Artificial Intelligence – Powering India’s Growth Story
Artificial Intelligence (AI) is the key to driving commercial development for the world. By 2030, AI is estimated to add upto $ 15.7 Tn to the global economy, which may be more than the current GDP of India and China combined. Closer to home, India has enormous potential for an artificial intelligence revolution, being the third largest talent pool for AI talent in the world, with investments in India's AI capabilities growing at a CAGR of 30.8% and expected to touch $ 881 Mn in 2023.
India’s growing semiconductor industry will be the backbone of the Indian AI market and by 2025, the Indian AI market will be worth $ 7.8 bn. 60% of AI’s Gross Value Added (GVA) in India’s GDP by 2025 is expected to be driven by four end-user sectors – Industrials & Automotive, Healthcare, Retail and CPG. BFSI and Agri-tech are also currently emerging as important application areas for AI.
Agri-tech is one of the key investment areas for Indian investors focusing on AI since agriculture contributes more than 18% to the Indian economy. Agriculture plays an important role in the Indian economy with more than 50% of the population engaged in the sector and the agriculture supply chain is in need of better optimization to improve crop yields and reduce wastage in procurement and supply. One of the most innovative solutions in this space has been Pramaan Exchange, a horticultural trading solution powered by Intello Labs, which uses computer vision to analyse one of the largest database of images (over 300 Mn) for quality mapping of horticultural products. The solution was originally developed for cardamom, a product that is challenging to trade due to its moisture-absorbing properties, making it difficult for buyers and sellers to assess its quality over an extended period. Praman’s quality assaying technology is 95% accurate compared to the 70% accuracy rate of manual assessment. Moreover, buyers and sellers gain additional time and flexibility as they can trade from anywhere and use facilities such as spot trading, e-auctioning, and reserve-auctioning for various commodities including apples and onions. Even though they have only been in business since 2021, Pramaan has already achieved an annualized trade value of over $ 600 Mn.
If we move onto FinTech, a household name in this space is the AI-supported decision making startup, Razorpay. It is one of India's leading payment gateways which allows acceptance, processing and disbursal of payments for companies and individuals. Razorpay uses the AI software Third Watch which minimizes losses due to fraud. It has become an everyday part of the modern consumer’s life—every time they book a cab, order food, groceries or conduct any online transaction, they see the Razorpay logo. To date, Razorpay has raised $ 816 mn of funding from their initial seed funding to being a mature startup today. Razorpay’s journey shows that India can foster and integrate disruptive AI-driven startups into mature and regulated sectors.
Another great example of AI application disrupting a traditional sector for the better is Sigtuple, a health-tech startup based out of Bengaluru. They provide custom products to automate analysis of biological samples for in-vitro diagnostic use. This drastically reduces the cost and time needed for healthcare professionals to diagnose the patients and their treatment can be started much earlier. This startup raised approx. $ 41 mn over 5 rounds of funding with veterans such as Binny Bansal and Accel Investors taking part. Such AI-powered healthcare solutions allow medical professionals to cater to a larger base of population at a much higher speed with greater accuracy.
Moreover, investors for all three examples cited so far have recognised that use cases for AI when adapted for India’s unique geography, culture and economic requirements can yield immense financial and social value. The growth of AI in India rests upon finding such applications of AI that reduce manual effort and help make crucial business processes better and more efficient. These business transformations require buy-in from enterprise leaders, an innovative talent pool and a healthy business ecosystem.
In terms of talent, industry surveys have shown that technical talent in building machine learning models is not enough, it is important for the employees to combine customer-centric skills such as design thinking, problem solving and communication with AI domain expertise to get the job done. Currently, India is the second biggest AI talent pool in the world and can leverage that to its advantage. Educational Institutes are already aware of this potential and the IISc campus in Bengaluru has partnered with the Karnataka government to launch ARTPARK, a $ 100 Mn venture fund to invest in AI and robotics startups. Researchers at ARTPARK developed an AI model, XraySetu in collaboration with HealthTech startup Analytix Niramai Health as an example of industry and government collaboration. They are also keen on developing the overall AI ecosystem in India and conducted the Innovation Summit 2022 to illuminate the role of 5G, AI & Robotics in the Indian economy.
The Central Government has also furthered this goal with the India Budget 2023-24. The Budget includes the government’s plan to set up three Centres of excellence for AI at prominent educational institutes. Prior to this, they have already set up an AI portal in collaboration with industry body NASSCOM which regularly publishes articles, organizes industry meetings and conducts informational seminars. They had organized a startup event called RAISE (Responsible AI for Social Empowerment) to help AI startups with fundraising and showcasing their innovations. In PM Modi’s recent webinar, ‘Ease of Living Through Technology’, he posed to the industry the question, “Can we identify 10 such problems of the society which can be solved by AI?” stressing upon the urgent need to identify use-cases where AI can help common citizens and solve their everyday problems, considering both social and financial value of their business models. The need of the hour is to help such AI startups attract investment, promote them to consumers and contribute to the benefit of the Indian public and the Indian economy.
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