‘A Business Necessity’: India’s AI Market Set to Triple, Hit $17 Billion by 2027, Says BCG

India’s artificial intelligence market will more than triple to $17 billion by 2027, positioning the country as one of the world’s fastest-growing AI economies, according to a Boston Consulting Group study released Tuesday.

The projection marks a huge surge driven by rising enterprise technology investments, solid digital infrastructure, and an expanding talent base that already comprises 600,000 AI professionals—16% of the global AI workforce, second only to the U.Sz.

BCG’s “India’s AI Leap: BCG Perspective on Emerging Challengers” report analyzes how leading Indian companies are embedding AI into core operations rather than treating it as experimental technology.

The study found that AI is expanding India’s total addressable market by 1.2 to 1.5 times across key sectors while delivering significant efficiency gains.

“AI is no longer an option but a business necessity,” said Mandeep Kohli, managing director at BCG India and co-author of the report. “Indian companies are using it to leapfrog traditional growth curves and compete confidently on the global stage.”

Financial services companies are cutting processing times by 70% through AI-powered underwriting, enabling micro-lending for underserved populations, as per the report.

Retailers report 10-15% conversion improvements through AI personalization. Media companies are reducing production costs by over 80% while increasing speed by 70%.

“AI is becoming the backbone of India’s digital payments ecosystem, enabling smarter fraud detection, seamless onboarding, and hyper-personalized financial products,” Monica Jasuja, Chief Expansion and Innovation Officer at Emerging Payments Association Asia, told Decrypt.

The report also pointed out how the country’s 4,500+ AI startups, 40% of which launched within the past three years, are solving local challenges from rural healthcare to vernacular education.

“AI is helping Indian startups grow faster and solve tough problems without needing huge teams,” Kunal Anand, CEO of AI chatbot firm aiBaat told Decrypt.

However, scaling remains challenging. Anand warned that the industry needs “more hands-on partnerships, access to computing power, and a strong talent pipeline that reaches beyond metro cities.”

The Indian government is addressing some of these concerns.

Its IndiaAI mission involves ₹10,000 crore in national compute capacity, including 10,000+ GPUs for model training, as per a March statement from the Ministry of Electronics & IT.