India’s CEOs remained upbeat about growth, but their optimism comes with caveats. Nearly 89% of Indian CEOs pointed out that identity theft and data privacy are the most pressing cybersecurity threats linked to artificial intelligence (AI), according to KPMG’s 2025 India CEO Outlook.
The global survey, covering 1,350 CEOs including 125 from India, found that confidence in India’s growth story is holding firm even as leaders admit to growing discomfort over data risk, regulatory lag and the environmental cost of technology.
KPMG said AI adoption, cybersecurity and regulatory compliance now dominate corporate priorities. AI is no longer seen as a futuristic advantage but as an unavoidable pressure point one that could just as easily create risk as it creates value.
Slower Indian regulatory reforms pulling down the AI growth
65% of Indian CEOs say AI integration is a top investment priority, compared with 71% globally. Over half of the CEOs plan to devote 10–20% of their annual budgets to AI initiatives this year.
KPMG noted that enthusiasm for AI remained strong, but 76% of Indian CEOs believe policy reform is lagging, and 62% flag ethical risks like bias and misinformation. This means, India Inc is automating faster than it is governing.
KPMG observed that India’s regulatory framework for AI remains incomplete. The Digital Personal Data Protection Act, passed last year, handles privacy but leaves algorithmic oversight unresolved. The proposed Digital India Act, meant to anchor emerging tech regulation, has yet to be notified.
The report said that regulatory reform must move faster to match the scale of AI investment. By contrast, governance specialists note that the absence of AI-specific rules has already slowed institutional readiness and made Indian firms cautious about scaling up.
In effect, Indian companies are building the technology before the rulebook is ready, a gap that could determine how quickly they can move from experimentation to full-scale adoption.
Domestic resilience stands out as global optimism dips
83% of Indian CEOs remain confident about their company’s growth prospects for 2025, up from 68% in 2024. However, confidence in the global economy has dropped to 63%, down from 80% a year ago.
KPMG said this divergence reflects faith in India’s domestic stability driven by consumption, credit and steady policy even as global uncertainty rises. “Indian CEOs continue to display confidence in the resilience of the Indian economy and their own organisations,” said Yezdi Nagporewalla, Chairman and CEO, KPMG in India. “However, they are also acutely aware that the environment in which they operate is changing faster than ever.”
That speed of change is both the opportunity and the risk. Indian companies are investing in AI to get ahead, yet the faster they move, the more they expose themselves to new forms of volatility.
India lags when it comes to AI readiness
According to KPMG, India’s AI readiness, the combination of infrastructure, skill and governance remains uneven. Large enterprises are moving quickly, but smaller firms still struggle with limited computing power, fragmented data systems and shortages of skilled talent. Unlike more mature markets, India’s progress depends largely on private investment and imported infrastructure rather than domestic public capacity.
As KPMG puts it, “Readiness is no longer about awareness; it is about infrastructure and governance.”
KPMG’s findings pointed to an India that is running on parallel tracks, one moving at the speed of innovation, the other slowed by missing regulation and uneven infrastructure.
For policymakers, the task is twofold i.e. creating clear AI standards and building energy-efficient data infrastructure that aligns with sustainability goals. For investors, the differentiator will be governance strength, how well a company manages compliance, ethics and cyber resilience while scaling up AI.
Cybersecurity spending climbs alongside exposure
42% of Indian CEOs have increased cybersecurity budgets this year, compared with 39% of global CEOs, KPMG revealed. The rise is being channelled into data encryption, identity management and fraud detection as firms look to secure new digital systems.
KPMG called this a shift in mindset: “Cyber resilience is no longer a technical add-on; it’s a boardroom agenda item.”
Echoing this assessment, risk consultants say Indian companies are starting to link cyber budgets directly to AI deployments. Every new algorithm, they argued, expands the attack surface making security investment less about compliance and more about survival, as per the report.
Can AI boost the sustainability goal or make it worse?
KPMG found that 77% of Indian CEOs believe AI will help reduce emissions and improve energy efficiency through predictive analytics and automation. Confidence in meeting net-zero goals by 2030 has risen to 56%, from 36% a year earlier.
However, a September 2025 study by MIT suggested that optimism may be misplaced. The research found that generative AI systems, particularly large language models, consume enormous amounts of power, putting pressure on data centres and electricity grids. It said that while AI can optimise industrial operations, those efficiency gains are often neutralised by the energy required to train and run the models.
Echoing the above finding, a recently published Stanford 2025 AI Index warned that unless AI is powered by cleaner energy sources, the technology’s carbon footprint will expand faster than its claimed efficiency gains.
The contradiction is hard to miss. While, CEOs see AI as part of their sustainability solution, researchers see it as a potential strain on the same goals. KPMG, for its part, added that measurement credibility will be key ESG data generated by AI must be independently validated to remain reliable.
Firms choose reskilling over layoffs
KPMG noted that 19% of Indian CEOs now cite employee value proposition pay, culture, learning as their top operational focus, almost double the 11% global average.
The firm said Indian businesses are favouring reskilling over workforce reduction, a pragmatic shift from earlier automation cycles.
For now, Indian firms are treating workforce adaptability as a competitive asset rather than a cost centre a move that could help them manage disruption more steadily than their global peers.
Leadership priorities tilt toward agility and compliance
KPMG revealed that 31% of Indian CEOs rank agility and faster decision-making as the most critical leadership qualities for 2025, compared with 26% of global CEOs. Regulatory awareness and digital fluency follow close behind.
The report noted that Indian CEOs are increasingly aware that technology fluency and compliance literacy will be essential to sustain growth in a complex environment. Yet, even as leaders prioritise agility, many companies are still putting in place the systems and oversight needed to translate that intent into practice.
The focus, they argued, must now move from writing AI principles to proving that those principles work in practice, as per KPMG finding.
The question now isn’t whether Indian companies can adopt AI. It’s whether they can build the capacity, regulation and energy base to make that adoption truly sustainable.