India AI Spend To Cross 21 Percent Of IT Budgets By 2027

Enterprise AI investment in India surged 119 percent over the past year, outpacing the 110 percent rise recorded worldwide, according to the ServiceNow Enterprise AI Maturity Index 2026. Artificial intelligence now occupies 16.6 percent of the average information technology budget for Indian firms and is projected to climb to 21.3 percent by 2027. The rapid increase in spend reflects strong ambition, yet the study highlights a shortfall in readiness, with only a fraction of companies equipped to manage AI risks. This contrast underscores a pivotal moment for Bharat’s digital transformation, as enterprises balance expansion with governance and data integrity.

Indian Firms Increase AI Spending Significantly

ServiceNow’s latest index shows that Indian organisations have embraced AI at a pace that eclipses global trends. Investment growth of 119 percent signals a decisive shift toward intelligent automation across sectors. Companies now allocate a larger slice of their IT spend to AI, moving from 16.6 percent to an anticipated 21.3 percent within a single year. The surge is driven by the promise of efficiency gains and competitive advantage, prompting senior leaders to earmark funds for new models, platforms and talent. While the fiscal commitment is evident, the underlying infrastructure remains fragmented, limiting the full impact of these investments.

Survey data reveal that more than half of the respondents are already deploying AI agents to handle routine tasks. Yet only a modest share have progressed to autonomous workflows, indicating cautious adoption. The disparity suggests that firms are testing the waters with pilot projects before granting AI broader decision‑making authority. As agents gain access to critical data and systems, executives weigh the benefits against potential exposure to errors or bias. This measured approach reflects a broader strategic intent to harness AI while safeguarding operational stability.

ServiceNow Reports Rapid Enterprise AI Growth

The ServiceNow Enterprise AI Maturity Index 2026, conducted with ThoughtLab, surveyed 4,500 senior leaders worldwide, including 350 from India. Findings point to a robust appetite for AI among Indian enterprises, with spending outstripping the 110 percent global growth rate. The report also highlights a governance gap: merely 22 percent of Indian firms have established processes for testing, auditing and assessing AI‑related risks. This shortfall stands in stark contrast to the high adoption rate of AI agents, which reaches 54 percent across the sample.

Risk concerns dominate the corporate agenda. Sixty percent of respondents cite transparency and misinformation as primary challenges, while 55 percent point to regulatory and compliance complexity. Data privacy and security worries feature in half of the answers. These apprehensions shape investment decisions, prompting many organisations to prioritise risk mitigation before scaling autonomous capabilities. The study underscores that the next phase of AI maturity will hinge on how effectively Indian firms integrate governance frameworks with their technological rollout.

IT Budgets See Major AI Allocation Shift

AI’s share of IT budgets in India has risen sharply, reflecting a strategic reallocation of resources. The current 16.6 percent allocation already exceeds many regional benchmarks, and the forecasted 21.3 percent by 2027 suggests continued momentum. Companies are diverting funds from legacy maintenance toward AI platforms, data management tools and talent acquisition. This trend aligns with global patterns, yet Indian firms display a distinct emphasis on building AI capabilities that support business outcomes.

Despite the financial commitment, only 18 percent of organisations have replaced fragmented legacy systems with an integrated platform. The lack of a cohesive technology stack hampers the efficiency of AI‑enabled workflows, which scored just 41 out of 100 in the study. Data accuracy, access and management emerge as critical pain points for 74 percent of respondents, while 56 percent stress the need for better legacy system integration. These infrastructure challenges temper the potential return on AI investment, highlighting the importance of holistic upgrades.

Twenty Two Percent Companies Ready Now

Readiness remains limited, as the index reports that only 22 percent of Indian enterprises possess formal mechanisms for AI risk testing and auditing. This minority demonstrates a proactive stance toward governance, establishing clear protocols to evaluate model performance and ethical implications. The majority, however, continue to rely on ad‑hoc processes, leaving them vulnerable to unintended outcomes.

Risk perception drives this cautious posture. Transparency and misinformation concerns dominate, followed closely by regulatory complexity and data security issues. Companies that have instituted robust risk frameworks report higher confidence in expanding AI use cases. Experts argue that bridging the readiness gap will require coordinated efforts across technology, policy and talent domains. As firms refine their governance models, they can unlock greater value from AI investments and move toward more autonomous operations.

Global Growth Rates Exceeded By India

India’s AI investment trajectory outpaces the global average, positioning the nation as a leader in enterprise AI adoption. While the world recorded a 110 percent growth rate, Indian spend accelerated to 119 percent, reflecting strong market confidence. Yet the overall AI governance score of 55 out of 100 lags behind the 78 achieved by APAC’s AI pacesetters, indicating room for improvement. The contrast between rapid financial commitment and modest governance maturity suggests a critical juncture. How Indian firms align ambitious spending with robust oversight will shape the next chapter of the country’s digital evolution.