₹91 Trillion BFSI, 30% MSME GDP: Why AI Is Now Central to India’s Economic Core

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On the second day of the India AI Impact Summit 2026, the key question was: how will AI shape India’s economic growth?

In a session titled AI and India’s Economic Growth: Sectoral Impact and the Road Ahead, industry leaders discussed how AI is becoming foundational to India’s growth across retail, telecom, agriculture, government, MSMEs, healthcare, finance, manufacturing, and more.

The message was clear: AI is reshaping the Indian economy.

Retail, Telecom & the Data Center Push

Anand Prakash Jangid of ajalabs.ai began with retail, one of India’s largest employers. With India’s young population driving consumption, AI is reshaping e-commerce and quick commerce through:

• Inventory optimization
• Demand forecasting
• Logistics efficiency
• Brand personalization

Jangid said AI-driven commerce could add $450 billion to India’s GDP.

He then turned to telecom and media, calling telecom “the backbone of the digital economy.” With India positioned as an energy-surplus country, it is emerging as a serious data center hub amid trillions of dollars in global investments.

AI applications in this space include:

• Infrastructure optimization
• Fraud detection (including initiatives like RBI’s MuleHunter)
• Media cost reduction
• Advanced analytics

India’s culture of experimentation, he noted, is fueling “Made in India for the World” innovation.

Agriculture and AI

Harpreet Singh of The Royal Bank of Scotland described agriculture this way: “Predicting droughts, anticipating storms, AI insights protect harvests strong.”

With agriculture employing 46% of India’s workforce and contributing 18% to GDP, AI’s role is transformative:

• Crop prediction using soil and climate data
• Digital twins of farmland
• IoT-based irrigation optimization
• 40% water waste reduction
• 30% fertilizer waste reduction

Better soil health data could even improve farmers’ creditworthiness, reducing interest rates by 0.5–1%. AI adoption in agriculture alone could generate ₹18,000–22,000 crore annually.

AI in Government

India processes nearly ₹50 lakh crore in public transactions annually, serving 1.5 billion citizens. AI, speakers noted, could reduce development variance by 40%.

Applications already emerging include:

• Grievance redressal systems reducing resolution time to two weeks
• Data-driven policymaking
• AI-based policing
• Healthcare diagnostics
• Smart traffic management (25% reduction in waiting time)
• Personalized education delivery

Singh said, “AI replaces guesswork with refined knowledge,” marking a big change for governance in a country as large as India.

Tourism, Textiles & the Rise of AI-Native Enterprises

Narasimhan Elangovan of InCorp Advisory Services highlighted tourism, which contributes 7% to GDP and aims to reach 10%.

AI is enabling personalized travel plans, multilingual chatbots, crowd management (as seen during the Maha Kumbh), and digital destination info systems. 

Government initiatives such as the proposed National Institute of Hospitality and the National Destination Digital Knowledge Grid aim to standardize and digitize tourism services.

In textiles, where 90% of the sector is MSME-driven, AI is used for virtual trial rooms, quality checks, cutting waste, tracking carbon compliance, and mass customization similar to Netflix-style personalization.

In IT and IT-enabled services, the panel emphasized that “every company will become an IT company.” India’s growing digital infrastructure—such as data centers, GPU adoption, and projects like Bhashini for language translation—is setting the stage for AI-native SaaS, vibe coding, and large-scale digital governance.

“India has the talent, digital rails, and intent,” Elangovan said. “Execution at scale is now key.”

MSMEs, Healthcare & Pharma Acceleration

Prabhaw Kumar Agarwalla of The Institute of Chartered Accountants of India highlighted that MSMEs contribute 30.1% to GDP and are rapidly embracing AI, with 59% adoption and strong growth in AI talent hiring.

In healthcare, the Ayushman Bharat Digital Mission aims to digitize over 500 million patient records, creating structured training data for AI systems while maintaining privacy safeguards.

AI diagnostics are already demonstrating capabilities beyond human visual detection, such as identifying a 9mm lung nodule on a chest X-ray.

Drone delivery pilots in Meghalaya, Arunachal Pradesh, Uttarakhand, and Himachal Pradesh are deploying AI-enabled drones to deliver life-saving medicines in remote regions.

In pharma, AI is speeding up processes dramatically:

• Drug development has been reduced from 5 years to 1.5 years
• Costs reduced from $700 million to $400,000
• 30% of new drugs expected to be AI-driven

Agarwalla said, “Today, we discuss AI’s impact on India’s economy. Tomorrow, we may discuss India’s economy’s impact on AI.”

BFSI & Manufacturing

R. Vittal Raj of The Institute of Chartered Accountants of India brought the focus to Banking, Financial Services, and Insurance (BFSI), calling it the economy’s circulatory system.

India’s digital public infrastructure, Aadhaar-linked identity, UPI, and Digital India initiatives provide a strong foundation for AI-led growth. With the sector’s market capitalization around ₹91 trillion and over 52 crore Jan Dhan accounts, financial inclusion is expanding at scale.

AI in BFSI is enabling customer personalization, credit access for MSMEs, fraud detection, efficient loan recovery, and AI-driven underwriting.

However, digital fraud remains a challenge, with reported losses exceeding ₹52,000 crore. Balancing innovation with compliance frameworks like the Digital Personal Data Protection Act is essential.

In manufacturing and automobiles, contributing 7% to GDP and 49% of manufacturing GDP, AI is driving:

• Predictive maintenance (20% downtime reduction)
• Vision-based defect detection (50% defect detection by AI)
• Supply chain optimization
• Autonomous mobility

Since logistics costs are 14% here versus 8% globally, AI-driven improvements could really boost competitiveness.

Across sectors, a pattern emerged: AI is improving both top and bottom lines.