India’s enterprise AI investment soared 119 per cent in a year, surpassing the global average growth of 110 per cent, according to a report released on Tuesday.
The report by ServiceNow revealed that AI currently represents 16.6 per cent of the average IT budget in Indian enterprises and this share is expected to grow to 21.3 per cent by 2027.
Investment momentum is supported by India’s robust digital public infrastructure, strong engineering talent, and rapid enterprise AI adoption rates.
Nevertheless, the report highlighted a significant gap in AI governance, with only 22 per cent of Indian enterprises having established testing, auditing, and risk assessment procedures.
While 54 per cent of Indian organisations have deployed AI agents, just 11 per cent have advanced to autonomous workflows.
Moreover, only 18 per cent of these organisations have replaced fragmented legacy systems with integrated platforms, meaning there is a lack of a unified layer for AI monitoring and governance.
Focus on Consequential Work
Kulmeet Bawa, Managing Director and Group Vice President of ServiceNow India and SAARC, stated, “India has proven it can commit to AI at a scale few markets can match. The next leap will be defined by how Indian enterprises pair that ambition with governance, connected data and workflows that let AI take on more consequential work.”
He added that those organisations building solid governance foundations will unlock the next level of AI value in India.
India has proactively established an enabling framework through the Digital Personal Data Protection Act, DPDP Rules, and AI Governance Guidelines launched at the February 2026 AI Impact Summit.
The report also noted national initiatives like the IndiaAI Mission and the IndiaAI Safety Institute as evidence of a deliberate approach to AI governance.
Challenges remain with nearly 74 per cent of Indian enterprises identifying data accuracy, access, and management as major areas needing improvement, while 56 per cent cited legacy system integration as a significant hurdle.