Union Budget 2024: What does Nirmala Sitharam’s bahi katha holds for India’s AI aspirations?

India’s investment of Rs 10,000 crores in the IndiaAI Mission marks a significant step towards enhancing the country’s AI capabilities. This funding reflects the government’s commitment to advancing technology and fostering innovation. However, experts agree that substantial work remains to meet the ambitious goals set for the AI sector. With global powers racing to harness AI’s potential, India must continue to push forward and avoid complacency.

With AI proving to be a massive opportunity for the Indian tech sector, it is also a major disruptor — we have already seen various industries, especially in tech, laying people off because of AI. We are also seeing new businesses emerge, and some disappearing because of AI. Naturally, then, Finance Minister Nirmala Sitharaman and her cohorts had to consider AI as a key aspect of India’s tech budget for 2024.

Strengthening Computational Capacity
Raj K. Gopalakrishnan, Co-Founder & CEO of KOGO, highlights the need for increased investment to meet India’s growing computational demands. “In March 2024, the Union Cabinet allocated Rs. 10,372 crores ($1.3 billion) for the IndiaAI Mission, with nearly half designated for NVIDIA GPUs and building compute capacity. However, to meet rising demands, more resources are necessary. The National Supercomputing Mission (NSM) currently has a compute capacity of 24.83 petaflops, costing Rs 1,218 crores. Our target of 10,000 GPUs seems conservative compared to the capacity of major companies. To keep up, India needs to boost its computing infrastructure,” he explained.

Gopalakrishnan also pointed out the AI skills gap in India, which stands at 51 per cent. “Roles like ML engineers and data scientists face a significant demand-supply disparity, ranging from 60 per cent to 73 per cent. While the National Education Policy aims to introduce AI education in schools, immediate actions are needed to prepare the next generation of workers. Enhanced budget allocations for updating engineering college curricula are essential. We hope for increased incentives to support startups focused on emerging technologies, which could boost job opportunities in AI.”

Enhancing R&D and Global Competitiveness
Arun Balasubramanian, VP & MD of UiPath India & South Asia, emphasizes the importance of continued investment in research and development. “The IndiaAI Mission’s Rs. 10,372 crores investment aims to create a high-end, scalable AI ecosystem through public-private partnerships. This underscores the government’s push to position AI and automation as key drivers of growth. The Union Budget should focus on ramping up R&D investments to drive innovation and maintain India’s competitive edge globally.”

Balasubramanian notes that the Indian economy’s rapid growth necessitates ongoing focus on education and employment to sustain progress. “This budget is crucial for ensuring that India continues its growth trajectory by addressing key areas like education and job creation.”

Capitalizing on AI’s Economic Potential
Pratap Daruka, CFO at Tredence, points out the vast economic potential of AI. “Studies suggest that AI could contribute up to $957 billion to India’s economy over the next decade. The government’s previous initiatives, like Centers of Excellence for AI and the Data Governance Policy, show its commitment. However, India’s share of global AI investment remains only 2.5%. To fully leverage AI’s potential, the government should treat AI and analytics as distinct industries, increasing investments in R&D and offering tax credits to encourage the development of advanced solutions.”

Daruka believes that AI could transform employment by creating new jobs and evolving existing roles. “To achieve this, a collaborative effort from the government, universities, and businesses is needed. A dedicated task force and appropriate budget allocation are crucial for faster execution and talent development.”

Fostering Innovation and Scaling AI Solutions
Sarvagya Mishra, Co-Founder & Director at Superbot, anticipates advancements in government policies supporting AI and technology sectors. “At Superbot, we’ve seen AI’s transformative power in addressing communication challenges, especially in education. We urge the government to prioritize funding for AI and machine learning research to enhance customer engagement across various industries.”

Mishra advocates for increased incentives for public-private partnerships to scale AI technologies. “These partnerships are vital for making advanced AI solutions accessible to small and medium-sized enterprises (SMEs). Integrating AI into national digital infrastructure initiatives will ensure robust support for businesses adopting these technologies. Tax incentives for companies investing in AI and automation will accelerate adoption and drive economic growth. Additionally, comprehensive training programs are needed to build a skilled workforce, and clear regulatory frameworks should be established to promote ethical AI use and protect consumer data.”

The 2024 Union Budget represents a significant opportunity for India to advance its AI capabilities and technological infrastructure. By focusing on strengthening computational capacity, enhancing R&D investments, and fostering innovation, India can solidify its position as a global leader in AI. The path forward involves addressing skills gaps, promoting public-private partnerships, and ensuring robust regulatory frameworks to drive sustainable growth in the tech sector.