AI to Boost India's GDP by $600 Billion by 2035, Transforming Key Sectors and Economic Growth
September 15, 2025
To address these issues, India must prepare a digitally skilled workforce, with urgent reskilling initiatives for workers displaced by AI, especially in sectors like healthcare and renewable energy, while capitalizing on its young demographic.
A recent NITI Aayog report highlights that increased adoption of AI across industries could add up to $600 billion to India's GDP by 2035, driven by enhanced productivity and frontier innovations like AI-enabled drug discovery and software-defined vehicles.
AI is already making an impact at the grassroots level, exemplified by a pilot in Rajasthan that improved student performance and curiosity, demonstrating AI’s potential to address rural educational challenges.
Key sectors targeted for AI integration include finance, healthcare, education, manufacturing, and agriculture, supported by regulatory sandboxes and open-source frameworks to accelerate adoption.
AI’s integration is seen as transformative, with the potential to change how India works, lives, and develops, inspiring the youth to envision a confident, developed India by 2047.
India’s approach to regulation favors a 'techno-legal' strategy that promotes innovation through frameworks like the Reserve Bank of India’s regulatory sandbox, aiming to balance growth with responsible AI use.
Government officials emphasize the importance of balanced AI regulation via regulatory sandboxes to foster innovation, ensure societal benefits, and prevent misuse, positioning India as a leader in responsible AI governance.
Industry leaders and policymakers are pushing for coordinated R&D efforts and leapfrogging in frontier tech areas such as space, aerospace, and quantum computing, with initiatives like the Frontier Tech Hub showcasing successful use cases.
Long-term AI strategies are being formulated, including efforts to promote technological interventions in agriculture and education through initiatives like the Frontier Tech Hub, avoiding reactive policies.
The government is modernizing Industrial Training Institutes and leveraging India’s semiconductor industry, with over 270 institutions working on chip design, to build a skilled workforce ready for an AI-driven economy.
India envisions leveraging AI as a key driver to achieve an 8% economic growth rate, aligning with its 'Viksit Bharat' vision, and focusing on sector-specific innovations to propel development.
However, challenges such as limited infrastructure, data access among MSMEs, talent shortages in robotics and chip design, and the need for supportive policies on data sharing and reskilling workers remain significant hurdles.
Summary based on 20 sources
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Sources

Economic Times • Sep 15, 2025
Faster AI Adoption could add up to $600 billion to India’s GDP by 2035: NITI Aayog
The Times Of India • Sep 15, 2025
AI for Viksit Bharat: Niti Aayog report pegs $500-600 billion GDP boost by 2035; financial services, manufacturing to gain most
The Hindu • Sep 15, 2025
AI-led efficiencies can contribute to 8% GDP growth target: NITI Aayog
Moneycontrol • Sep 15, 2025
AI can lead to 8% plus economic growth to realise the vision of 'Viksit Bharat': NITI Aayog Report