest programming language is English. If you can programme in English, you can do exciting new applications.” 

Avaamo, which operates across 45 countries, recently announced Avaamo Agents — a suite of autonomous AI agents designed to act as digital workers. These agents leverage Agentic reasoning, enterprise workflows, and compliance protocols to deliver human-like intelligence round the clock. The digital workforce promises to help companies scale operations without increasing headcount. Menon describes it as a significant shift, particularly for industries reliant on offshore labour. “We're converting labour into software,” says Menon. “Support agents in BPOs are often reading from scripts — AI can do that faster, cheaper, and more accurately.”

McKinsey & Company estimates that automation could displace 400–800 million jobs by 2030. Meanwhile, the Economic Survey 2024–25 emphasises that while AI can cause short-term worker displacement, quick action can harness it to augment, and not cut away at, employment numbers.

While large companies are showing greater interest in AI adoption, scaling these technologies remains a challenge. Menon opines that many enterprise projects remain at the pilot stage, often due to legacy software vendors pushing toolsets rather than solutions. A PwC report highlights that nearly 50% of Indian AI projects never go into production. “Can you get the job done? That’s the question enterprises should be asking — not which LLM model you're using,” he says.

However, AI’s potential in India extends beyond cost savings and could potentially unlock new efficiencies in agriculture, logistics, and language-based applications. “There's an unnecessary focus on how AI is going to lose IT jobs. But the rest of the Indian economy, which could not use this before, is going to benefit in so many different ways.”

However, the environmental cost of AI is an emerging concern. The computing power required to train and deploy AI models is placing immense strain on energy resources. “You can't just suck up all the power in the grid — something has to give,” Menon says, adding that balancing AI's benefits with sustainability will be a key challenge in the coming years.

As Indian enterprises navigate the AI shift, the focus will increasingly move from technological hype to measurable business outcomes. Whether AI delivers on its trillion-dollar potential will depend on how companies balance efficiency, job impact, and sustainability in the years ahead.