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AI sector is expected to power the next technology rally, according to Dikshit Mittal, Senior Fund Manager at LIC Mutual Fund.
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Import replacement will be a major long-term theme for India, backed by government schemes like PLI and growing corporate investment.
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AI sector and digital transformation remain key growth drivers for India’s IT industry despite short-term global headwinds.
AI Sector Expected to Lead India’s Next Technology Boom
The AI sector is emerging as the next big growth engine for India’s economy and stock market. According to Dikshit Mittal, Senior Fund Manager at LIC Mutual Fund AMC, the technology industry is set to enter a new growth phase powered by artificial intelligence, cloud computing, and digital transformation. While global economic uncertainties have caused temporary slowdowns in IT exports, Mittal believes this is only a short pause. He argues that the long-term story for India’s technology and AI sector remains strong, driven by increasing global demand for automation, analytics, and intelligent digital solutions.
Mittal emphasizes that companies adapting to AI-led digital transformation will gain a competitive advantage as global clients continue to shift from traditional outsourcing to smarter, value-driven partnerships. This makes the AI sector one of the most exciting opportunities for long-term investors looking to benefit from India’s evolving technology landscape.
AI Sector and Festive Demand to Boost Consumption-Driven Growth
The AI sector and broader economic activities are benefiting from strong consumption trends supported by festive season demand and robust government capital expenditure. Mittal highlighted that India’s consumption story remains one of the most powerful structural drivers of economic growth. With rising household incomes, urbanization, and a young population, consumer preferences are shifting from essentials to lifestyle and premium products.
Government reforms such as GST rationalization, new income tax regimes, and monetary support from the RBI have improved purchasing power. As a result, sectors such as automobiles, real estate, electronics, and digital services are seeing renewed momentum. The AI sector also indirectly benefits from this surge in digital adoption, as businesses across industries use AI tools to enhance marketing, logistics, and customer engagement. Mittal believes these shifts will continue fueling demand across both tech and consumption-linked sectors.
Import Replacement – A Defining Theme for India’s Future Growth
Import replacement is expected to become a defining economic theme for India over the next five years, according to Mittal. This strategy focuses on reducing dependence on imported goods and boosting local manufacturing. The import replacement movement is gaining momentum due to three key factors — strong government support through Production Linked Incentive (PLI) schemes, corporate willingness to invest, and massive opportunities across industries like defense, electronics, and chemicals.
Mittal explained that India still imports large amounts of equipment, technology, and chemicals, but this reliance is turning into an opportunity for domestic producers. Companies with strong technology capabilities and cost efficiency can now capture a larger share of the domestic and export markets. This trend not only strengthens India’s manufacturing base but also creates jobs and enhances long-term economic stability.
AI Sector and IT Industry Still Hold Long-Term Promise
Despite recent underperformance, the AI sector and IT industry remain vital pillars of India’s growth story. Mittal believes that the current weakness in IT stocks is temporary and reflects global macroeconomic headwinds rather than structural decline. Many international companies have postponed discretionary tech spending due to inflation and geopolitical tensions, but this pause is likely to reverse once conditions stabilize.
India’s IT firms are now focusing on the AI sector and digital transformation rather than traditional outsourcing. Cloud computing, generative AI, and cybersecurity are expected to open up new revenue streams. Companies investing early in these technologies will likely outperform as the global demand for intelligent automation accelerates. Mittal remains optimistic that the IT sector will lead the next wave of growth, supported by India’s strong talent base and rising global competitiveness.
Import Replacement and Manufacturing – Key Investment Focus for LIC MF
Import replacement is not just an economic policy but also a major investment opportunity, according to Mittal. LIC Mutual Fund is strategically overweight on sectors that align with this trend. These include power and data centers, contract manufacturing, domestic pharmaceuticals, and consumer discretionary businesses. The fund manager noted that India’s push for localization under the “Make in India” and “Atmanirbhar Bharat” initiatives has improved investor confidence and created a favorable environment for private investment.
Mittal’s team is particularly optimistic about power generation and transmission, data center expansion, and chemical and electronic manufacturing, all of which tie into the import replacement story. These areas are expected to deliver consistent growth supported by policy incentives, infrastructure investments, and corporate innovation.
AI Sector and Structural Growth Themes Driving LIC MF’s Portfolio
The AI sector is one of the core pillars of LIC MF’s investment strategy. Mittal explained that their approach focuses on identifying long-term growth themes that can consistently outperform GDP growth. The fund emphasizes businesses with high-quality management, strong balance sheets, and disciplined cash flows. Currently, LIC MF is overweight on AI-driven technology, data center infrastructure, and consumer discretionary segments that are transforming due to digitalization.
Other favored sectors include defense, banking, manufacturing, and pharmaceuticals, all of which align with India’s structural transformation story. Mittal believes that by focusing on these high-growth areas, investors can capture the benefits of India’s next economic cycle while mitigating short-term volatility.
Import Replacement and IPO Boom Reflect India’s Growing Confidence
The import replacement trend is also visible in India’s booming primary market. Mittal pointed out that record fundraising through IPOs reflects strong domestic liquidity and investor appetite for innovation-driven sectors. Many consumer tech, fintech, and manufacturing companies are reaching maturity and tapping the public markets for growth capital. As more AI sector startups and new-age tech companies go public, investors will have broader opportunities to participate in India’s digital revolution.
Mittal dismissed fears of market saturation, emphasizing that as long as liquidity remains strong and new business models continue to emerge, India’s IPO market will thrive.
Conclusion: AI and Import Replacement to Shape India’s Economic Future
In conclusion, Dikshit Mittal believes the AI sector and import replacement will be two defining forces shaping India’s economy and markets in the next five years. While the IT sector faces short-term challenges, its long-term outlook remains bright, powered by AI-led transformation and global digital adoption. Meanwhile, the shift toward local manufacturing and self-reliance will create new opportunities across industries, from defense to chemicals.
Together, these themes reflect a confident, forward-looking India that is embracing innovation, technology, and resilience as key drivers of its economic future.
