India’s domestic artificial intelligence (AI) market is expected to more than triple to $17 billion by 2027, according to a report by global consulting firm BCG.

The growth of the country’s AI market will be helped by increasing enterprise tech investments, thriving digital ecosystem and robust talent base, said BCG in a report titled India’s AI Leap – BCG Perspective on Emerging Challengers.

The report noted that India has more than 600,000 AI professionals and the number is expected to more than double to 1.25 million by 2027.

India accounts for 16% of the global AI talent pool, second only to the United States, a reflection of both its demographic advantage and STEM education pipeline, added the report.

Apart from the talent base, the expansion of India’s AI market is also expected to be fuelled by public platforms like Aadhaar, UPI, DigiLocker, and the Open Network for Digital Commerce (ONDC).

“With over 700 million internet users and widespread smartphone penetration, India generates massive volumes of data, which is the fuel for training AI models. This scale, combined with open architecture, is enabling the development of population-scale AI solutions across sectors,” explained the report.

The expansion of data centre network and government’s IndiaAI mission is also expected to boost the country’s AI growth. India already has a network of 152 data centres and it plans to add 45 new data centers by 2025, bringing 1,015 MW of additional capacity, it said. Besides, the government under its IndiaAI mission plans to invest over Rs 10,000 to develop the AI market.

The report also said that India’s startup industry is also keeping pace with the AI development in the country. “With 4,500+ AI startups , 40% of which were launched in the last three years, the country is fostering innovation across sectors, from health-tech and agri-tech to logistics and fintech,” it added.

The report singled out four sectors in the startup industry that are ideal for AI-led transformation – fintech, consumer, media and entertainment, and proptech.

In the financial services space, AI is enabling reimagination of the financial stack that is helping in underwriting risk using alternative data, automating onboarding & compliance, and building intelligent workflows for fraud detection, service resolution, and sales enablement.

In the consumer space, the market is ripe for AI-driven innovation in areas such as customer engagement, supply chain, and store operations while media and entertainment industry is being upended by AI, particularly with the rise of generative content, it stated.

In the proptech space, AI has the potential to revolutionize the sector by removing intermediaries, verifying users, predicting prices with precision, and personalizing services, the report noted.

The report also said that Indian firm across sector using AI have moved from isolated pilots to business-wide programs with measurable ROI (return on investment).

“What sets these leaders apart is not just technological maturity, but a clear understanding of what truly drives scale: people, processes, platforms, and precision,” added the report.

The main challenges to implementing AI will be pilot fatigue as AI initiatives would remain stuck in experimentation and governance issues as adoption of generative AI grows, the report said.

The report concluded that the call to action for Indian business leaders to adopt AI is urgent and absolute while urging them not to build everything alone but to partner with startups, technology leaders, and academia.

“This is India’s opportunity to lead the global AI wave—not by watching from the sidelines, but by rewriting the playbook,” it said.

Earlier in March, in another BCG report titled “In the Race to Adopt AI, Asia Pacific Is the Region to Watch”, it had said that Asia is racing to adopt generative AI at a pace that surpasses other regions, with APAC now second only to North America in adoption of the technology. “Frontrunners China and India are using GenAI to modernize sectors and develop talent,” it had noted.