Rajeev  Narayan

Kolhapur, Maharashtra: At a small leather workshop, hands still cut, stitch and polish shoes the way they have for decades. In this ‘factory’, a young apprentice scrolls through his phone, not scouring for entertainment, but checking prices on WhatsApp, tracking an online order routed through a local reseller and watching a short video on how to improve finishing techniques to attract urban buyers.

Bengaluru, Karnataka: Just a few hundred kilometres away from this factory, a software tester packs up his desk after being informed by ‘HR’ that an AI tool can do his job faster and cheaper. He will get three months’ basic salary, and his employment is over.

These two moments, one from India’s informal heartland, the other from its corporate nerve centre, capture the paradox of artificial intelligence in today’s India. AI is no longer just a white-collar phenomenon threatening coders and call-centre executives; it is seeping into kirana stores, small workshops, farms, transport hubs and home-based enterprises. The question confronting India is not whether AI will destroy jobs, but whose jobs will change, who will gain and who will be left behind in an unequal economy.

Beyond the Glass Towers

Much of the conversation around AI and jobs has been dominated by India’s IT and BPO sectors, with reason. Recent layoffs at IT firms like TCS and Infosys Technologies have rattled the middle class. But such a focus misses the bigger picture, that 90 per cent of the workforce is employed in the informal sector. Street vendors, small manufacturers, labourers, artisans, domestic workers and gig workers make up this number. Yet, they rarely appear in glossy AI forecasts.

For these people, AI arrives not as a pink slip but as a sudden end of livelihood. Consider the corner kirana store. Digital payment systems, algorithm-driven inventory apps and online delivery platforms shape how these shops now function. For a few, AI-powered demand forecasting helps reduce waste and improve margins. For most, especially older shopkeepers with limited digital literacy, the same technologies threaten displacement as big platforms and delivery apps squeeze them out.

Similarly, in manufacturing clusters such as Moradabad’s brassware and Tiruppur’s knitwear, AI-enabled design tools and automated quality checks are being embraced by larger units. While this improves export competitiveness, it kills small workshops that cannot afford the technology or retrain workers. The risk is not one of overnight mass unemployment, but that of hollowing out traditional livelihoods that have sustained communities for generations.

Hands, Not Just Code

Unskilled and semi-skilled labour occupies a precarious space in India’s move to AI. Construction workers, warehouse loaders, sanitation staff and agricultural workers are considered ‘safe’ from automation because their work is physical. That assumption is now being tested. AI-guided machinery, predictive maintenance systems and automated logistics are entering worksites, ports and warehouses. While full automation is still a far cry away, productivity pressures mean fewer workers are needed to do the same job.

In parallel, AI is enabling new forms of survival. Platform-based work, such as delivery, ride-hailing and home services, relies heavily on algorithmic management. For a migrant worker, an app can mean access to income without traditional gatekeepers. It also means surveillance, unpredictable earnings and opaque decision-making, where machines determine who gets work and who does not. In this world, AI does not eliminate labour; it reorganises precarity.

Artisans and craftspeople face a divergent dilemma. AI designs and customisation are undercutting handmade products, yet digital marketplaces and algorithms are connecting niche crafts to global buyers. A weaver in Kutch or a potter in Khurja can, on paper, reach customers beyond local areas. In essence, success depends on digital skills, logistics support and policies that favour scale, not tradition.

Inequality as Real Risks

What distinguishes India’s AI moment from that of developed economies is not just income levels, but structural inequality too. In the US or Europe, automation-driven job losses are cushioned by social security systems and retraining pathways. In India, the margin for error is thinner. A factory worker or street vendor displaced by AI rarely has the savings, time or institutional support to reskill.

This is why claims that “AI will create more jobs than it destroys” ring hollow for India. Even if the number of jobs grows, the transition costs are unevenly distributed and hard to come by. High-skill workers with English proficiency, digital access and urban access are better-placed to adapt. Those at the bottom, such as women in informal work, labourers and older workers, face the greatest risk of being locked out of the new economy.

Government estimates and policy papers often emphasise AI’s contribution to GDP growth and job creation. Such forecasts are not wrong, but they hide a grisly truth. Growth without inclusion can deepen social fractures. And if AI adoption largely benefits large firms, urban centres and already-skilled workers, it will also widen regional and class divides, not bridge them.

Comparisons & Cautions

Comparisons with advanced economies are instructive but limited. In Europe and the US, AI is threatening clerical, legal and administrative jobs that dominate their labour markets. In India, the exposure is broader and messier, cutting across formal and informal sectors alike. The danger is not a single dramatic collapse, but a thousand small displacements that go uncounted or slowly add up.

That said, India has an advantage many developed economies lack; that of demographic scale and adaptability. Informal workers learn to adjust to shocks, such as economic reforms, demonetisation and COVID-19. For them, AI is just another shock. The deeper question is whether their adaptation will be supported or simply assumed.

Different Path Forward

If AI is to work for India and not against it, policy thinking must move beyond elite anxieties and boardrooms. Reskilling cannot be limited to coding boot camps and AI certifications for engineers. It must include digital literacy for shopkeepers, platform rights for gig workers, technology access for small manufacturers and design support for artisans.

It is important to recognise the value of human labour where AI cannot replicate easily, such as care work, community services, local knowledge and cultural production. These are labour-intensive and socially essential sectors, yet undervalued. Public funding in these segments could absorb workers displaced elsewhere while improving the quality of life. India also needs stronger safety nets to allow workers to take risks and learn skills without falling into destitution, such as social security, health coverage and income support. Without this, AI-led efficiency will only come at the cost of social stability.

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AI is not a merciless army, but a tool shaped by choices. In India, those choices will define whether AI becomes a force that concentrates wealth and opportunity or broadens them. From the software engineer in Bengaluru to the shoemaker in Kolhapur, the future of work is being renegotiated. If policy, industry and society can widen the lens beyond corporate fears and profits, AI can be a lever for shared prosperity. If not, it will automate inequality; faster, cheaper and at unprecedented scale.

The writer is a journalist and communications specialist