Artificial intelligence is generally regarded as a superpower contest between the U.S. and China, and with the U.K. and Europe to a lesser extent. But the race is far from over, and India doesn’t want to be counted out.
The South Asian country sets a technology course in keeping with its stature among emerging markets and contrasting with how foundation model advances like GPT-4 drive AI breakthroughs in the West. Building on a record of “frugal innovation,” India prioritizes practical, accessible solutions that could serve as a blueprint for emerging economies.
Being less prominent on the international stage “could ultimately be an opportunity to avoid some of the toxic geopolitics attaching itself to the global AI ecology which lead to bans and export restrictions, etc., all of which end up restricting technical progress,” says Akash Kapur, senior fellow at New America and visiting research scholar at Princeton University.
“While much of the world is obsessed with fine-tuning models and achieving incremental gains, there is a real need to figure out what AI will actually do in the world – especially in the Global South,” Kapur adds.
India offers a glimpse into the opportunities and challenges of scaling AI in rapidly developing and resource-constrained conditions.
Boost from Government
Launched by the government last year, the “AI for all” India AI Mission is aiming for a global leadership position by 2030.
Speaking on April 22 at a Boston Global Forum conference at Harvard University, Kamal Malhotra, non-resident senior fellow, Global Development Policy Center, Boston University, acknowledged that India is “many years behind” China and the U.S. He characterized the AI Mission as “an early step in India’s AI journey.” He noted that “$232 million, or nearly 25% of the entire India AI Mission budget, has been approved for spending as part of the most recent Union Budget 2025-26.”
Cabinet Minister Ashwini Vaishnaw
“With the potential to contribute $500 billion to the economy by 2025, AI stands to revolutionize key sectors such as agriculture, healthcare, urban planning and manufacturing,” said a January 2025 World Economic Forum article on “AI for India 2030.”
Also in January, Ashwini Vaishnaw, India’s electronics and IT minister, announced plans to develop a “world class” foundational model to rival the likes of ChatGPT and DeepSeek R1.
“Globally, GPU [graphics processing unit] access costs $2.5-$3 per hour,” the minister said. “We are making it available, after the subsidy, for around $1 per hour.”
Promising the world’s “most affordable” AI compute facility, Vaishnaw revealed that at least six major developers and startups were expected to roll out models this year – within four to six months, in the most optimistic estimate.
According to a joint Boston Consulting Group-Nasscom study, India’s AI sector is poised to reach $17 billion by 2027 with a 25%-35% compound annual growth rate. It said that India has 420,000 employees in AI job functions.
While China relies heavily on government-backed AI innovation, and the U.S. is a hub for research and enterprise solutions, India stresses open ecosystems and public-private partnerships along with a Digital Public Infrastructure (DPI) that is one of the country’s differentiating factors.
“The private sector is also stepping up,” Prasanna Arikala, chief technology officer and head of product at Kore.ai, points out. “Reliance’s plan to build the world’s largest AI data center and Microsoft’s $3 billion bet on India’s AI landscape signal that the country is becoming a global hub for AI talent and innovation.”
Existing IT Strengths
“India has the second-largest AI workforce globally,” concentrated in Bangalore, Hyderabad and Pune, Ramyani Basu, global lead for AI and data at Kearney, observes. “While it may lag in foundational AI research and breakthrough innovations, Indian AI startups and IT giants like TCS, Infosys and Wipro are driving cost efficiencies. India’s strengths lie in its cost-effective innovations and large IT talent pool.”
Akash Kapur of New America and Princeton
The national AI Mission includes a Rs. 2,000 crore ($230 million) investment in AI infrastructure and research hubs at institutions like the Indian Institutes of Technology, establishment of AI Centers of Excellence, and deployment of 14,000 GPUs to build AI models.
Some AI Mission infrastructure targets are “pretty ambitious,” Kapur comments. “This could run into financing challenges and global supply-chain bottlenecks.
“That being said,” he continues, China’s DeepSeek “shows that frugal development is possible, and India is well-positioned to take advantage of this pathway.”
