Interactions of Artificial Intelligence with India's Labour Market

Payal Malik () and Nikita Jain ()
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Payal Malik: Indian Council for Research on International Economic Relations (ICRIER)

Indian Council for Research on International Economic Relations (ICRIER) Policy Paper from Indian Council for Research on International Economic Relations (ICRIER), New Delhi, India

Abstract: This paper examines AI–labour interactions in India through a structural and a task-based lens. Using Indian databases such as KLEMS, PLFS, and NCO classifications, the analysis groups the economy into four structural categories and applies the productivity, inclusivity, and entrepreneurship framework to assess sector-wise AI exposure and adjustment capacity. The findings suggest that AI diffusion in India will be uneven. In employment-intensive, low-productivity sectors, displacement risks remain limited for now, but exclusion from AI-enabled productivity gains is a concern. In manufacturing, AI creates opportunities for upgrading through the servicification of production alongside selective automation. In knowledge-intensive services, AI may augment human capabilities, but this may require high-level skilling of labour, leading to shifting the nature of jobs. In public and social sectors, AI may lead to huge productivity gains. This paper argues for an AI strategy that prioritises diffusion and broad-based participation through coordinated investments in skills, infrastructure, and institutions.

Keywords: Artificial intelligence; labour markets; task-based analysis; productivity; inclusivity; entrepreneurship; AI-for-labour; IPCIDE; icrier (search for similar items in EconPapers)
Pages: 19 page
Date: 2026-02
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