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India’s computer services exports have surged by 30 per cent since OpenAI launched ChatGPT in November 2022, according to Franziska Ohnsorge, Chief Economist for the South Asia Region at the World Bank. Speaking on the sidelines of the Fourth Kautilya Economic Conclave, organised by the Ministry of Finance and the Institute of Economic Growth, Ohnsorge said the boom in India’s software services sector has been directly boosted by the global rise in artificial intelligence (AI) adoption.

ChatGPT Spurs Growth in India’s Tech Exports

According to the latest Reserve Bank of India (RBI) data, India’s software services exports reached $47.32 billion in the April–June 2025 quarter — a 13 percent increase year-on-year. In comparison, in the July–September 2022 quarter (just before ChatGPT’s public release), exports stood at $36.23 billion.

Ohnsorge highlighted that India’s growing reputation in the IT and Business Process Outsourcing (BPO) industries has been a key factor. “We look at millions of job postings, and you can see that 12 per cent of job listings in the BPO sector since the release of ChatGPT require AI skills — double what it was before and triple compared to other sectors,” she said.

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She noted that this strong AI adoption reflects India’s readiness to benefit from new technologies. “India ranks 46th in Oxford Insights’ Government AI Readiness Index, a position close to that of advanced nations and much higher than other emerging markets,” Ohnsorge added.

AI Drives Opportunities but Investment Growth Slows

While the rapid integration of AI is expected to create new opportunities and attract private investments, Ohnsorge warned that overall private capital expenditure in India remains sluggish compared to pre-pandemic levels.

“This is the opposite of what’s happening in other emerging markets,” she said. “However, even with slower private investment, India still outperforms other developing economies. It’s slow by Indian standards, but not slow internationally.”

She added that public investment has been rising steadily, helping balance the slowdown in private spending.

Services Trade Surplus Helps Offset Goods Deficit

A stable trade balance is still largely dependent on India's growing exports of software and IT services.  India had a $122 billion goods trade deficit between April and August 2025, which was partially offset by a $81 billion services trade surplus, according to preliminary data released by the Ministry of Commerce and Industry.

During the same period in 2024, the goods deficit was $121 billion, but the services surplus was lower at $68 billion, indicating a strong rise in the export of services year-on-year.

Net FDI Remains Weak Despite Gross Inflows

While India’s AI and software sectors are thriving, Foreign Direct Investment (FDI) figures tell a more mixed story. Ohnsorge described net FDI inflows as “weak,” even though gross FDI in July 2025 rose to a 50-month high of $11.11 billion.

RBI data shows net FDI was just $5.05 billion after accounting for repatriations and outbound investments. This figure is modest compared to gross inflows of $80.62 billion recorded in 2024–25.

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The drop in net FDI can be attributed to two key factors -- foreign companies repatriating $51.49 billion of earnings earned from India over the year (an increase of 16 percent year-on-year), while Indian firms increasing overseas investments by 69 percent (to $28.17 billion).

India saw its net FDI inflow plunge significantly during 2024-25 to $959 million compared with $10.15 billion during 2023-24.

India Well Positioned for the AI Era

Ohnsorge noted India remains well positioned to lead the global AI wave due to its abundant talent pool, digital infrastructure and export-driven IT ecosystem.

“The services sector, particularly BPO and software, is embracing AI rapidly and enthusiastically,” she said. “India has the opportunity to combine its technological strength with inclusive growth in the age of artificial intelligence.”