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IMF Says Indian Firms’ AI Use Is Above Global Average, But Flags Skill Gaps As Challenge
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IMF noted that ensuring AI enhances productivity without widening disparities requires further investment in India’s strong digital infrastructure.
The findings were highlighted in an IMF Country Focus report published on January 28.
Nearly 60 percent of Indian companies already use some form of artificial intelligence (AI), well above global averages. However, skill gaps and integration challenges continue to be a major hurdle, the International Monetary Fund (IMF) said.
The findings were highlighted in an IMF Country Focus report published on January 28.
“Nearly 60 percent of Indian firms already use some form of AI—well above global averages. AI can make businesses more efficient, speed up technology diffusion, and strengthen innovation. But adoption remains uneven: employers cite skill shortages, inadequate tools, and integration challenges,” the report stated.
The IMF noted that ensuring AI enhances productivity without widening disparities requires further investment in India’s strong digital infrastructure, training workers, and protecting those who may lose jobs.
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Simulations by IMF staff suggest that AI-driven productivity gains could raise total factor productivity in emerging Asia, including India, by roughly 0.3 to 3 percentage points over a decade, depending on sectoral exposure and preparedness.
The IMF also noted that India has already established key foundations for productivity-boosting reforms and can further leverage its world-class digital public infrastructure.
“Unlocking the next wave of growth requires a coordinated agenda: easing regulatory burdens so firms can grow, boosting innovation and university-industry collaboration to promote innovation, strengthening business dynamism, and enabling labor to move to higher-productivity sectors,” it added.
The report also highlighted structural challenges in manufacturing. Nearly three-quarters of Indian factories employ fewer than five paid workers, with the smallest enterprises producing less than 20 percent of the output per worker of large firms. Complex compliance requirements, rigid labour regulations, and restrictive product market rules often keep these businesses small, limiting overall productivity growth.
With the right reforms, India could convert its structural strengths into sustained productivity gains, supporting its ambitions to become an advanced economy, the IMF said.
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February 26, 2026, 20:03 IST
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