The AI Revolution Shaping India's Tier 2 & 3 Cities
Powering Economic Revitalization in Secondary and Tertiary Indian Cities With AI Technology
India, in the midst of global economic instability, is standing tall, bursting with resilience and innovation. With a bubbling startup ecosystem, a tech-savvy populace, and robust public-private collaborations, India is poised to surpass many major economies.
Kickstarting this transformation is artificial intelligence (AI), particularly in smaller cities where it's driving inclusion, improving service access, and reshaping local economies.
Though broad in impact, we'll delve into a few areas where AI is making a significant difference, contributing to India's economic rejuvenation.
Transforming Agriculture
AI is revolutionizing India's agriculture by arming smallholder farmers with precision farming tools and real-time data. Companies like Stellapps are embedding AI and IoT (Internet of Things) across the dairy supply chain - from monitoring livestock health to controlling milk quality and logistics. In cities like Varanasi, Indore, and Patna, AI-powered solutions such as the mooON wearable for cattle and smartAMCU for milk collection are boosting productivity, ensuring traceability, and elevating farmer income.
"AI doesn't replace farmers; it empowers them," explains Ranjith Mukunda, CEO of Stellapps. In Varanasi, improvements in profitability have soared by up to 500%, while market realisation for milk jumped by 160%. Innovations like AI-driven credit scoring through mooScore are fostering financial inclusion for previously unbanked farmers.
Beyond dairy, AI is giving agriculture a tech makeover.
Reshaping Skill Development and Employment
AI is bridging the urban-rural skill gap by making education and training more accessible and demand-driven. Adaptive learning platforms and virtual apprenticeships equip young people with valuable skills.
"Cities like Indore, Meerut, Jalandhar, and Jaipur are witnessing the emergence of AI-enabled employment ecosystems," states Amit Singh Khokhar, Assistant Professor at Delhi Skill and Entrepreneurship University.
Educational institutions like IndiaAI FutureSkills and NIELIT are setting up AI and data labs in cities such as Gorakhpur and Bikaner, democratizing access to digital skills. From AI-assisted customer support to predictive maintenance, Tier 2 and 3 cities are rapidly becoming talent havens for MSMEs and new-age industries.
Democratizing Education
EdTech platforms leverage AI to personalize learning, offering real-time feedback and tailored content to learners across India's smaller towns. Akshal Agarwal, Co-Founder of NatureNurture, which operates in 75 tier 2 and 3 cities, highlights how AI-based education is breaking geographic and economic barriers.
"AI offers a decentralizing opportunity, enabling local talent to thrive without migrating to metro cities," he says.
Paving the Path for Inclusive Jobs
Conventional hiring often ignores talent in smaller cities. AI-based recruitment platforms like CoHyre.ai are challenging this norm. "Tier 2 and 3 towns teem with capable individuals who suffer due to geography, infrastructure, and unconscious bias," explains Deepak Ahluwalia, CoHyre's CEO. Using agentic AI tools, these platforms match candidates with jobs based on actual skills, intent, and learning agility - not just CVs. This strategy promotes fairer hiring practices, bolstering local economies by increasing job opportunities and reducing urban migration.
Supporting Vulnerable Communities
NGOs like SOS Children's Villages India are integrating AI into skilling initiatives for underprivileged communities. In 2024-25, they trained nearly 3,000 youth in cities like Rourkela, Guwahati, and Bhimtal.
"AI paves the way for personalized learning paths and links youth to social benefits and job-readiness training," says CEO Sumanta Kar. Many of their graduates now work in sectors like IT, healthcare, and hospitality, or have launched their own ventures.
With over 500 million smartphone users and the world's largest Gen Z population, India is brimming with potential for grassroots innovation powered by AI. As India moves toward its $5 trillion economic vision, AI is shaping inclusively developed Tier 2 and 3 cities, offering a promising future for rural communities.
- The integration of AI, such as in platforms like Stellapps, is transforming India's agriculture, providing precision farming tools and real-time data to smallholder farmers, thereby boosting productivity, ensuring traceability, and elevating farmer income.
- AI is bridging the urban-rural skill gap by making education and training more accessible and demand-driven, equipping young people with valuable skills and establishing AI-enabled employment ecosystems in cities like Indore, Meerut, Jalandhar, and Jaipur.
- EdTech platforms in Tier 2 and 3 cities, like NatureNurture, leverage AI to personalize learning, offering real-time feedback and tailored content, breaking geographic and economic barriers for learners.
- AI-based recruitment platforms, such as CoHyre.ai, are challenging traditional hiring practices by matching candidates with jobs based on actual skills, intent, and learning agility, promoting fairer hiring practices and increasing job opportunities in Tier 2 and 3 towns.
