India's Economic Survey 2025 Highlights AI's Impact on Jobs and Calls for Increased Private R&D Investment

Economic Survey 2025 Confirms What We've Long Feared: AI is Coming for Jobs

In 2025, we may see the first AI agents join the workforce and materially change the output of companies, OpenAI chief Altman said earlier this year. In the Economic Survey 2025, the government has acknowledged OpenAI's recent statement about AI replacing the workforce in 2025. "OpenAI has initiated an 'arms race' in AI. Between 2022 and 2024, many companies, including big tech firms, scrambled to capitalise on the demand for AI," the document read. The survey report suggested that anxieties about the impact of AI on jobs remain high in India as well, considering ours is a services-led economy. The chief economic advisor to the Indian government, V Anantha Nageswaran, discussed the impact of artificial intelligence on employment and labour in the latest economic survey. The report claimed that "among white-collar workers, an IIM Ahmedabad survey highlights how 68 per cent of the surveyed employees expect their jobs to be partially or fully automated by AI within the next five years. Forty per cent of the employees believe AI will make their skills redundant". The report highlighted that, as India's workforce in low-skill and low-value-added services faces vulnerability from AI, strong supporting institutions are crucial to assist workers in moving to medium- and high-skilled roles, where AI can complement their work instead of replacing it. The Economic Survey added that the ideal use of AI is to support human decision-making, which can help maximise both micro- and macroeconomic benefits. Leading AI companies are also working toward this objective. The survey referred to OpenAI chief Sam Altman, who recently mentioned in a blog post that the company's goal is to provide people with powerful tools to achieve broadly distributed benefits. Nageswaran also stressed that businesses must weigh AI's benefits against its long-term social costs. "The private sector needs to consider the subterranean social costs, which may surface over time and eventually affect the environment necessary for running businesses smoothly." Sindhu Gangadharan, MD of SAP Labs India, told AIM that to sustain the momentum of AI, the nation must ensure robust support for deep tech innovation. "We also need to create a dedicated deep tech fund to support startups in critical areas; this will further need significant investment and a structured funding mechanism," she said. "This must be linked to strong learning and upskilling initiatives to cultivate the next generation of AI and deep tech talent. As AI and automation redefine job roles, it is essential to prioritise upskilling and reskilling initiatives," she added. Notably, Microsoft has announced that it will train and skill 10 million people in AI under the ADVANTA(I)GE India initiative. Along similar lines, Sumeet Mathur, senior vice president and MD of ServiceNow India Technology & Business Center, told AIM that to fully harness AI's potential, the government must strongly emphasise AI skilling and establish robust training frameworks to empower the workforce with future-ready capabilities. "Policies that support the industry in attracting investments, promoting innovation, and building world-class digital infrastructure will be crucial. Strengthening public-private partnerships can further accelerate these efforts, bridging the digital divide and fostering a thriving tech ecosystem," he added. As India prepares for the Union Budget 2025-26, global tech giants, including Google, Microsoft, AWS, and Oracle, are keenly watching for policies that could shape their future strategies. This year, the focus will definitely be AI, especially as India, following the success of the Chinese AI model DeepSeek, is now working on developing its homegrown LLM. This will increase the demand for compute in India, and the government is likely to turn to private players to provide compute for startups building LLMs in the country. Global companies in India are expecting the government to reduce import duties on key AI hardware like GPUs and high-performance computing equipment. This could lower costs for AI and cloud infrastructure, attracting more investment in India. Indian IT minister Ashwini Vaishnaw recently announced that India will host DeepSeek on its local servers, boosting the demand for compute capability in the country. He also stated that India is set to offer the world's most affordable compute power, providing high-end AI chips for under $1 per hour. "DeepSeek was trained on 2000 GPUs " Vaishnaw said. "We have now 15,000 high-end GPUs. ChatGPT was trained on about 25,000 GPUs. So this gives us a huge compute facility, something which will really give a boost to our ecosystem." Microsoft CEO Satya Nadella recently visited India and announced that the company would invest $3 billion to build more data centres in the nation to grow its Azure business. AWS is investing $8.3 billion in Maharashtra and ₹60,000 crore in Telangana to expand cloud infrastructure and data centres. The announcement is part of AWS's broader $12.7 billion commitment to India by 2030 to meet the growing demand for cloud services and AI nationwide. Oracle currently has two centres in India. Launched in 2019, its first Gen 2 Cloud data centre is in Mumbai. The Hyderabad Cloud Region opened in 2020 and serves as a disaster recovery data centre for the Mumbai region. Shailesh Singla, vice president of cloud Applications at Oracle India, told AIM that the cloud service provider will continue to invest in AI infrastructure in the country to serve the demands of Indian customers. Local Saas player LeadSquared told AIM that targeted incentives supporting AI research, cloud technology, and innovation are crucial. "Equally important is establishing a robust data security framework to ensure trust and credibility, which will drive long-term progress. A Budget focused on these priorities can lay the foundation for sustainable growth and position India as a global leader in innovation," said Prashant Singh, COO, LeadSquared. However, according to a recent report, the race for the government's INR 10,000 crore 'India AI Mission' to acquire advanced AI chips could bring some surprises. None of the four service partners of cloud major Oracle -- Ishan Infotech, Path Infotech, Cyfuture India, and Unicloud Labs -- made it to the technical evaluation held this month. Global cloud players in India face competition from local cloud providers like Yotta, E2E Networks, Netweb, and Tata Communications. The likes of Google, Microsoft, AWS, and Oracle would want to get a share in this pie as well. "NVIDIA is AI in India", said Jensen Huang at NVIDIA AI Summit 2024 in Mumbai when announcing that Indian AI factories would see 20x NVIDIA GPU growth by year-end. Citing Yotta, Tata Communications, and others, Jensen said that NVIDIA in India has built a really rich ecosystem in just a span of one year. "By the end of this year, we will have nearly 20 times more compute here in India than just a little over a year ago," he added. These companies, with their significant investments and strategic interests in the country, have high expectations for infrastructure development and supportive policies that could bolster their operations and contribute to India's technological advancement.

