India’s engineering R&D and product development market is expanding rapidly, forecast to post a CAGR of 12% to reach US$ 63 billion by 2025 from US$ 31 billion in 2019. Complementing this momentum, the artificial intelligence (AI) market is projected to touch US$ 131.31 billion by 2032, growing at 42.2% CAGR, with demand for AI professionals expected to cross one million by 2026.
The global software outsourcing sector is forecast to expand at a compound annual growth rate (CAGR) of 7.54% from 2023 to 2027. Notably, Asia is at the forefront with a growth rate of 9.16%. Amid this expansion, India holds approximately 17.58% of the global outsourcing market. India boasts the world's largest developer workforce, with over 5.4 million software engineers. Moreover, its universities produce more than 500,000 new graduates each year, ensuring a consistent influx of talent.
The strength of India’s workforce underpins this growth. With 5.8 million professionals, India contributes 28% of the global STEM talent pool and 23% of the world’s software engineering professionals. Cloud adoption alone is expected to create 14 million jobs and add Rs. 33,01,060 crore (US$ 380 billion) to GDP by 2026. The job market remained resilient in Q4 FY25, with 82% of employers actively hiring and strong demand for roles in software development (29%), data analytics and science (26%), and sales (23%). India is also a global leader in startups, ranking as the third-largest ecosystem with over 1.8 lakh DPIIT-recognized startups as of June 30, 2025.
Of these, 34,000 are technology startups, including 3,600 deep-tech ventures driving innovation in AI, quantum computing, and frontier technologies. The ecosystem is further supported by initiatives such as the Rs. 1 lakh crore (US$ 12 billion) Innovation and Startup corpus announced in the Interim Budget 2024-25 and the Rs. 20,000 crore (US$ 2.33 billion) allocation in Union Budget 2025-26 to launch a Rs. 1,00,000 crore (US$ 11.82 billion) private sector-driven R&D and Innovation fund, alongside a Deep Tech Fund of Funds.
The space sector is also seeing renewed dynamism, with Rs. 211 crore (US$ 24.62 million) allocated under the Fund of Funds for Startups in August 2025. Upcoming milestones include the first private-built PSLV, a privately launched satellite, and a PPP-led Earth Observation Constellation, signalling India’s transition toward a vibrant commercial space economy. The Government has approved a Rs. 1,000 crore (US$ 113.69 million) Venture Capital Fund for the space sector, anchored by IN-SPACe and managed by SIDBI Venture Capital, to furnish growth and early-stage capital to Indian space startups.
R&D expenditure has been on a steady rise, doubling from Rs. 60,196 crore (US$ 9.95 billion) in 2013-14 to Rs. 1,27,000 crore (US$ 15.34 billion) in FY24, backed by initiatives such as DISHA and ANRF across AI, biotech, space, and nuclear sectors. The India AI Mission alone has been allocated Rs. 2,000 crore (US$ 236.4 million) in 2025-26, a significant leap from Rs. 173 crore (US$ 8.6 million) in the previous year.
Innovation output has kept pace. Overall, intellectual property rights (IPR) filings clocked over 18% growth with healthy growth across all categories- patents, designs, trademarks, and geographical indications- reaching 7,49,946 in FY25 from 6,35,508 in FY24 as per the annual report for 2024-25. IP filings rose 44% in the last five years, climbing from 4,77,533 in 2020-21 to 6,89,991 in 2024-25. The sharpest growth was in Geographical Indications (380%), followed by Designs (266%), Patents (180%), Copyright (83%), Trademarks (28%), and Semiconductor Integrated Circuits Layout-Designs (20%). India granted a record 1,43,729 patents in the FY25. Domestic innovators contributed nearly 69% of these filings, indicating a major shift towards self-reliance in innovation and a growing R&D base in the country.
India’s technology sector continues to expand its global footprint. The IT industry is projected to reach Rs. US$ 315 billion in FY26, surpassing US$ 283 billion in FY25. The Global Capability Centre (GCC) ecosystem is also scaling, with over 1,800 centres employing 1.9 million professionals and projected to grow from Rs. 5,45,805 crore (US$ 64.6 billion) in 2024 to Rs. 9,46,330 crore (US$ 110 billion) by 2030. These GCCs are no longer cost-driven units but hubs of digital transformation and innovation for global giants like Microsoft, Cisco, and JPMorgan. India is leading the global capability centre (GCC) race and GCCs are expected to generate 10 lakh jobs in the country in next six years.
The Information Technology industry is undergoing transformative changes with automation and AI driving growth. IT contributes 12% to total services GVA and about 7% to India’s GDP, adding over US$ 280 billion to the economy. Hiring trends indicate a rebound with significant fresher recruitment.
India’s bioeconomy adds another layer of growth, valued at US$ 165.7 billion in 2024 and aiming to achieve US$ 300 billion by 2030. Together, these developments position the country’s technology sector as a critical driver of its ambition to become a Rs. 5,97,17,000 crore (US$ 7 trillion) economy by 2030, contributing around Rs. 85,31,000 crore (US$ 1 trillion) to GDP.
Global recognition of India’s progress is evident. India improves its ranking to 45th position (2024) from 79th position (2019) as per Network Readiness Index (NRI) 2025 report. India is globally placed at 3rd rank in terms of the research publications. Research by Accenture suggests that AI alone could raise India’s annual growth rate by 1.3% by 2035. With sustained investment, policy support, and a robust talent pipeline, India’s science and technology ecosystem is evolving into one of the world’s most dynamic engines of innovation.