Artificial intelligence (AI) is become more sophisticated while providing easier answers to a number of real-world issues due to exponential growth in data collection and processing capability. The uses of AI in business, education, science, government, and consumer applications have a significant impact on global trade.
AI may be a versatile technology that can be used in trade to produce goods and services more effectively. AI-powered smartphones and software applications are examples of products that can be exchanged as intellectual property (IP) and included in goods or services. In other cases, it might only be a tool to facilitate trade, like an AI-powered system for border control risk assessment. AI offers enormous potential to increase GDP and international trade.
A World Trade Organization (WTO) study estimates that trade growth might rise by 14% through 2040 in a “global synergy” scenario of universal AI adoption, whereas cautious, uneven adoption might only result in 7% growth. It also implies that while low-income economies may see lower trade costs if they invest in digital infrastructure, innovation, and regulatory capacity, high-income economies stand to benefit the most from increased productivity.
AI may make it easier for small and medium-sized businesses (SMEs) and emerging nations to reach international markets by reshaping economic comparative advantages, lowering trade barriers, and opening up new trade sectors.
India must fully utilize AI opportunities to increase its export potential and consider AI’s impact on global commerce to modify its trade regulations, as it aims to achieve $2 trillion in exports by 2030. The development of AI is increasing demand for a wide range of products, such as ICT (IoT devices, camera systems, semiconductor chips, and computer systems) and automation systems that have uses in a variety of industries, including food processing (quality inspection), transportation (drones), and agriculture (micro irrigation), as well as their byproducts, such as raw materials.
The implementation of the India Semiconductor Mission (ISM) and the country’s concentration on developing an environment for electronics manufacturing through programs like Production Linked Incentives (PLI) for electronic components, IT gear, and mobile devices are crucial interventions. The India Cellular and Electronics Association (ICEA) estimates that India produced $115 billion worth of electronics in FY24, of which $29 billion came from exports, a 23.6% increase over the previous year. Technology advancements may also revolutionize AI-driven commerce, as evidenced by the upheaval brought about by China’s AI business DeepSeek. By lowering capital needs, accelerating technology adoption, and enabling quick scalability, such advancements have the potential to democratize the AI ecosystem and help tech startups and small businesses alike. These developments might potentially present chances for Indian businesses, especially startups and SMEs, to leverage AI to boost productivity at reasonable prices.
Challenges for AI
AI has benefits, but it also has risks. For instance, AI may have a detrimental effect on jobs in the service industry that depend on manual procedures and may completely eliminate the need to outsource some services, such as the replacement of traditional call centers by AI-enabled chat rooms.
The advancement, precision, and creativity of AI rely on having access to diverse, high-quality datasets. AI is already upending established IP frameworks, even though the Trade-Related Intellectual Property Rights (TRIPS) Agreement provide fundamental IP protection for AI innovations. There are serious concerns over the use of copyrighted content for AI training, the legal standing of AI as a creator, and the transparency of algorithms.
Global trade regulations need to change to take into account concerns about competitiveness, data stewardship, and technical neutrality. AI is already being influenced by a number of bilateral free trade agreements (FTAs), regional trade agreements (RTAs), and international trade regulations under the WTO. Disciplines on data flow, data privacy, personal data protection, e-commerce, and digital trade are progressively being included in these agreements.
India’s large talent pool, highly qualified workforce, and the substantial presence of global competence centers (GCCs) built by top international IT businesses put it in a strategic position to take advantage of the opportunities presented by AI. Along with taking action to establish a trade policy environment that supports the export of AI-based goods and services, India should also take the lead in advancing the Global South’s agenda on trade-related issues of AI, especially inside the WTO.