Jul 24, 2020
AI in India
A comprehensive analysis of Indian advancement in Artificial Intelligence
In June 2018, India’s national think-tank, the NITI Aayog, released a discussion paper on the transformative potential of Artificial Intelligence (AI) in India. This paper said the country could add US$1 trillion to its economy through integrating AI. In this blog, I will cover the state of AI in India and the path to future advancement in this field.
This blog focuses on 3 major aspects related to AI in India:
- Current milestones of AI development in India
- The current and projected impact of AI on Economy
- Contribution of Public and Private sectors towards improving AI in India
This article has further been divided into 16 major headings:
1. HighTech and Telecom and Financial sectors of India are among the sectors with the highest AI adoption rate.
- Almost every sector of India has started to implement AI-based technologies.
- HighTech and Telecom is the sector which has the highest AI adoption rate
- Within High Tech and Telecommunications sector, 31.8% of it has adopted AI-based technology.
- However, only 16% of Indian healthcare sector has implemented AI which needs to be increased to improve the country’s healthcare facilities.
2. Indian start-up ecosystem has shown noticeable improvement every year with a maximum of its start-ups being AI-based.
27% of Indian start-ups are based on AI/Ml which is maximum share among all Indian start-ups. The US currently has a maximum number of start-ups in the world. Active AI startups in the U.S. increased to113% from 2015 to 2018 Meanwhile, active startups as a whole increased by 28%.
- India has a newly emerging start-up ecosystem and thus lack much from the start-up leader U.S.
- The Indian government has supported the start-up system and has accelerated the growth of start-up culture in the country.
3. India’s GDP has subsequently increased every year. 2010 onwards as Indian start-ups increased, their effect was well reflected on the country’s GDP
Indian start-ups have successfully contributed to the country’s GDP and they also hold a large contribution in the country’s development.
4. Increment in investment in AI/ML has resulted in growth of AI/ML-based start-ups in India
According to LinkedIn, AI is among the fastest-growing skills in the world. There was an increase of 190% in AI skills from 2015 to 2017. Industries with more number of AI skilled workforce are among the fastest growing industries.
India is ranked third after U.S. and China in terms of the highest AI penetration skills.
- USD 150 million is invested by private players in Indian AI sector.
- Indian companies are investing heavily in AI infrastructure.
- Increment in investment in artificial intelligence, machine learning, big data has developed the start-up ecosystem of the country.
- Newly AI-based start-ups are emerging at a faster rate.
5. Government of India has invested successfully to develop AI/ML-based infrastructure of the country.
- India had the third-largest artificial intelligence-based start-ups in 2016. This increment was observed from 2011 to present with a CAGR of 86%.
- At present more than 400 start-ups of the country are working on artificial intelligence and machine learning framework.
- India lags in AI/ML infrastructure and holds 20th position among leading AI countries and therefore there is a need to develop AI/ML infrastructure of the country.
- India is the youngest start-up nation has successfully invested in artificial intelligence infrastructure to develop start-ups.
- The investment has increased with a CAGR of 66% from USD 44 million in 2016 to USD 73 million in 2017.
6. Indian budget has taken steps to develop technology-based companies which will be critical in India’s economic growth and will solve the country’s social challenges
- Access to Capital:
- The new budget released by the Indian government has successfully improved the access to capital for the MSMEs and start-ups.
- ESOP(employment stock ownership plan) is a form of compensation provided by a start-up to its employ. Earlier these ESOP were taxable, due to which the employees do not sell those which resulted in reduced cash flow.
- Thus the Indian government in order to give a boost to the start-up ecosystem proposed to ease the taxation burden and thus has put off the tax payment till five years or till they leave the company or when they sell those shares.
2. Access to Technology
- To ensure that the latest technologies are easily accessible for MSMEs and start-ups, the Indian government has launched a Credit Linked Capital Subsidy Scheme to provide an upfront capital subsidy.
- MSME ministry with the support of the World Bank has launched the Technology Centre Systems Program to set up 15 new technology centers and to upgrade existing ones, at an estimated cost of INR 2200 crore.
3. Transaction Cost
- For reduction of transaction costs, the government has launched Udyog Aadhar Memorandum to simplify the registration process so that government schemes are available easily and to formalize quickly to adapt to the GST regime.
- Two new engagement platforms have been launched one, Sambandh Portal- to monitor the public procurement policy of govt. for MSME and two, Samadhan Portal- to register cases for delayed payments.
7. Research works in AI are weaker at the Undergrad level as compared with the world’s major universities. Indian universities lack Industry-Academia collaboration.
8. Government-Run Indian Universities are launching Bachelor’s and Master’s Program to increase the country’s base of AI executants
With the Increasing Number of Specialization in Artificial Intelligence, offered by Indian Universities, Number of AI practitioners doubled in an year, indirectly impacting the growth of the Indian Economy.
Also, the number of Indian universities offering specialization in Artificial Intelligence has skyrocketed in past years, with major progress made in premier institutes such as IIT.
9. Artificial Intelligence has the potential to add ~1 trillion to India’s economy with boosting its annual growth rate by 1.3% points by 2035
GVA-Gross Value Added
- AI has the potential to add $957 billion (Rs 62,29,113 crore) to India’s GDP by changing the nature of work to create better outcomes for businesses and society.
