The good, bad and ugly of AI for India | Number Theory

What we do know is that the future will not be unchanged, both in capital and labour markets. What will AI mean for the Indian economy?

India held its biggest ever Artificial Intelligence (AI) gathering this week. As of today, AI promises huge benefits to the global economy and perhaps even humankind , even as it sparks legitimate fears. What it will finally entail is something best left to the future. What we do know is that the future will not be unchanged, both in capital and labour markets. What will AI mean for the Indian economy?

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  Indians are among the most optimistic about AI’s impact

  According to a cross-country survey done by Ipsos in 2024, India was among the top countries where respondents believed that products and services using AI have more benefits than drawbacks, with 62% believing the same. China and Indonesia were ahead of India on this count. To be sure, even that survey showed that optimism regarding AI had fallen in India compared to the past. This number was 75% and 65% of those surveyed from India in 2022 and 2023 respectively. On a similar note, a 2025 survey by Pew Research Center shows that 89% of Indians also trust their country to regulate the use of artificial intelligence effectively. This optimism towards AI also reflects in usage, with Indians being the second largest cohort of ChatGPT users, with a 11.1% share in global traffic, only behind the US (20.6%), according to a paper by economists at the World Bank published in November 2025.
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  Will India’s stock market AI FOMO turn out to be a JOMO?

  India was one of the worst performing equity markets last year. This year so far has not been very different. While headwinds such as US tariffs played a role in poor sentiment, one of the big reasons why Indian equity returns have lagged behind countries such as the US is the absence of an AI boom in India. Data shows that a very large part of the rally in US equities is driven by seven tech firms invested most heavily in AI. In case this bubble is pricked, prices could correct very sharply in markets such as the US. India, not having been a part of the rally, might escape such a drastic correction. To be sure, some blowback in the wake of a crash will be inevitable and India is also dealing with headwinds from the loss in market cap of domestic IT firms which are being seen as losing out due to AI.
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  Most Indian jobs might not be affected because of AI…

  As AI pushes the envelope on its learning frontiers, a lot of intermediate service sector jobs might become redundant. This would include lawyers who prepare briefs, IT employees who offer business process services, accountants etc. However, AI would still not do most of the blue-collar jobs and the really high-end white-collar jobs (machines are unlikely to be CEOs). A 2025 World Bank paper which measured the potential exposure of the labour market to AI across 25 countries found India facing a much lower risk from AI than high-income countries. The logic is simple. Countries with lower income levels have fewer white-collar jobs for IT to replace.
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  … But a lot of well-paying ones might suffer

  The fear is best captured by market movement in the last few days. Last week CNBC-TV18 reported that Anthropic’s market capitalization had exceeded the combined market cap of all major Indian IT companies. Indian IT stocks started sliding after Anthropic’s Claude Cowork suite was rolled out, which turns its AI from a conversational assistant into an autonomous workplace agent, along with plug-ins that extend its use across legal, sales and finance workflows, raising fears that traditional outsourcing and software services—which has been the bread and butter of Indian IT—could be replaced by AI automation. While a lot of Indian IT leaders have dismissed fears of AI adversely affecting their businesses, it would be delusional to believe that the technology’s impact on established practices, employment generation included, will be trivial.