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

By Sohail Khan 8 September 2026, 1:54 pm

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Business News›AI›AI Insights›India’s AI spend set to cross 21% of IT budgets by 2027: ServiceNow

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India’s AI spend set to cross 21% of IT budgets by 2027: ServiceNow
Synopsis

Indian AI investment surged significantly, outpacing global growth rates. However, widespread AI readiness and risk assessment processes remain underdeveloped. Many companies deploy AI agents but hesitate with autonomous workflows due to transparency concerns. Fragmented legacy systems and data management issues hinder AI integration and maturity.

India races to deploy AI, but few enterprises are ready for autonomy<br> — India races to deploy AI, but few enterprises are ready for autonomy

Enterprise AI investment in India grew 119% in the past year, ahead of the 110% global growth, according to the ServiceNow Enterprise AI Maturity Index 2026. Artificial intelligence (AI) now accounts for 16.6% of the average IT budget of Indian companies and is expected to rise to 21.3% by 2027.

However, the rapid spending is not translating into widespread AI readiness.

Only 22% of Indian enterprises have processes in place for testing, auditing and assessing AI-related risks, the report said. At the same time, 54% of organisations are deploying AI agents, while just 11% have moved to autonomous workflows.

The gap points to a growing caution among Indian businesses around letting AI act independently, particularly as agents get access to company data, systems and decision-making processes.

Also Read: AI in Indian healthcare still stuck in pilots, but the scale-up opportunity is growing: Bain, HealthQuad

Transparency and the risk of misinformation are the biggest concerns, cited by 60% of organisations. Regulatory and compliance complexity follows at 55%, while 50% flagged data privacy and security.

“India has proven it can commit to AI at a scale few markets can match. The next leap will be defined by how Indian enterprises pair that ambition with governance, connected data and workflows that let AI take on more consequential work,” said Kulmeet Bawa, managing director and group vice president, ServiceNow India and SAARC.

The technology infrastructure underneath AI is another weak spot as only 18% of Indian organisations have replaced fragmented legacy systems with an integrated platform, while AI-enabled workflows scored just 41 out of 100 in the study. About 74% of organisations said data accuracy, access and management need to be strengthened for AI, while 56% pointed to legacy system integration.

This has left India with an overall AI governance score of 55 out of 100, well below the 78 scored by APAC’s AI Pacesetters.

This is important because the more mature AI adopters are already seeing significant returns. APAC Pacesetters are generating a 149% return on investment from AI, which is expected to rise to 181% over the next two years. They are also six times more productive than their peers, according to the report.

For Indian companies, the next phase of AI adoption could therefore be less about simply deploying more models and more about connecting the systems, data and workflows that allow AI to take on more complex work.

Also Read: India cannot build its digital economy on ‘borrowed trust’: QNu Labs CEO Sunil Gupta

Ashvin Vellody, partner and chief strategy and innovation officer at Deloitte India, said AI maturity in India is moving beyond individual use cases towards rethinking workflows, decision-making and operating models.

“Agentic AI will accelerate this shift significantly, as AI begins to take on more complex work and operate with greater autonomy,” Vellody said.

He added that companies will need to decide where AI can act independently, where human judgement remains necessary and how the two can work together.

India is also building a broader policy framework around AI, with the Digital Personal Data Protection Act and rules, the AI Governance Guidelines launched at the February 2026 AI Impact Summit, the IndiaAI Mission and the IndiaAI Safety Institute.

The ServiceNow study, conducted with ThoughtLab, surveyed 4,500 senior leaders globally, including 350 from India.

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