- Economic value is expected to be created from the new goods, services, and innovations that AI will enable, estimates AI to boost India’s annual growth rate by 1.3 percentage points by 2035.
10. Investments in AI-based start-ups have grown meteorically in the last decade, giving GOI strong inspiration to invest
Indian AI startups attracted an investment of $762.5 Mn in funding in 2019, a 44% increase over the $530 Mn funding received in 2018. The growth rate from 2017 to 2018 skyrocketed at 368%.
11. The government of India is extending its support to nurture AI culture in the Country by adopting various schemes and policies
- Atal Innovation Mission
- Developed an AI-based module for students in Indian schools
- Atal Incubation Centers(AIC)
2. NewGen (IEDC)
3. Technology Development Programme
4. Multiple Grant Schemes
Aims to encourage collaborative r&d between industry and academics for the development of products and packages.
5. High risk — high rewards
Aims to support exceptionally creative scientists pursuing highly innovative research with the potential for a broad impact in sectors within the NIH mission. This scheme is applicable to AI and other related fields.
12. The government has increased the budget allocation to AI and automation tech which will help develop the AI scenario in India
Some initiatives taken by the government in this field, in the past 2 years include:
- To pave the way for greater advancements in digital technologies like AI, the government had doubled its allocation to the ‘Digital India’ program to $480 Mn (INR 3,073 Cr) in 2018–19.
- During the Budget 2018 session, Finance Minister, Arun Jaitley announced that the government will be investing extensively in research, training, and skill development in robotics, AI, digital manufacturing, Big Data intelligence and Quantum communications, among others.
- The Union Budget 2020 allocated Rs. 3000 Crore for skills development will help bridge a sizable technological skills gap in the country. With a huge focus on Internet of things (IoT), machine learning (ML), artificial intelligence (AI), and analytics, India Inc believes that the budget will provide a boost to the country’s digital economy.
- The government’s announcement of setting up a policy to build data center parks throughout India for digital connectivity and the allocation of Rs 6,000 crores for BharatNet is a big step towards a successful Digital India initiative. This will increase the adoption of technologies such as IoT, Analytics and AI; leading to an unprecedented amount of data generation.
- Budget 20–21 also includes a 5-year plan for Quantum Computing with Rs. 8000 Crore allocated to it.
13. Comparative analysis of other countries government’s current investment in AI
China is working on an aggressive multi-billion-dollar plan for government investment into AI research and applications, while the U.S. government has been slower to act. This is compensated by the investment in AI by the private sector in the US.
India, on the other hand, is slowly increasing its spending and investment in AI, with the government being increasingly proactive in promoting these technologies.
The impact of technology like artificial intelligence (AI) in India can be measured from the influence of digital technologies on the economic elements and GDP which is 8 percent. The percentage is expected to increase to 60 percent in the next two years.
14. Public Sector In India is Experiencing Rapid Growth under the Umbrella of Artificial Intelligence
With the use of artificial intelligence applications, doctors can offer their services to more patients and reduce the existing gap in demand and supply of medical services in the country.
Indian Agricultural Ecosystem can benefit from the use of Artificial Intelligence
- AI-Based Agricultural startups have raised more than USD 800 Mn in funding in the last five years.
- Digital and AI technologies are helping solve pressing issues across the agriculture value chain.
- Accenture Research reveals that AI can impact 70 million farmers and can increase the farmer’s income by USD 9Bn.
Indian Education System is also experiencing growth owing to the introduction and increasing familiarity of artificial intelligence
15. How Indian AI-based startups/companies are contributing to the GDP, and there’s a lot more potential
The use of AI spreads through diverse sectors and there are some startups making good social use of the AI tools in crime reduction, healthcare, education, agriculture, manufacturing and climate. These contribute to different sectors of the GDP.
Some Indian startups leveraging AI and contributing to the Indian economy in different sectors are:
- Services Sector| Staqu- AI tackling crime
- Manufacturing Sector| Flutura: Improving Asset Uptime and Operational Efficiency in manufacturing
- Industry Sector| Leverage Edu- Helping students make decisions
- Agriculture Sector| Intello Labs- Quality check with AI app
- Services Sector| Niramai- Detecting Breast Cancer
16. Comparative analysis of investment in AI/ML technologies and development of AI in other countries
AI development by country:
India ranks third in the total number of artificial intelligence startups after the US and China among the G20 countries. This shows that there is something the government is doing right to help AI grow in India. But the issue that is pertaining to India is that the funding received by Indian AI startups is significantly lower than in the US and China. This will adversely affect the growth and productivity of Indian startups.
AI investment by country
China and the US lead the race in investment and funding in AI, followed by India and UK.
The above analysis clearly highlights that India certainly has the potential and is on the right track towards becoming an AI developed country, with AI expected to soon contribute significantly to India’s GDP and helping change lives for the good.
Till next time!
This was a collaborative effort by Me(Ashwin Goyal), Kartik Arjaria, Rhythm Matta, and Rishabh — Btech 2nd year undergrad students at IIT Ropar as part of a project taken up by us under ShARE(a global education and consulting organization), IIT Ropar chapter.
As always, feedback/suggestions welcome at ashwingoyal154@gmail.com
[Ashwin Goyal ]
