World Bank: Only 23% of Indian Firms Use AI Despite Rising Investment
A World Bank report indicates that only 23% of surveyed formal firms in India utilize artificial intelligence, despite significant private sector investment in the technology.
Only 23 percent of formal firms in India are currently using artificial intelligence (AI), despite substantial increases in private investment in the technology, according to the World Bank's October 2026 India Development Update. This adoption rate is approximately one-third of the level seen in the United States.
The report identifies three foundational elements positioning India to benefit from AI: a large technical workforce, a globally integrated IT sector, and digital public infrastructure. The World Bank's lending strategy focuses on locally adapted AI tools rather than advanced frontier models, aiming for broader benefits and support for workers during technological transitions.
Private investment in AI within India saw a significant surge, rising from $1.2 billion in 2024 to $4.1 billion in 2025, a nearly threefold increase. However, the report cautions that the long-term impacts of AI on the economy and labor market remain uncertain, with no current forecast suggesting increased growth or job reductions as a direct result.
The World Bank recommends lowering barriers for AI adoption by small firms, fostering local AI innovation, and establishing a clear regulatory framework to reduce uncertainty while safeguarding data security and privacy.