This report was released to mark the India AI Impact Summit 2026.
AI is transitioning into a critical stage of adoption, as organisations shift from small-scale pilots to integrating AI across essential processes and service models. For India, this evolution coincides with a uniquely strategic moment, one defined by scale, affordability and inclusion.
India today is positioned at the forefront of AI adoption, anchored in a decade of sustained digital transformation and the development of digital public infrastructure (DPI) at a population scale. Key platforms such as Aadhaar, Unified Payments Interface (UPI) and the Account Aggregator framework have created interoperable digital rails that support data-driven service delivery across citizens and enterprises. These foundations position India to deploy AI as a mass impact enabler across sectors and demographics.
This digital maturity is translating into a set of structural advantages that extend beyond technology alone, shaping how AI is designed, deployed and governed in India.
Collectively, India’s structural advantages in AI infrastructure, talent, compute access, innovation and governance signal a transition from foundational readiness to execution at scale. Building on this momentum, the policy focus is correspondingly shifting from enabling adoption to building enduring national capabilities. Furthermore, a strategic focus on small, efficient language models tailored for local languages and constrained environments strengthens this trajectory. These models reduce compute and energy requirements while supporting real-time, on-device AI applications, expanding access to AI benefits, particularly for micro, small and medium enterprises (MSMEs), smaller cities and underserved communities.
Union Budget 2026-27 reinforces this shift, signalling a move away from isolated experimental AI pilots towards scalable, enterprise-grade platforms enabled through multi-year investment frameworks. It further lays the foundations for an AI‑ready economy by expanding compute infrastructure, strengthening semiconductor and electronics capabilities and accelerating AI upskilling.
Looking ahead, AI is projected to unlock USD1.7 trillion in economic value by 2035, underscoring its key role in India’s ambition of Viksit Bharat by 2047.
Realising this potential will depend on coordinated action across priority areas:
As AI becomes integral to India’s economic and social development, the focus is shifting towards building enduring capabilities that combine innovation with responsibility. In doing so, India has the opportunity to define a globally relevant model of AI, rooted in scale, inclusion and long-term value creation.
Artificial Intelligence (AI) for Bharat: Innovation and inclusion at scale
Advancing inclusive, scalable AI innovation to propel India’s digital future
Key Contacts
Nilachal Mishra
Partner and Head, Government & Public Services (G&PS), National Leader - Government and Infrastructure
KPMG in India
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