How AI Is Powering India’s Economic Resurgence from Tier 2 and 3 Cities
Amid global economic uncertainty, India is emerging as a hub of digital innovation and inclusive growth, thanks to the rising adoption of artificial intelligence (AI), particularly in Tier 2 and 3 cities. These regions, once left behind in the digital race, are now becoming vital engines of India's economic resurgence.
AI is not just supporting large enterprises—it is transforming local economies by driving inclusion, bridging the urban-rural skill divide, and enabling grassroots innovation across agriculture, education, and employment.
Transforming Agriculture and Dairy with AI Tools
AI is revolutionising farming by giving smallholder farmers access to real-time data, precision farming tools, and digital credit. In cities like Varanasi, Indore, and Patna, startups such as Stellapps are deploying AI-driven platforms to monitor cattle health, assess milk quality, and improve supply chain traceability.
“AI is not replacing farmers—it’s empowering them,” said Ranjith Mukunda, CEO of Stellapps. Their wearable tech, mooON, and the smartAMCU collection system have reportedly improved profitability by up to 500% and market realization by 160%. Additionally, MooScore, an AI-based credit assessment tool, is enabling financial inclusion for previously unbanked farmers.
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Bridging the Skill Gap and Democratizing Education
AI is helping address India's rural skill gap by enabling adaptive learning and virtual apprenticeships. EdTech platforms are providing real-time feedback and tailored educational content to youth in smaller cities. Institutions such as India AI Future Skills and NIELIT are establishing AI labs in Gorakhpur, Bikaner, and beyond.
“Cities like Indore, Meerut, Jalandhar, and Jaipur are developing AI-enabled employment ecosystems,” said Amit Singh Khokhar, Assistant Professor at Delhi Skill and Entrepreneurship University.
AI-driven hiring, customer service, and logistics are also making Tier 2 and 3 cities attractive hubs for MSMEs and global capability centers.
A New Growth Engine for Digital India
With over 500 million smartphone users and the world’s largest Gen Z population, India’s smaller cities are emerging as powerhouses of AI-driven growth. As the country advances toward its $5 trillion economic target, AI is set to play a pivotal role in reshaping education, agriculture, and employment from the grassroots up.
