The healthcare sector in India has been growing at a CAGR of 22.5% between 2016 to 2022 and is diversifying in terms of products, services, and markets. AI technology promises a transformative leap for India’s healthcare system by enhancing diagnostics, streamlining operations, and improving patient care nationwide. To further analyze the AI adoption in the Indian healthcare sector, nasscom and Kantar have released a report titled ‘Advancing Healthcare in India – Navigating the Transformative Impact of AI’. The report highlights significant use cases and outlines a strategic roadmap for AI implementation. It also offers actionable recommendations to fully harness AI’s potential, fostering innovation and enhancing overall healthcare efficiency in the rapidly evolving Indian healthcare ecosystem.
The healthcare sector in India is expected to reach $650 Bn by 2025, supported by uptick in public health spending, government and private investments in expanding medical infrastructure, diversifying healthcare segments, and growth in newer pockets like home healthcare, and telemedicine.
AI in the Indian Healthcare market is growing at a CAGR of 40.6% and is estimated to reach $1.6 billion by 2025. Varied applications are emerging for AI in this segment. Areas such as drug discovery and development, clinical trials, and AI imaging and diagnostics have witnessed a significant uptick in AI penetration levels in this sector. As per nasscom AI Adoption in Healthcare Survey 2023-2024, in verticals such as Pharma and Life Science, 82% of the surveyed organizations that have adopted AI in small scale and intend to scale up in 2024 with 12% having already integrated AI into their functional processes. A similar trend is being witnessed in the MedTech vertical. Among healthcare providers, AI adoption is relatively high at 68%, but most of the deployments (92%) are in the PoC phase.
The report also focuses on how AI technology providers are crucial in helping healthcare enterprises overcome challenges, achieve efficiency, and speed up service delivery. Large tech firms are adopting platform-based approaches and hybrid cloud solutions for scalable and compliant healthcare applications. Meanwhile, specialist service providers are offering tailored point solutions, and product companies are expanding AI offerings, shifting towards platform-based and product-as-a-service models. Indian healthcare AI startups are driving innovation in the B2B space, particularly in Healthcare IT & Analytics, to improve operational efficiency and care delivery.
While there has been a growing interest and investment in Generative AI, its adoption in the healthcare segment is in its nascent stages, with 34% of healthcare organizations in India piloted at least 1-2 Gen AI use cases in 2023, and only 16% of the organizations have moved to production phase in 2023.
Despite its potential & steady growth, significant gaps exist in the Indian healthcare sector. Lack of a skilled AI professionals, PoCs to Scale, insufficient budget allocation, managing data and AI models, data security & model biases are some of the challenges hindering full scale adoption of AI in the Indian healthcare segment.
Achyuta Ghosh, Senior Director & Head, nasscom Insights, said, “AI holds transformative potential in healthcare, from predictive analytics for disease outbreaks to precision medicine tailored to genetic profiles. To fully harness this, India must invest in AI infrastructure, skilled professionals, and adaptive regulatory frameworks. Ensuring data privacy, security, and ethical guidelines is crucial for maintaining public trust. By embracing AI, India can set a global standard for healthcare innovation, driving growth and enhancing the quality of life for millions.”
The report focusses on five key elements that are essential to unlock AI’s full potential in the Indian healthcare sector. These include infrastructure, skills, planning & implementation, scalability, and regulatory frameworks. Robust infrastructure is crucial to support AI-driven diagnostics, patient care, and data-driven decision-making. This includes developing high-performance computing, enhancing broadband connectivity, promoting cloud platforms, and standardizing interoperable EHR systems. Equipping healthcare professionals and policymakers with AI skills is vital for better healthcare outcomes and efficiency. This requires AI training programs, fostering interdisciplinary collaboration, and establishing strong AI talent management and upskilling initiatives. By focusing on these elements, India can ensure a comprehensive, effective, and sustainable AI integration across its healthcare ecosystem.
