Artificial Intelligence: AI will transform India's image, boosting the economy - World Bank's big claim

Artificial Intelligence: India is poised for a significant economic boom in the field of artificial intelligence (AI). Franziska Ohnsorge, Chief Economist for South Asia at the World Bank, recently claimed that India is in an excellent position to accelerate AI adoption and drive private investment through it. This article outlines India's progress in the AI ​​sector, the state of private investment, and the impact of future trade agreements.

India's Strong Position in AI

In a media interaction on October 4, 2025, Ohnsorge stated that India is exceptionally well-positioned to leverage AI. She explained that India's AI Readiness Index is significantly higher than other emerging economies and is almost at the level of developed countries. This is due to the rapid adoption of AI in India and its diverse uses. In particular, the impact of AI in the BPO (Business Process Outsourcing) sector is notable. Following the launch of ChatGPT, the number of jobs requiring AI skills has doubled, now accounting for 12% of total jobs. This is three times more than other sectors.

As a result, India's service exports have also seen significant growth. In particular, computer services exports have increased by 30% since ChatGPT, while overall service export growth has remained stable. This demonstrates that AI is not only transforming India's technology sector but also enhancing its competitiveness globally.

Private Investment: Slow but Steady

Private investment in India has slowed down since the pandemic, while it has increased in many other emerging economies. Nevertheless, Ohnsorge pointed out that private investment growth in India has been better than in most developing countries. On the other hand, government investment has accelerated, playing a key role in boosting the economy. However, foreign direct investment (FDI) remains relatively weak compared to international standards.

Ohnsorge believes that with the increasing use of AI and new trade agreements, private investment in India could regain momentum. In particular, reforms in tariff policies and the manufacturing sector could further strengthen India's position in the global supply chain.

The Future of Trade Agreements

Ohnsorge cited countries like Mexico and Vietnam, stating that these countries have achieved access to approximately 50% of GDP with their trading partners. For India, this figure currently amounts to 12% of GDP. If India concludes trade agreements with the UK, the European Union (EU), Australia, Canada, and possibly the US, this access could increase to 50% of GDP.

In particular, Ohnsorge described the UK trade agreement as the most ambitious agreement of the last decade. This agreement not only reduces tariffs but also promotes services and labor mobility. It could open up new opportunities for India in both the services sector and manufacturing.

World Bank Reports and Economic Projections

The World Bank is scheduled to release its South Asia Report on October 7, 2025. Previously, the report, released in June 2025, projected India's GDP growth rate at 6.5% for fiscal year 2026 and 6.7% for the next fiscal year. This projection reflects India's strong economic foundation and progress in emerging areas such as AI.