Artificial Intelligence (AI) has become a game-changing driver of India's economic growth, shaping productivity, innovation, and employment in different sectors. This research examines the trend of AI adoption in major sectors like healthcare, agriculture, manufacturing, financial services, and education, evaluating the determinants and challenges of AI adoption. However, AI has made significant advancements in India due to developments in the IT sector through support from the government, but there are challenges like lack of digital infrastructure, availability of skills, and lack of regulation and ethical consideration. This research comments on the determinants of AI adoption and analyses the impact of AI on the economic development of India. Through theoretical and empirical findings the research helps to analyse the impact of AI on the economic development of India and identifies the policy recommendations for effective AI adoption. The findings underscore the need for strategic investments in AI infrastructure, regulatory alignment, and upskilling the workforce to ensure inclusive and sustainable economic growth.