India’s AI Market to Be Just 3 PC of Global AI Biz Despite Four-Fold Growth by 2031
Control of a few large firms across the AI stack may create barriers to entry for smaller players.
Chennai: The AI market in India is expected to grow four-fold by 2031 to $31.94 billion, but India’s share in the global AI market will be just 3 per cent as the country faces several entry barriers for smaller players, finds the Competition Commission of India.
The AI market worldwide has increased from $93.24 billion in 2020 to $186.43 billion in 2024 while the market size of AI in India has grown from $3.20 billion in 2020 to $6.05 billion in 2024. The global AI market is projected to grow from $244.22 billion in 2025 to $1 trillion in 2031 and in India it is expected to expand from $7.84 billion in 2025 to $31.94 billion in 2031. India’s share in the global AI business will be just 3.1 per cent by 2031.
Control of a few large firms across the AI stack may create barriers to entry for smaller players. CCI survey identifies availability of data, talent, compute facilities and cost of cloud services amongst potential entry barriers. Established entities own vast high-quality datasets, which may not be accessible to small firms. Furthermore, high training costs may favour well-funded incumbents. Removing these barriers is imperative to create a level playing field, encourage the entry of new players and stimulate competition in the AI marketplace.
The adoption of AI technologies in India is rapidly accelerating across various user sectors. The integration of AI across industries is reshaping market structures and business strategies. AI is widely used in Banking Financial Services and Insurance (BFSI), healthcare, retail, e-commerce, logistics and marketing, with applications including dynamic pricing, personalised recommendations, demand forecasting and automated decision-making.
Primary research indicates that the core area of work for almost 67 per cent of respondent AI startups in India lies in the layer of building AI applications. India's market is dominated by open-source model usage with 76 per cent of the startup respondents building their application solutions using open-source technologies.
Worldwide open-source technologies and algorithms for model building are provided by players such as Google, Microsoft, Meta, Amazon, Open AI etc.