AI in healthcare: India has built the foundation, but 3 barriers are blocking scale - new paper flags

India has built strong foundations for using artificial intelligence in healthcare, but AI-enabled medical technologies are still struggling to move from successful pilots to routine clinical use, a new knowledge paper has said.

The report identifies this as one of the biggest challenges facing India's AI healthcare push. It says the issue is no longer proving that AI works, but building the ecosystem needed to scale it.

Union Health Minister J P Nadda released the paper, titled "AI in MedTech: Revolutionising Healthcare Through Artificial Intelligence", at the ninth edition of India Medical Device 2026 in New Delhi on Saturday.

The paper was jointly developed by Praxis Global Alliance and FICCI.

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MEDTECH SEEN AS BIGGEST OPPORTUNITY

The report says MedTech represents India's "most immediate and scalable opportunity" for AI adoption.

Medical devices operate at the point of care and generate clinical data that can be enhanced through AI. This can improve diagnosis, clinical decision-making and workflow efficiency, the paper said.

For India, the opportunity is particularly significant because the country's challenge is not only a shortage of medical devices but also a shortage of specialist expertise.

By embedding AI directly into medical devices, the technology could enable high-quality screening and clinical decision-making closer to patients, without requiring a proportionate expansion of healthcare infrastructure.

AI-enabled diagnostics are expected to be the first major application at scale, the report said. They rely on structured data, standardised workflows and measurable clinical outcomes.

THREE BIG BARRIERS

Despite rapid technological progress and growing acceptance among clinicians, few AI-enabled MedTech solutions have moved from pilots to wider clinical deployment.

The report identifies three major barriers: fragmented health data and limited evidence, evolving regulation, and inadequate reimbursement and procurement mechanisms.

Fragmented health data, limited interoperability and insufficient real-world evidence can make clinical validation, regulatory approval and post-market monitoring difficult.

Adaptive AI systems also need predictable, lifecycle-based regulation that can account for software updates and continuous monitoring of performance.

The report said existing payment and procurement systems often do not recognise the value created by AI-enabled technologies. That limits incentives for healthcare providers to adopt them and for companies to continue innovating.

INDIA HAS THE FOUNDATIONS

The paper said India has already built several foundations for AI-led healthcare through initiatives such as the Ayushman Bharat Digital Mission, IndiaAI Mission, Strategy for AI in Healthcare in India, Benchmarking Open Data Platform for Health AI and the National Medical Devices Policy, 2023.

But these foundations need to be linked with stronger evidence generation, predictable regulation, reimbursement and procurement mechanisms.

The report calls for coordinated action by the government, regulators, healthcare providers, payers, industry and academia.

It also says India has a unique opportunity because of its software capabilities, digital public infrastructure, clinical diversity and growing MedTech manufacturing base.

"AI is therefore emerging not simply as a technology trend, but as a strategic enabler for expanding healthcare capacity and access," the executive summary said.

The paper said that if regulation, evidence generation, reimbursement and procurement evolve together, AI-enabled MedTech could become a "foundational layer of healthcare delivery".

The opportunity, it said, is not simply to adopt AI, but to establish India as a global leader in the responsible development and deployment of AI-enabled MedTech.