India's AI Adoption Reaches Mid-Level Maturity: Report 86% of companies are in the middle stages of AI adoption, classified as enthusiast and expert adopters

India's Artificial Intelligence (AI) market is growing rapidly, with an expected annual growth rate of 25-35 per cent over the next few years. A recent report by Nasscom-EY reveals that India's AI adoption index is now 2.47 out of 4, a slight increase from 2.45 in 2022. Eighty seven per cent of companies are in the middle stages of AI adoption, classified as enthusiast and expert adopters. The number of companies in the expert stage, particularly in the manufacturing, telecom, media, and entertainment sectors, has doubled in 2024 compared to 2022. This stage represents the next level of maturity after enthusiast.

Additionally, about 75 per cent companies have an AI strategy in place at the proof-of-concept (PoC) stage, and 40 per cent are successfully moving from PoC to full-scale production. The rise in AI adoption is fueled by the IndiaAI mission, the tech services industry, startups, and a strong talent pool. Improved digital infrastructure and the increased use of digital technologies are also major factors, with 70 per cent of companies now spending over 20 per cent of their IT budgets on digital advancements.

AI is becoming easier to use across various products and services, especially with the rise of Generative AI, which is making AI more accessible to non-technical users. The availability of AI tools as cloud services and AI-integrated products is also boosting AI usage. This growth has been significantly driven by the centrally funded IndiaAI mission, the AI and GenAI-ready tech services industry, startup ecosystem, and the talent pool. It is also evident that India's digital infrastructure has improved over the past few years, and the adoption of digital technologies by businesses and large organizations has grown exponentially—70 per cent of companies now spend over 20 per cent of their IT budgets on digital and emerging technologies.

Nevertheless, to transition India from AI-ready to AI-first, the report recommends; large enterprises should prioritize data standardization, establishing strategic partnerships for swift PoC-to-production transitions, and balancing AI uses for both efficiency and innovation, while carefully managing AI risks and integrating sustainability into their AI strategies. On the other side, Small and Medium-sized Businesses (SMBs) must focus on contextual use cases, explore partnerships with tech SMEs to jumpstart AI initiatives, ensure strong leadership commitment, understand data regulations, and foster peer learning to overcome adoption barriers.