India’s AI spend to cross 21% of IT budgets by 2027

By 2027, India's investment in artificial intelligence (AI) is projected to comprise 21.3% of the average IT budget for Indian companies, a significant increase from the current 16.6%. This sharp rise in AI spending, which has already grown by 119% within the past year, outpaces the global average growth of 110%.

However, this surge in investment has not yet translated into widespread AI readiness among Indian enterprises. Only 22% of companies have implemented processes for testing, auditing, and assessing AI-related risks. Furthermore, while 54% of organizations are deploying AI agents, only 11% have transitioned to autonomous workflows, highlighting a growing caution among businesses regarding AI acting independently, especially when dealing with company data, systems, and decision-making processes.

Key concerns highlighted by 60% of organizations include transparency and the risk of misinformation, followed by regulatory and compliance complexity (55%), and data privacy and security (50%). India lags behind in terms of infrastructure, with only 18% of organizations having transitioned from fragmented legacy systems to integrated platforms, and AI-enabled workflows scoring just 41 out of 100 in the study.

This has led India to have an overall AI governance score of 55 out of 100, notably lower than the 78 scored by APAC's AI Pacesetters. Indian companies are now focusing on connecting systems, data, and workflows to enable AI to handle more complex tasks, rather than simply deploying more models. According to Ashvin Vellody, a partner and chief strategy and innovation officer at Deloitte India, the shift is towards rethinking workflows, decision-making, and operating models.

Agentic AI, which allows AI to take on more complex work with greater autonomy, is expected to drive this transition.

India is also establishing a broader policy framework around AI, including the Digital Personal Data Protection Act, AI Governance Guidelines, the IndiaAI Mission, and the IndiaAI Safety Institute. These developments indicate that while India is committed to AI, the next phase of adoption will require significant improvements in governance, data management, and workflow integration.