Generative artificial intelligence (GenAI) could reshape India’s labour market over the next decade, with 8-12 per cent of non-agricultural jobs at risk of being replaced, while nearly half the workforce is expected to benefit from AI-enhanced productivity, according to a new report by Goldman Sachs.
The report estimates that AI could perform between 9 per cent and 17 per cent of tasks currently carried out by India’s non-agricultural workforce, depending on how advanced the technology becomes. Under its baseline scenario, around 13-15 per cent of existing work tasks are exposed to automation.
Rather than causing widespread job losses, the report suggests AI will largely augment workers by taking over routine tasks and allowing employees to focus on higher-value work. It expects 42-48 per cent of India’s workforce to benefit from this complementary use of AI.
The impact, however, is expected to vary across industries. Sectors such as healthcare, education, media and entertainment, financial services and professional services are likely to see the greatest productivity gains as AI supports activities including diagnostics, research, analytics and knowledge-based work.
On the other hand, routine business process functions, particularly in post and telecom services, are considered more vulnerable because of their dependence on repetitive and standardised tasks. Industries such as manufacturing, construction and mining are expected to be less affected, as much of their work remains physical in nature.
The report projects changes in the composition of employment rather than a sharp decline in overall jobs. Clerical support roles are expected to witness the largest fall in employment, followed by professionals, service and sales workers, and technicians. In contrast, demand for workers in physical occupations, skilled trades and machine operations could increase, as these roles remain difficult to automate.
Goldman Sachs estimates that GenAI could increase India’s annual labour productivity growth by around 0.4 percentage points over the next decade, with the potential impact ranging between 0.1 and 0.8 percentage points depending on AI adoption and technological progress.
The report also cautioned that India will need substantial investments in AI infrastructure, including data centres, computing capacity, reliable electricity and water supply, to fully capitalise on the technology. It noted that India currently accounts for only around one per cent of the world’s installed data centre capacity, significantly behind the US and China. Additionally, rising protectionism and restrictions on cross-border data flows in key export markets could pose challenges to India’s AI-driven services growth.
