Gen-AI may substitute 8-12% of India's non-farm workforce: Goldman Sachs

Goldman Sachs says GenAI could augment nearly half of India's non-farm workforce while replacing jobs with repetitive tasks and lifting productivity

Around 8-12 per cent of India's non-agricultural jobs face the risk of substitution by Generative artificial intelligence (GenAI) while 42-48 per cent of the workforce is expected to benefit from AI-driven augmentation, according to a Goldman Sachs report released on Wednesday.

 

The investment bank estimates that GenAI could perform 9-17 per cent of the tasks currently undertaken by India's non-agricultural workforce. However, this depends on the complexity of tasks the technology is eventually able to handle.

 

Under its baseline scenario, around 13-15 per cent of tasks are exposed to AI automation.

 

In most occupations, AI is likely to free workers from routine tasks and improve productivity rather than replace them entirely.

 

The impact will vary significantly across sectors, the report said.

 

Healthcare, education, media, and financial and professional services are expected to benefit the most as AI assists workers with diagnostics, analytics, research and other knowledge-intensive tasks.

 

In contrast, routine business-process work, including post and telecom services, is more vulnerable to substitution because of its concentration of repetitive and codifiable tasks.

 

Manufacturing and construction are expected to remain relatively less affected as their work is predominantly physical.

The report projected a shift in occupational composition rather than broad-based job losses.

 

Employment declines are expected to be concentrated among clerical support workers (around 3 per cent of non-agricultural employment), followed by professionals (3 per cent), services and sales workers (2 per cent) and technicians (1 per cent).

 

At the same time, physical occupations could see employment rise by around 4 per cent, followed by craft and trade-related workers (3 per cent) and plant and machine operators (2 per cent), as manual and interpersonal tasks remain difficult to automate.

 

“At the sector level, healthcare, education, media and entertainment, and parts of financial services appear more likely to benefit from labour augmentation, reflecting their relatively higher share of skilled workers. In contrast, post and telecom services, along with other routine service segments, face higher substitution risk given their greater concentration in customer support, documentation, and processing tasks. Sectors such as construction, manufacturing, and mining remain less directly exposed because task content is still more physical in nature,” the report added. 

Gen-AI could lift India's annual labour productivity growth by around 0.4 percentage points over the next decade in its baseline scenario, with the impact ranging from 0.1 to 0.8 percentage points depending on AI capabilities, the report said.

 

It added that the initial gains are likely to be the strongest in sectors where AI complements workers rather than replaces them, including global capability centres (GCCs), healthcare, education and financial services. Healthcare has around 83 per cent of tasks classified as complementary, while the share is about 68 per cent in financial services. 

 

“Our analysis also suggests it is important to have augmentation before substitution, as the main risk for India is that if substitution arrives too early (and before adoption), the economy could face a period of weak employment growth before productivity gains broaden out,” the report said. 

The report cautioned that India's AI opportunity will depend on significant investments in AI computing capacity, data centres, reliable electricity and water.

 

It noted that India currently accounts for only about 1 per cent of globally-installed data-centre capacity, compared with 47 per cent for the United States and 25 per cent for China. This highlights the scale of infrastructure expansion needed to support wider AI adoption. 

The report also warned that increasing protectionism in major export markets, including restrictions on cross-border data flows and AI deployment, could pose risks to India's services exports.