India and the Fourth Industrial Revolution: Promises, Perils, and Policy Responses

Over the past decade, corporate, policy and scholarly experts have come to agree that states’ ability to exploiting the benefits of fourth industrial revolution technologies in the fields of artificial intelligence (AI), Internet of Things (IoT) or automation while mitigating their risks will significantly shape their prospects for growth, stability, and security. Yet, it is strongly contested what kind of impact this will primarily be. Meanwhile, public debates have been dominated by one-sided headlines hyping fears of super-intelligent robots taking over humans’ jobs, dignity and ultimately political control, or overinflating expectations of technologies as panacea for most of humanity’s ills, creating safer and better jobs, higher living standards and less lethal warfare. At the 15th edition of the India Trilateral Forum in Stockholm in November 2018, a panel of business, research, and policy experts resisted the temptation of drawing fatalistic scenarios and provided a sober assessment of the promises and perils of emerging technologies in India, Europe and the U.S. and of how they are adapting. While India is a relatively late entrant in the race for developing beneficial artificial intelligence and other fourth industrial revolution technologies, it has distinct advantages that can give it a strategic edge in the future.

Promises of the Revolution

Bundled under the label of the fourth industrial revolution, what unites technologies based on AI, autonomous vehicles, big data processing, 3-D printing, IoT, and blockchain is the exponential pace of their emergence, the velocity of their cross-sectoral disruption, and the scope of their impact. Fusing digital, physical and biological strata, they potentially transform entire systems of governance, management, and production. To kick-start the discussion, panelists highlighted the extant and potential economic gains associated with the revolution. Total funding in AI alone has increased from an estimated $862 million in 2012 to $6.4 billion in 2016. According to a PwC study, AI could contribute up to $15.7 trillion to the global economy in 2030, primarily by increasing labor productivity through automation and product enhancement across various sectors. AI is increasing the efficiency in manufacturing, transportation, internet and communication, and financial sectors by developing industrial robots, self-driving vehicles, web search engines and automated stock-trading systems; transforming the health sector by enabling medical decision support systems to support doctors diagnosing and treating diseases or innovating medical equipment such as cognitive hearing aids using algorithms to filter out ambient noise or surgical robots; modernizing agriculture by improving agricultural yields and forecasting extreme weathers; and improving the efficiency of military logistics and operations as well as intelligence analysis by employing bomb-disposing robots, surveillance and attack drones and other unmanned vehicles. To maintain economic and military competitiveness, states, therefore, feel increasingly compelled to cultivating and harnessing a culture of AI innovation.  

The Indian state and society, one panelist argued, have traditionally perceived technology as a major enabler of economic growth and a vehicle to leapfrogging established industrialized economies. India’s software miracle and recent smartphone revolution allowed it to maintain its trademark as “IT superpower” and “info-nation”. Since extensive computerization of services in the late 1980s, India emerged as the leading sourcing destination for the global IT industry and the world’s fastest growing e-commerce market, and with the world’s largest highly-skilled IT workforces and one of the largest technology start-up sectors, it is well positioned to benefit not only from the ongoing digital transformation but also the evolving fourth industrial revolution. While significantly lagging behind the volume of private investment in AI in China, the US and Europe, India’s AI sector has grown over the past five years by a total of $150 million, with private investment almost doubling from $44 million in 2016 to $73 million in 2017. In its Artificial Intelligence Primer 2018, India’s National Association of Software and Services Companies (NASSCOM) estimated that AI has the potential to contribute $957 billion to India’s economy by 2035, with agriculture, education, healthcare and infrastructure as the key sectors benefiting from AI. Already today, India has by far the highest growth rate of internet access of any large economy and has digitized its economic, social and political systems at an unprecedented scale – the recent breakthroughs in AI-enabled innovations promise to multiply the potential benefits that have evolved in this ecosystem.

