This is despite presence of a tech-savvy talent pool, renowned universities, healthy levels of entrepreneurship and strong corporations, it added.
The report, 'Rewire for Growth', estimates that AI has the potential to increase India's annual growth rate of gross value added (GVA) by 1.3 percentage points, lifting the countrys income by 15 per cent in 2035.
In value terms, it expects the GVA to be about USD 7.35 trillion by then, including the AI gains.
AI's transformative power can be compared to the advent of computing itself, and theres strong early evidence that AI can play a key role in unlocking socio-economic value in India, Accenture India senior managing director and chairman Rekha M Menon said.
"The time to act is now. With the right investments AI can create a flywheel effect 'liberating' people to create long term economic and societal value," she added.
The report noted that major Indian technical universities have been pioneering fundamental research in AI, but are not doing enough to strengthen the AI ecosystem around them unlike their global counterparts like Cambridge and Oxford in the UK.
It also stated that although AI startups have witnessed higher than average growth in India since 2011, and in 2016 ranked third among G20 countries measured by the number of AI startups, the size of funding received is substantially smaller than in the US and China.
The report suggested development of a long-term vision and action plan that unites the ecosystem, and addresses technical and ethical questions as they arise.
Increased spending on core AI research, facilitating ecosystem collaboration and creating opportunities for smaller players will play an important role, it added.