India’s export of computer services has increased by 30 per cent since artificial intelligence firm OpenAI launched ChatGPT in November 2022, according to Franziska Ohnsorge, World Bank’s Chief Economist for the South Asia Region. Speaking on the sidelines of the Fourth Kautilya Economic Conclave, organised by the Ministry of Finance and Institute of Economic Growth, Ohnsorge said India’s computer services sector was booming and its exports have particularly benefited from the release of ChatGPT. As per latest data from the Reserve Bank of India (RBI), India’s export of software services in the April-June quarter stood at $47.32 billion, up 13 per cent year-on-year. In July-September 2022, the quarter before ChatGPT was made available to the public by OpenAI, India’s software services exports amounted to $36.23 billion. On the whole, Ohnsorge thinks India is “well placed” to benefit from the advent of AI, with the services sector – especially the Business Process Outsourcing (BPO) industry – adopting it rapidly. “We look at millions of job postings and you can see that 12 per cent of job postings in the BPO sector since the release of ChatGPT require AI skills and that's double of what it was before the release of ChatGPT. And this is triple what other sectors want. So, the BPO sector is really adopting AI and enthusiastically embracing it,” Ohnsorge said, pointing out that India ranked 46th in Oxford Insights’ Government AI Readiness Index, which was a much better position than other emerging markets and developing economies and almost at the level of advanced nations. Export of services is crucial for India as the country enjoys a sizable surplus with the rest of the world as opposed to a deficit on the merchandise trade front. According to preliminary data from the Ministry of Commerce and Industry, India had a goods trade deficit of $122 billion in the first five months of 2025-26, or April-August. However, much of this was cancelled out by a services trade surplus of $81 billion over the same period. In April-August 2024, India’s goods trade deficit stood at $121 billion, while the services trade surplus was lower at $68 billion. Private investment, FDI troubles Ohnsorge said that while opportunities in AI will attract the private sector investments, that may not necessarily be enough to move the headline numbers, with growth in overall private capital expenditure having slowed down since the coronavirus pandemic. “This is the opposite of what's happening everywhere else in other emerging markets. And it is also the opposite of what has happened in public investment, where you see a real acceleration,” the World Bank’s economist said, although she added that even India’s weaker private investment growth rates were higher than those in other emerging markets and developing companies. “So, it is slow by Indian standards, but it is not slow by international standards.” However, what is slow by international standards is net Foreign Direct Investment (FDI), which Ohnsorge said is “weak”. While gross FDI into India in July rose to a 50-month high of $11.11 billion, net FDI was a lower $5.05 billion, as per RBI data. Net FDI is calculated after adjusting for investments that are repatriated by foreign companies and overseas investments made by Indian companies. FDI is a key indicator of the health of the economy and the confidence foreign investors have in the country. Foreign inflows into India have picked up steam in recent months after a disappointing 2024-25 which saw net FDI inflow total just $959 million even though gross inflows rose to $80.62 billion. The precipitous fall in net FDI in 2024-25 from $10.15 billion in 2023-24 came on the back of a sharp increase in overseas direct investments made by Indian companies and foreign companies cashing in on their past investments in India. In 2024-25, foreign firms took back $51.49 billion to their home countries from India, up 16 per cent from 2023-24. Meanwhile, overseas FDI by Indian companies rose 69 per cent to $28.17 billion. Both these factors contributed to the net FDI in the last fiscal being negligible.
