AI’s $1.7 Trillion Bet: Which Sectors & Signals Traders Should Watch

Artificial Intelligence (AI) is moving from hype to hard numbers in India’s growth story. A new roadmap from NITI Aayog says faster AI adoption could add $1.4–1.7 trillion to the Indian economy by 2035.

At the current pace, India’s GDP is expected to touch $6.6 trillion by then. But if growth picks up to 8% under the government’s Viksit Bharat plan, it could reach $8.3 trillion. AI is being counted on to help close that gap.

For investors, the impact may not be far away. Sectors such as IT services, chip-making, data centres, factory automation, and healthcare technology could see early gains. Traders should also keep an eye on government policies, company spending on AI, and changes in valuations of tech and infrastructure stocks.

Why AI Matters for India’s Growth Story

The NITI Aayog report highlights that AI could deliver productivity gains of 30–35% and boost innovation-led growth by another 20–30%. Together, these levers can bridge nearly half the gap between India’s current trajectory and its aspirational growth path.

With one of the world’s largest STEM (Science, Technology, Engineering, and Mathematics) workforces, a fast-growing digital infrastructure, and an expanding Research and Development (R&D) ecosystem, the country has the potential to capture 10–15% of the global AI opportunity, which itself is projected to add $17–26 trillion to the world economy over the next decade.

Sectors to Watch: Immediate and Long-Term

The roadmap identifies 18 priority sectors where AI can deliver outsized impact, from software and semiconductors to space and nuclear power. Yet, four sectors stand out as near-term growth engines:

1. Financial Services

Banking, insurance, and capital markets are poised for rapid transformation through AI-led compliance, fraud detection, and hyper-personalised customer services. The report estimates that AI could unlock $50–55 billion of additional value in financial services by 2035.

For lenders, AI-driven credit decisioning could expand financial inclusion and reduce risk, while asset managers may benefit from smarter portfolio strategies powered by real-time data analytics.

2. Manufacturing

AI-powered predictive maintenance, intelligent product design, and supply chain optimisation could deliver $85–100 billion in incremental value for Indian manufacturing. The creation of smart factory corridors, integrating clean energy and digital infrastructure, is also on the agenda. For traders, this sector signals opportunities in industrial automation, robotics, and export substitution.

3. Pharmaceuticals and Biotech

In an industry where India has traditionally played the role of a generics giant, AI is opening doors to drug discovery and innovation-led leadership. AI could cut discovery costs by up to 30% and reduce timelines by nearly 80%. This not only accelerates domestic innovation but also positions Indian pharma as a global player in novel therapies.

4. Automobiles and Mobility

The roadmap envisions 18–20 million software-assisted vehicles on Indian roads by 2035, supported by digital testing parks and smart corridors. For automakers, AI will enable everything from autonomous driving systems to real-time traffic integration. Export gains and import substitution in this sector alone could add $20–25 billion in value.

Governance, Regulation, and Workforce Transitions

AI’s impact will not stop at banking, manufacturing, pharma, or automobiles. The NITI Aayog roadmap points to a bigger horizon—frontier sectors like space technology, defence, renewable energy, nuclear power, and semiconductors.

With opportunities come challenges. As AI adoption accelerates, it raises tough questions: How should we regulate it? What happens to jobs that machines might replace?

Finance Minister Nirmala Sitharaman has argued for a “soft yet agile” regulatory approach—rules that encourage innovation while still keeping guardrails in place. At the same time, the government knows that routine and low-skill roles will feel the impact.

What Traders Should Read Between the Lines

For markets, the AI roadmap offers three clear signals:

1. Structural Growth Driver: AI is not a one-off policy announcement—it is being positioned as a national economic lever, much like liberalisation in the 1990s or digitisation in the 2010s. Traders should see AI-related reforms as long-duration growth catalysts.

2. Sectoral Winners: Financials and manufacturing stand to benefit first, followed by pharmaceuticals and mobility. This makes banks, NBFCs, auto ancillaries, pharma majors, and IT services natural watchlists for investors.

3. Innovation Premium: Beyond operational efficiencies, AI promises “leapfrogs” in innovation. This means companies that invest early in AI-led R&D could command valuation premiums, particularly in export-driven sectors.

The Bigger Picture

By 2047, when India aspires to be a developed economy, the size of the economy could rise to $13 trillion at baseline growth. With AI integration, this could swell to $21 trillion.

For traders, this is not just about chasing near-term winners. It is about recognising that AI is becoming the decisive lever of India’s growth story, much like IT outsourcing was in the 1990s and digital payments in the 2010s.

As NITI Aayog CEO BVR Subrahmanyam puts it, “AI can be the decisive lever for an 8% plus growth rate.” For India’s markets, that statement may well be the most important investment signal of the decade.

Read more:

From Outsourcing to Ownership: How GCCs and AI Are Reshaping the Indian IT Industry

Sources

Deccan Chronicle
Business Today
CNBC TV18
MSN
Mint
The Economic Times India Brand Equity Foundation
The Times of India