Perils of Disruptions

Yet, while denouncing apocalyptic scenarios outlined above, panelists identified critical economic, political, and military risks associated with the fourth industrial revolution. Of most immediate concern was the observation that the revolution has already led to substantial job losses and could further amplify inequality and social tensions as job markets further segregate into low-skill/-pay and high-skill/-pay segments. Technological advancements have contributed to income stagnation or decrease, increasing a sense of dissatisfaction among members of the middle classes. Referring to a study by consultancy company McKinsey published in 2017, a panelist warned that up to 30 percent of hours worked globally could be automated by 2030, potentially displacing 800 million workers and compelling up to 375 million to learn new skills for novel occupation categories, in particular in advanced, high-wage economies. While India compared to countries like the US, Japan or Germany has a relatively modest potential for automation of up to 19 percent over the next years, given its relatively low wage rates, and will likely be able to create sufficient new jobs to offset automation, fears of “jobless growth” persist.

Another key concern discussed across panels at the ITF15 and previous trilateral fora is the potential of emerging technologies to disrupt democratic political processes and facilitate authoritarian, oppressive practices. Novel techniques to subvert democracy or consolidate authoritarian rule range from AI-enabled election hacking and the abuse of social media to fuel discontent to enhanced surveillance through AI-enabled group cognition, robotic policing, and computational propaganda. Some observers warned that digital authoritarianism is emerging as a novel system of social organization combining economic growth with increasingly effective state control, referring to China’s efforts to use AI-enabled technologies to build and export such a system as the most prominent example. Others highlighted the loss of control over data and the hollowing of privacy rights. India under Prime Minister Narendra Modi has been keen to control content and, between January 2016 and May 2018, intentionally disrupted the internet or mobile apps (“internet shutdowns”) much more often than any other state, according to a study by the NGO Access Now. In addition, a climate of hyper-nationalism exhibits the risk of misusing technology for fomenting violence.  

Finally, fourth industrial revolution technologies have the potential to compromise national and international security. Already, states have begun to weaponize AI. The combination of lethal autonomous weapon systems (LAWS) and AI-enabled intelligence operations with a broad range of cyber weapons constitute a significant revolution in military affairs with potentially destabilizing effects, increasing armed conflict escalation as ethical hurdles decrease, instigating arms races as weaponized applications evolve and create market incentives, and empowering asymmetric warfare as individuals or small groups can cause mass harm. Although India is engaged in an enduring rivalry with China, whose military has amassed sophisticated AI capabilities, Indian policymakers largely perceive such threats as future scenarios. Yet, one panelist noted that the detection of one of the world’s first AI-enabled attacks in India in November 2017, using malware that learned and adapted its methods while spreading, revealed the vulnerabilities of India’s critical infrastructures to AI-powered attacks.

Policy Responses to Emerging Technologies

States have adopted international and national policy measures to maximize the benefits of and mitigate the threats caused by emerging technologies, seeking to manage the social disruptions through multistakeholder regulation without undermining innovation. At the global level, the United Nations initiated numerous efforts to encourage dialogue on how AI is transforming the nature of work and the means of warfare, and global arms control regimes negotiated ways to regulate the research and development of AI and limiting or potentially banning LAWS. At the G20 Summit taking place in Buenos Aires in parallel to the ITF15, the Argentine Presidency selected the future of work as a priority topic, with the summit declaration highlighting the need for coordinated policy responses that would not engender exclusion, social disintegration or backlash. Yet, one panelist concluded that global efforts to setting AI standards have more recently been derailed by escalating tensions between the US and China. Meanwhile, more than 20 governments and international organizations, including the US, the EU, and India, have published national AI strategies over the past two years. Overall, however, states have been struggling with keeping pace with the rapid technological advances.

The Indian state’s response to the challenges posed by the fourth industrial revolution has reportedly been relatively late and fragmented. In its federal budget for the financial year 2018-2019, the government doubled public investment by allocating $480 million for AI and other emerging technologies. In June 2018, the government think tank NITI Aayog released a discussion paper that outlined a national AI strategy, focusing strongly on how AI, data analytics and IoT-based systems can improve access and quality of social services in the five priority sectors of health, education, agriculture, smart cities, and smart mobility. While acknowledging that India has lagged in fundamental AI research, resources and regulation, the strategy commits to building a pool of AI talent by drawing on India’s vast engineering and IT workforces and burgeoning startup scene, and to developing India into a major provider of AI solutions for the developing world. Based on these nascent steps, India has an opportunity to play a pivotal role in developing beneficial fourth industrial revolution technologies. Adopting comprehensive, integrated policy responses will require strategic dialogue involving all stakeholders – such as the ITF – in the coming years.