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Indian AI Market Forecast to Reach $7.8 BN by 2025

The artificial intelligence (AI) market in India is expected to grow at a five-year compound annual growth rate (CAGR) of 20.2% and reach US$7.8 billion in total revenues by 2025, according to a report by the International Data Corporation (IDC). Businesses in India are expected to accelerate the adoption of both AI-centric and AI non-centric applications for the next five years.

Further, the AI software segment has the potential to dominate the market and grow from US$2.8 billion in 2020 at a CAGR of 18.1% by the end of 2025, the report stated. Organisations are leveraging multiple AI applications in their customer relationship and enterprise risk management, and other operational platforms for daily management. They are also using AI to scale up supply chains. This is primarily aimed at improving return on investment (RoI) and cost savings.

Indian organisations plan to invest in AI to address current business scenarios across functions, such as customer service, human resources (HR), IT automation, and security, among others. Increasing business resilience and enhancing customer retention are among the top business objectives for using AI by Indian enterprises, the report noted. About 51% of organisations are processing transactional and social media data through AI and machine learning (ML) solutions. While 46% of them use unstructured or semi-structured data.

With data being one of the most crucial components in an AI/ML project, businesses use a variety of databases to handle large data volumes for making real-time business decisions. Organisations must focus on getting high-quality training data for AI/ML models, an expert explained. AI applications form the largest share of the revenue for the AI software category, at more than 52% in 2020. The major reasons for AI projects to fail includes disruptive results to current business processes and lack of follow-ups from business units, the report said.

The country has been heavily investing in developing AI/ML courses and solutions. In September, The Indian Institute of Science in Bangalore (IISc), in collaboration with a private player, announced it would establish a state-of-the-art AI/ML centre at the IISc campus. Spread across approximately 140,000 square feet, the centre will offer bachelor’s, master’s, and short-term courses in areas AI/ML, deep learning, fintech, reinforcement learning, image processing, and computer vision.

The centre will also promote research and innovation in AI/ML and develop the talent pool from across the country to provide cutting-edge solutions to meet the industry’s emerging and future requirements. According to a statement, as IISc continues to deliver on its mandate to provide advanced scientific and technological research and education, its partnerships with forward-thinking institutions will help it scale up substantially and position India as a deep tech innovation hub.

More recently, OpenGov Asia reported that the Indian Institute of Technology in Roorkee (IIT-Roorkee), is setting up a new school for AI and data science. The course will invite renowned experts in the field of AI to participate in designing relevant curricula as well as faculties and mentors who will encourage innovative research ideas to the students. These experts will also facilitate student scholarships and faculty exchange programmes. AI-driven technologies are rapidly transforming the world. Academic collaborations between international faculty and institutes can help solve ongoing global challenges like climate change, resource sustainability, and information security.

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