India's labour market is entering a period of rapid technological adjustment, with a new report warning that roughly a quarter of the country's workforce is highly exposed to artificial intelligence. The finding points to a broad shift in how work is organised, especially in sectors where routine cognitive tasks, data handling and digital workflows are increasingly susceptible to automation or augmentation.
The report's central message is not that AI will simply eliminate jobs, but that its impact will vary sharply by occupation. In some roles, the technology is expected to complement workers by improving speed, accuracy and output. In others, it may substitute for tasks that are repetitive or rules-based. That distinction matters for India, where the labour market is large, diverse and heavily segmented between formal and informal employment.
Productivity Divide
The report estimates that 7.6% of the workforce is likely to experience higher productivity as AI tools are adopted more widely. That group is expected to benefit from systems that can assist with drafting, analysis, customer support, coding, forecasting and other knowledge-intensive functions. For employers, the upside is clear: faster workflows, lower operating costs and potentially higher output per worker.
But the same technology could widen gaps between workers who can adapt and those whose tasks are more vulnerable to substitution. The exposure is especially significant in jobs where digital literacy is already a prerequisite, including parts of finance, business services, administration, media and technology-enabled back-office operations. In these areas, AI is less likely to replace entire occupations overnight than to reshape job content, compress entry-level work and raise the bar for human oversight.
For policymakers, the report adds urgency to a debate that has been building around skilling, labour market resilience and the quality of job creation. India has long relied on labour-intensive growth to absorb a young and expanding workforce. If AI accelerates productivity in a relatively small but economically important slice of employment, the benefits could be material. Yet if the transition is poorly managed, the gains may accrue unevenly, with the most educated and digitally connected workers capturing a disproportionate share.
Jobs Under Pressure
The report's warning comes at a time when Indian companies are already testing AI across customer service, software development, compliance, logistics and internal operations. Many firms see the technology as a way to improve efficiency without large-scale hiring, particularly amid cost pressures and a global push for leaner operations. That makes the labour implications more complex: AI may not trigger mass layoffs immediately, but it can slow future hiring in some functions and alter the composition of demand for skills.
The exposure also has a geographic dimension. Urban, formal-sector jobs are more likely to be digitised and therefore more exposed to AI than informal work in agriculture, construction or small-scale services. However, the spread of AI-enabled tools into sales, accounting, design and administrative functions means the impact will not remain confined to high-tech industries. As adoption deepens, the boundary between "AI jobs" and traditional office work is likely to blur.
Economists generally caution against reading exposure as destiny. A high exposure score does not automatically translate into unemployment; it signals vulnerability, adaptation pressure and the need for policy response. In India's case, that response will likely need to combine faster reskilling, stronger digital infrastructure, incentives for labour-intensive sectors and a sharper focus on employability in an AI-shaped economy.
The report arrives as governments and businesses worldwide grapple with the same question: how to capture the productivity benefits of artificial intelligence without intensifying labour market inequality. For India, the stakes are especially high because the country's growth model depends not only on output expansion, but on creating enough quality jobs for a vast and still-growing workforce. The report suggests that AI could become a force multiplier for some workers, a threat to others and a test of how quickly the economy can adapt to a new technological baseline.