India's Chief Economic Advisor Calls for More Private R&D Investments as Govt Funds 50%

About 50% of India's R&D expenditure comes from the government, 41% from business enterprises, and only 9% from higher education institutions. Ahead of the Union Budget 2025, the chief economic advisor to the Indian government, V Anantha Nageswaran, discussed the impact of artificial intelligence (AI) on employment and labour in the latest economic survey. He highlighted that raising wages and salary growth for workers is not just a moral imperative but also a driver of aggregate demand for businesses in the medium run. "It is enlightened self-interest rather than being seen only from a moral prism," he stated. He pointed to AI as a clear example of the evolving balance between capital and labour, referring to a special essay on the topic in Chapter 13 of the Economic Survey 2024-25. "Deployment of artificial intelligence presents both opportunities and challenges. Past technology revolutions, in general, sometimes make us feel that technology eventually generates more jobs than it displaces. That is true, but the key word is 'eventually'," he emphasised. Nageswaran underscored the importance of addressing the transition period before AI-induced job displacement leads to new opportunities. "What happens between 'now' and 'eventually' is critical, and that is where we need to create supporting institutions, enabling institutions to train workers and prepare them. Academic curriculums have to change, workplace practices have to evolve," he said. He acknowledged that technological transitions in history, particularly during the previous three industrial revolutions in the Western world, had not been painless. "We need to learn from them, and that is what this chapter covers." Nageswaran also stressed that businesses must weigh AI's benefits against its long-term social costs. "The private sector needs to consider the subterranean social costs, which may surface over time and eventually affect the environment necessary for running businesses smoothly. The chapter argues [that] for cash flow deployment optimised over a long horizon, this will augment labour and deliver broad-based social benefits." In a lighter vein, he said, "One of the considerations - when we wrote this chapter - was whether it would become outdated by the time it goes to print, given the fast changes happening in the artificial intelligence space." However, he reassured that the discussion focuses not on technological advancements themselves but on AI's broader economic and labour implications. He further pointed out the relatively low R&D spending by India's private sector, noting that compared to other countries, 50% of India's R&D expenditure comes from the government, 41% from business enterprises, and only 9% from higher education institutions. "This is one area where the private sector must step up. Despite available incentives, private sector R&D in India remains both limited and sectorally concentrated." 'From Make in India, We Have Moved to Make for the World' President Droupadi Murmu, addressing the joint session of Parliament ahead of the Union Budget session, emphasised the government's commitment to making India a global leader in innovation. "Our aim is to make India a global innovation powerhouse. In the area of artificial intelligence, IndiaAI Mission has been started," she stated. Highlighting India's growing influence in digital technology, she said, "Our country is emerging as a major global player in digital technology." 'From 'Make in India', we have moved to 'Make for the World',' President Murmi added while talking about the defence sector and innovations. The IndiaAI Mission, launched to strengthen the nation's role in artificial intelligence, was also discussed by IT minister Ashwini Vaishnaw in a press conference. He recently confirmed that India's LLM would be ready within 10 months. The electronics and information technology ministry, through its IndiaAI Mission, has also called for proposals to create AI models that are tailored to Indian needs while meeting global standards. This proposal comes after Vaishnaw said India is set to develop its own generative AI model, aiming to rival global platforms like ChatGPT and DeepSeek. "Very soon, we will have our own LLMs," Vaishnaw added. Comparing India's AI infrastructure to global benchmarks, Vaishnaw noted, "DeepSeek AI was trained on 2,000 GPUs, ChatGPT was trained on 25,000 GPUs, and we now have 15,000 high-end GPUs available. India now has a robust compute facility that will support our AI ambitions." For the Union Budget 2024-25, the Indian government has underscored its commitment to AI by approving the comprehensive IndiaAI Mission. A substantial financial outlay of over ₹10,000 crore was earmarked for the mission over five years, of which ₹551 crore has already been allotted. Speculations and discussions are rife about who stands to benefit and what allocations will be made. While finance is obviously the big picture, considering how the IndiaAI Mission found its place in the previous Budget, AI is likely to take centre stage in the upcoming session tomorrow.

Will Budget 2025 Boost AI Investments in India?

The advancement of technology is powered mostly by Artificial Intelligence (AI) systems. Several AI technologies now shape different sectors, leading to India's position as an innovative technology center. The Indian government is actively supporting AI to be a global leader in the field. Speculation exists regarding whether the upcoming Budget 2025 can revolutionize AI investments in India. The AI domain has demonstrated substantial advancement throughout India. Most of the advancements have happened in recent years. In fact, nowadays, so many firms are starting to work in this field more and more. Due to the new groups and conferences in this field, there are better scopes and understanding here. The big change has shaken the global perspective towards the complete Indian AI domain. It was not some small change but a major step of achievement accomplished by the . Data indicates that India's Investments in AI are rapidly increasing, having been boosted toward approximately $2 billion. Though progress has been made, the existing gap in infrastructure and funding blocks further development of untapped potential.