(Commonwealth_India) Since ChatGPT emerged in late 2022, India’s technology narrative has subtly ushered in a new era. The country’s export of computer services has jumped by nearly 30 percent, riding on a global wave of excitement around artificial intelligence. At the Fourth Kautilya Economic Conclave in New Delhi, Franziska Ohnsorge, the World Bank’s Chief Economist for South Asia, said it was no coincidence. “India’s computer services sector is booming,” she explained, “and its exports have clearly benefited from the release of ChatGPT.”
The data vividly illustrates this story. According to the Reserve Bank of India, between April and June this year, India exported $47.32 billion worth of software services, up 13 percent from a year earlier. Back in late 2022, just before ChatGPT’s launch, the number was $36.23 billion. In less than three years, India’s software sector has not only grown but also evolved, taking on more AI-powered projects and serving clients that now demand intelligent automation, not just coding or back-office support.
Ohnsorge believes that India is currently in a favorable position. The country’s services sector—especially its massive Business Process Outsourcing (BPO) industry—has wasted no time embracing AI tools. “When we look at millions of job postings, 12 percent of openings in the BPO sector now ask for AI skills,” she said. “That’s double what it was before ChatGPT and three times higher than other sectors.” To her, it’s a sign that India’s workforce isn’t waiting to be disrupted by AI; it’s actively learning to work with it.
Global indexes are also reflecting India’s progress. In Oxford Insights’ Government AI Readiness Index, India ranks 46th, better than most emerging markets and inching close to the league of advanced economies. For Ohnsorge, that signals something deeper: not just digital capability, but institutional willingness to adapt.
This technological rise has also had an important ripple effect on India’s trade balance. Services exports, from software to consulting, are increasingly helping offset the country’s large merchandise trade deficit. Between April and August this fiscal year, India recorded a goods trade deficit of $122 billion, but that was partly cushioned by an $81 billion surplus in services. The surplus in services was only $68 billion a year earlier. In other words, software and digital services are quietly helping India hold its economic ground in a turbulent global trade environment.
Yet, while the AI boom has brought energy and optimism, the investment picture looks more complicated. Ohnsorge pointed out that private investment in India has been sluggish since the pandemic. “Public investment has surged,” she said, “but private capital expenditure hasn’t caught up.” Despite being slow by India’s own standards, she noted that the pace of growth is still faster than that of many other developing economies.
Foreign direct investment, however, remains a sore spot. Despite some recent improvement, India’s net FDI—the money that actually stays in the country—has been worryingly low. In July of this year, India received $11.11 billion in gross FDI, the highest in more than four years, but after accounting for funds that foreign companies repatriated and Indian firms sent abroad, net FDI was just $5.05 billion.
The bigger picture over the last two years tells a more sobering story. In 2024–25, India’s net FDI collapsed to just $959 million, compared to more than $10 billion the year before. That happened not because investors lost faith, but because foreign firms took home $51 billion in profits, and Indian businesses themselves invested nearly $28 billion abroad. Money flowed both ways in 2024–25, and at a rapid pace.
All of the data paints a picture of an economy that’s buzzing with innovation but still searching for stronger financial roots. India’s tech and services industries are clearly on the right track, but to turn this AI-driven momentum into sustained growth, the country will need deeper and more stable investment, both domestic and foreign. As Ohnsorge put it, India’s potential is enormous. The question now is whether the flow of capital can keep up with the flow of ideas.
