India has an AI edge, will gain from boom: World Bank’s Franziska Ohnsorge

The chief economist for South Asia says private investment growth has slowed since pre-pandemic highs, but it’s still higher than the country’s peers

Last Updated: Oct 05, 2025, 16:25 IST2 min

Franziska Ohnsorge Chief Economist, South Asia Region,...

India is at a pivotal moment in its economic trajectory and its rapid adoption of artificial intelligence (AI) is set to open significant new investment opportunities, according to Franziska Ohnsorge, World Bank’s chief economist for South Asia. “India is well placed to benefit from the global boom in AI,” she said on the sidelines of the Kautilya Economic Conclave in New Delhi.

Services Edge

Ohnsorge made a pre- and post-ChatGPT comparison to highlight how the business process outsourcing (BPO) sector is enthusiastically embracing AI. Sam Altman’s OpenAI had launched ChatGPT in November 2022.

“You see a rapid adoption of AI in the services sector, particularly the BPO sector. Almost 12 percent of job postings in the BPO sector since the release of ChatGPT require AI skills—double of what it was pre-ChatGPT and about triple of what other sectors seek,” she said.

On services exports, she explained that since the release on ChatGPT, there's been a 30 percent increase in computer services exports. “So, it seems that computer services exports, in particular, are benefitting from whatever's happening since the release of ChatGPT,” she added.

Also read: We’re not chasing the AI hype: Zoho CEO Mani Vembu

Manufacturing renaissance

The economist stressed the transformative potential of trade agreements for goods exports and manufacturing, where India still underperforms compared to other countries. “Goods exports are exceptionally low and that’s in part because manufacturing is impacted by higher tariffs on intermediate goods. If those can be lowered and ideally embedded in a broader trade agreement which goes well beyond tariffs, you could get a real manufacturing renaissance in India,” she said.

Drawing comparisons with other countries that have such trade agreements, she said: “In Mexico and Vietnam, market access is 50 percent of GDP. For India, it’s 12 percent... if you add the trade agreements with the UK, the EU, Australia and Canada and possibly the US, then India’s market access can also go to 50 percent of GDP.”

Private investment and FDI

Ohnsorge emphasises that though private investment growth has slowed since pre-pandemic highs, it still outpaces international benchmarks. “Private investment growth in India is higher than it is in other emerging markets and developing economies. So it’s slow by Indian standards, but not by international standards,” she explained.

Despite growth in new technology sectors, India’s foreign direct investment (FDI) remains weak compared to peers. “What is slow by international standards is FDI. That is weak,” she said.

Policy plus luck

On the Viksit Bharat goal, Ohnsorge said, “One way of growing is moderately rapidly without any accidents, growing at 6.5, 7, 7.5 percent. That's quite an achievement and that's something India has achieved since 2000. You can lift a lot of people out of poverty this way... whether you can then accelerate, that's a different matter, and that probably needs a lot of things to happen. But I suspect it takes policy plus luck.”

First Published: Oct 05, 2025, 16:25

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