India's enterprise AI investment surges 119 pc but governance lags
India’s enterprise AI investment surged 119 per cent in a single year above the global average of 110 per cent, yet only 22 per cent of Indian enterprises have testing, auditing and risk?assessment processes in place, a report said on Tuesday.
The report from ServiceNow said that AI now accounts for 16.6 per cent of India’s average IT budget and is projected to rise to 21.3 per cent by 2027.
The report noted that investment momentum in India is being built on world-class digital public infrastructure, deep engineering talent and one of the fastest rates of enterprise AI adoption globally.
However, the next phase will depend more on how confidently companies can govern AI. The gap is already visible as 54 per cent of Indian organisations are deploying AI agents, but only 11 per cent have moved to autonomous workflows.
Only 18 per cent of Indian organisations have replaced fragmented legacy systems with an integrated platform, the firm said, adding that there is no single layer through which AI can be monitored, audited or governed.
"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," said Kulmeet Bawa, Managing Director & Group Vice President, ServiceNow India and SAARC.
The organisations that build these foundations first, will unlock AI's next tier of value for India, Bawa added.
India has moved early to put an enabling framework in place from the Digital Personal Data Protection Act and the DPDP Rules, to the AI Governance Guidelines launched at the February 2026 AI Impact Summit.
Further, the IndiaAI Mission, and the establishment of the IndiaAI Safety Institute indicates a purposeful national approach to AI, the report noted.
Nearly 74 per cent Indian enterprises flagged data accuracy, access and management as the area most in need of strengthening for AI, and 56 per cent pointed to legacy system integration.
