NITI Aayog calls for AI-led overhaul of India's tech services industry

NITI Aayog says India's tech sector must shift to AI-driven, IP-led and outcome-based models, warning that the traditional labour-heavy IT services approach will not sustain future growth

Ahead of the India AI Impact Summit 2026, government think tank NITI Aayog has urged a fundamental restructuring of India’s technology services industry around artificial intelligence (AI), warning that the current labour-intensive model will not sustain global competitiveness.

 

In its 10-year roadmap titled ‘Technology Services – Reimagination Ahead’, the think tank says the sector must transition to outcome-based, intellectual property (IP)-led and platform-driven delivery models to achieve a revenue target of $750-850 billion by 2035.

 

According to NITI, India’s technology services industry, currently valued at around $265 billion and contributing 7 per cent to gross domestic product (GDP), is already facing a growth slowdown of 4-5 per cent due to AI-driven automation and broader macroeconomic shifts.

 

 

Why AI is critical for the tech sector?

 

The roadmap makes it clear that simply expanding the traditional labour-driven IT services model will no longer be enough. AI, automation and platform-based delivery are transforming how businesses purchase and use technology services. As a result, Indian companies can no longer depend solely on large workforces and cost advantages to drive growth.

 

According to the report, AI represents a fundamental shift in value creation. Instead of relying primarily on headcount-based revenues, firms will need to focus on building intellectual property, delivering measurable outcomes and developing platform-led solutions. This transition presents India with an opportunity not just to remain a global services hub, but to emerge as a leader in creating AI-native systems and high-value digital solutions.

 

Companies that fail to adapt risk being confined to low-margin service segments, the report warns. NITI Aayog places the technology services sector at the centre of India’s broader economic ambitions. Its evolution, the report notes, will be critical to meeting long-term growth and employment objectives.

 

The roadmap also highlights mounting external pressures, including geopolitical fragmentation, data localisation mandates and changing client expectations. These dynamics strengthen the case for diversification, resilience and innovation-led growth. 

 

Five strategic growth levers for India’s AI transition

 

To enable structural transformation, NITI Aayog identifies five strategic growth pillars:

 

• Agentic AI
• Software & Products
• Digital Infrastructure
• Innovation-led Engineering
• India-for-India solutions

 

To unlock these, the roadmap calls for coordinated action across government and industry: accelerated enterprise AI adoption, scaled investment in IP and R&D, workforce reskilling at national scale, and regulatory predictability to enable global market access. 

 

Policy reforms to enable AI-driven growth

 

On the policy front, the report recommends streamlined regulatory processes through a national single-window mechanism for technology services companies. It also calls for strengthening India’s innovation and R&D ecosystem and expanding large-scale skilling and reskilling programmes focused on AI-augmented roles.

 

Further, it stresses the need for clarity around employee stock ownership plans (ESOPs) and talent mobility to support startups and product-led firms.

 

“The rise of AI is transforming the technology services industry in fundamental ways. For India, this is not just a challenge, it is a generational opportunity to create new value pools, upgrade skills at scale and strengthen our global leadership. The roadmap launched today outlines a forward-looking strategy to build an innovation-driven, AI-enabled technology services ecosystem that supports India’s growth ambitions and creates high-quality employment,” said BVR Subrahmanyam, CEO, NITI Aayog.