Artificial Intelligence and the Future of Employment in India: An Empirical Economic Analysis of Labour Market Transformation and the Rise of the Skill-Craft Economy

Artificial Intelligence (AI) has emerged as one of the most transformative forces in modern economies, reshaping production systems, labour demand, income structures and skill requirements. While AI-driven automation enhances productivity and economic efficiency, it simultaneously raises serious concerns regarding employment displacement, wage inequality and job insecurity particularly in labour-abundant economies such as India. This study presents an empirical and economic analysis of the impact of AI on employment in India by integrating official labour market data with global industry trends. Drawing on the Periodic Labour Force Survey (PLFS 2023–2024), the India Employment Report 2024 (IHD–ILO) and World Economic Forum insights, the paper examines labour participation, wage dynamics and skill transitions. In addition, the study incorporates contemporary industry signals, particularly the observations of NVIDIA CEO Jensen Huang, who argues that while AI disrupts white-collar employment, it is simultaneously generating massive demand for skilled physical labour—electricians, plumbers, technicians and infrastructure workers. The findings reveal that AI has not caused large-scale unemployment in India but has fundamentally altered job composition, employment quality and income structures. The study concludes that AI-led growth must be supported by targeted skill development, vocational education and labour-market policies to ensure inclusive and sustainable employment outcomes.