India's services sector is among the most AI-exposed in the emerging world, positioning the country to capture meaningful GDP growth as artificial intelligence adoption accelerates, according to a report by Equirus Economics released on Saturday, 13 June. The analysis argues that the current wave of AI — centred on software-driven tools — disproportionately favours service-led economies like India.

Why India Stands Out Among Emerging Markets

The Equirus Economics report identifies India's financial, IT, and professional services sectors as the primary beneficiaries of AI-driven productivity gains. These segments collectively account for roughly 23 per cent of gross value added (GVA), making India one of the most AI-exposed large emerging markets globally.

'India's financial, IT, and professional services account for roughly 23 per cent of GVA, and it is precisely this slice that is most exposed to AI-driven unit cost compression and productivity gains,' the report stated. This structural advantage sets India apart from manufacturing-heavy peers in the emerging market universe.

How This AI Wave Differs From Previous Technology Cycles

The report emphasises that the current AI adoption cycle — driven by large language models (LLMs), generative AI tools, coding assistants, and workflow automation systems — is fundamentally different from earlier technology shifts. Unlike past cycles that rewarded capital-intensive, factory-floor deployments, this wave runs primarily on software, lowering the barrier to adoption for service-oriented industries.

Researchers broadly agree on a positive relationship between AI adoption and labour productivity, the report noted, though estimates on the eventual scale of gains diverge — ranging from moderate productivity improvements to large output increases.

The Inflation Caveat

Despite the optimism on growth, the report cautioned that inflation benefits from AI may be more limited in the near term. The categories that dominate India's Consumer Price Index (CPI) basket — food, commodities, and physical services — remain largely outside the current AI adoption curve.

'The case for broad-based AI-led disinflation remains relatively weaker at present,' the report noted. Factory-floor AI, which could eventually compress costs in goods-producing sectors, 'requires capital-intensive deployment (robotics, predictive maintenance, process automation) with a much longer adoption curve than software tools,' it added.

Uneven Distribution of AI Gains

The report forecasts that AI's productivity dividend across emerging markets will be real but highly uneven. Sectors reliant on physical infrastructure and manual processes face a longer wait before AI meaningfully lowers their cost base. This structural divergence means that while India's services ecosystem stands to gain early, the broader economy — particularly agriculture and manufacturing — may lag.

Notably, this assessment comes as Indian IT firms are already integrating generative AI into client delivery models, a trend that could accelerate revenue per employee even as headcount growth moderates.

Outlook

India's large and globally competitive services ecosystem places it in a favourable position to capture the benefits of the current AI adoption cycle, the report concluded. As AI tooling matures and enterprise adoption deepens, the productivity dividend for India's service sector could translate into a measurable uplift in GDP growth — though the timeline and magnitude will depend on the pace of enterprise integration and the regulatory environment around AI deployment.