TLDR: India faces a critical juncture as agentic AI systems emerge, presenting both immense opportunities for productivity gains and significant risks of job displacement and wealth outflow. The nation’s ability to develop a robust policy framework and foster homegrown AI innovation will be crucial in determining its economic future in the age of advanced artificial intelligence.
The advent of agentic Artificial Intelligence (AI) is poised to reshape India’s economic landscape, presenting a complex dilemma with profound implications for productivity, competitiveness, and employment, according to a recent analysis by The Economic Times. Published on September 14, 2025, the report highlights the dual-edged nature of this technological evolution.
Agentic AI, which moves beyond traditional predictive and generative models, is characterized by its ability to act autonomously to achieve specific goals. While it holds the promise of significantly boosting the productivity of existing workforces and streamlining operations across various sectors, it also carries the risk of substantial labor displacement. The article points out that these AI agents may replace human labor rather than merely enhancing it, leading to potential ‘jobless growth’ where increased output does not translate into proportional GDP growth or widespread employment.
One of the primary concerns for India is the risk of export erosion. If rival nations adopt agentic AI more rapidly and effectively, they could significantly reduce production costs, making their goods and services more competitive internationally. This scenario could lead to job losses, particularly within India’s crucial IT sector, which has historically relied on its human capital advantage. Conversely, even if India embraces AI aggressively, there’s a risk that much of the wealth generated by these advanced systems could flow westward, given India’s current position in the global AI race. The report notes the widespread adoption of foreign AI tools like ChatGPT in India, while homegrown Large Language Models (LLMs) are yet to gain significant traction.
Implementing AI at scale across India’s diverse economic fabric will not be straightforward. The technology is expected to expose existing structural weaknesses within the Indian economy, demanding a carefully designed and proactive policy response. The article emphasizes that maintaining a strong export balance in this new era will necessitate unprecedented levels of productivity and efficiency.
However, the outlook is not entirely bleak. Agentic AI offers transformative potential across industries. Examples cited include its application in banking for compliance, in telecommunications for dramatically reducing call center headcount, in retail for marketing and content creation, and in airlines for optimizing revenue cycle management. These applications demonstrate AI’s capacity to automate heavily people-dependent workflows, significantly cutting down process times—for instance, reducing a six-week airline revenue policy change process through the deployment of agentic AI.
Experts suggest that India has a unique opportunity to leverage AI, not just for its own internal development but also to become an exporter of AI solutions to other developing economies, particularly in the Global South. This would involve a strategic decision on whether to focus on building indigenous foundational AI models or to partner with countries that already possess such capabilities, fine-tuning them for local applications. The quality of leadership and a clear focus on increasing revenue or efficiency are identified as critical differentiators for successful AI adoption by companies.
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Ultimately, India stands at a crossroads. The path it chooses in developing and integrating agentic AI will determine whether it harnesses this technology to unlock new economic potential and global leadership, or if it succumbs to the challenges of job displacement and a widening technological gap.
