MUMBAI, Aug 05, 2026 — Two years into what most Indian enterprises describe as a serious commitment to artificial intelligence (AI), boards are still searching for the one metric that matters most: measurable business impact. That is the central finding of the State of AI in Indian Enterprises 2026, a new research report published by ET Edge CIO&Leader. Key findings from the report were unveiled at the 27th CIO&Leader Conference, The Agentic Enterprise, held in Jaipur from July 31 to August 2, 2026.
Drawing on surveys of 300+ senior enterprise technology leaders conducted in May and June 2026, the report finds that 60% of organizations remain at the pilot or exploration stage of their AI journey despite two or more years of investment, and that just 12% can point to significant, measurable return on that investment. Fifty-seven percent either have no measurable ROI or cannot determine whether returns exist at all — a gap the report characterizes as a measurement failure rather than a performance failure.
The disconnect extends to funding. Eighty-three percent of technology leaders name productivity improvement as their organization’s primary reason for investing in AI, yet 58% still allocate less than 10% of the IT budget to it, and 55% either experienced AI cost overruns in the past year or do not track AI spending separately from the broader IT budget at all. For boards approving technology budgets, the report argues, that combination makes it difficult to hold management accountable for either the investment case or the returns it is meant to deliver.
The report’s sharpest finding for boards concerns risk oversight. Eighty-one percent of respondents name data privacy and compliance as their leading AI concern, but only 19% describe their organization as highly prepared to meet obligations under India’s Digital Personal Data Protection (DPDP) Act. Nine percent report no formal AI governance structure whatsoever, and close to two in five organizations report a confirmed, or suspected, AI-related security incident.
Layered on top of this is a faster-moving shift already underway inside these same organizations. Sixty-four percent of technology leaders report that their organization is now actively piloting or has deployed agentic AI — systems that execute multi-step tasks and make decisions autonomously, rather than simply generating content for a human to review. Forty-six percent of the report’s risk and governance-focused respondents name agentic AI as the capability most likely to reshape enterprise operations in the next eighteen months, ahead of any other emerging technology tested in the study.
“The spending arrived. The returns have not. That is not a story about a market failing for lack of vision — it is a lack of process discipline, in how pilots are selected, who owns the business case, and how success is measured. Those are decisions a board can and should be asking about directly.” — R. Giridhar, Editorial Director – Technology, ET Edge
“Every AI budget a board approves is also, implicitly, a risk the board has accepted. Data privacy exposure, concentration in a handful of AI vendors, and now systems that act without a human in the loop are no longer operational details. They belong on the same agenda as capital expenditure and cyber risk.” — Jatinder Singh, Chief Editor, Enterprise Tech Publications, ET Edge
Four Priorities for Board-Level Oversight
The report sets out four priorities it argues Indian boards should treat as immediate and parallel —over the next 18 months:
- Require evidence of business ownership and data readiness before any AI pilot is funded, to close the pilot-to-production gap.
- Insist on a minimum, rigorously measured ROI benchmark before further AI investment is authorized.
- Treat DPDP compliance for AI systems as a present legal obligation, not a future initiative.
- Require documented governance — autonomy limits, audit trails, and escalation paths — before any autonomous AI system is scaled beyond a pilot.
About ET Edge CIO&Leader: ET Edge CIO&Leader, a brand of The Times Group, is India’s leading platform for enterprise technology leaders. It brings together CIOs and senior technology decision-makers to exchange insights on emerging technologies, digital transformation, leadership, innovation, and business strategy. As a trusted voice in the industry, CIO&Leader empowers enterprises to harness technology for growth while ensuring resilience, governance, and responsible innovation.