Entrepreneurial Hotbed
If literal parity with the U.S. or China is beyond reach, how can India compete?
“By leveraging its unique strengths,” says Chetan Dube, chairman and CEO of Quant. “Its startup ecosystem is on fire, ignited by India’s youthful entrepreneurial spirit. It’s sprouting new AI companies every week. There are over 338 reputable AI companies seeded in India.”
The emphasis is less on the high-stakes large language models (LLMs) than on domain-specific applications in finance, healthcare, agriculture and customer support.
“Here’s where India really has an opportunity – building AI solutions that fit its unique needs,” says Arikala. “With a focus on sectors like banking, healthcare, agriculture and manufacturing, India has a chance to lead by creating AI that solves local problems in ways no one else can.”
Public Infrastructure
To truly compete globally, India needs sustained investment in R&D, data infrastructure and high-performance computing, Arikala adds. “There’s a push for improvement, but the pace is slow.”
Aadhaar, the world’s largest biometric identification system, and the UPI (Unified Payments Interface) real-time payment system signify India’s ability to implement large-scale, economical digital solutions, which could be replicated in AI.
The Digital Public Infrastructure approach “is arguably one of the most successful adoption stories in global tech in recent decades,” Kapur says. It is a private- and public-sector collaboration, “and by focusing on use cases and low-cost, frugal MVP-style [‘minimum viable product’] development, I see a lot of potential for India to go down the same path” with AI.
“DPI is an open, interoperable digital system for identity, payments and data which inherently promotes transparency and inclusivity,” Malhotra stated in his Boston presentation. “By placing essential services on digital platforms, these are made accessible to all . . . in a transparent and accountable manner.”
The UPI system “is an acknowledged global leader in ease of use, transaction value (approximately $239 billion in August 2024, a 31% increase over the previous year) and volume ($14.96 billion in August 2024, a 41% year-on-year increase).”
The Pull of Diversity
In view of the population of 1.4 billion, speaking 122 major languages and over 1,599 other dialects, there is a flurry of attempts to develop AI solutions that address India’s considerable linguistic and cultural complexity. Tech Mahindra’s Project Indus, an LLM trained on 1.2 terabytes of Hindi and its dialects, is an example.
Lakshmanan Chidambaram of Tech Mahindra
“India has the potential to influence global AI policies and standards,” says Lakshmanan Chidambaram, president and head of the Americas Leadership Council at Tech Mahindra. “Amid trade uncertainties and power shifts around the world, business leaders in India are focused on resiliency to ensure we are driving technological innovation.”
Chidambaram identifies the U.S.-India Initiative on Critical and Emerging Technology (iCET) and the U.S.-India Business Council (USIBC) as examples of efforts aimed at deepening strategic cooperation. Such partnerships “will be critical for future AI developments and maintaining a competitive edge.”
“We don’t invent things in India; we adapt and use [technology] very effectively,” says Bhaskar Pramanik, former chairman of Microsoft India. “That’s been our core capability, and we’ve done that with successive generations of technology.”
“India can, and must, play a significant role in every aspect of AI’s evolution,” says Vishal Sikka, a former Infosys CEO who is founder and CEO of Vianai Systems. “With our talent, commitment to education, and ability to innovate under resource constraints, we are uniquely positioned to lead in AI’s development for a better future for all of humanity.”
“Despite some limitations, most experts will, no doubt, agree that India has demonstrated adequate scale, credibility and potential in the digital area” to play a leadership role in AI Government 24/7 in the Global South, said Malhotra, referring to a governance model of the Boston Global Forum’s AI World Society.
India’s global profile was raised by Prime Minister Narendra Modi’s serving as co-chair of the February 2025 Paris AI Action Summit, and the showcasing of the Digital Public Infrastructure during the country’s 2023 G20 presidency “where it secured support for a One Future Alliance.” Malhotra described the alliance as “a proposed mechanism for G20 members and institutions to pool funds to sponsor DPI deployments in developing countries of the Global South.”
Jeffrey Kutler of GARP contributed reporting for this article.
Topics: Innovation, Tools & Techniques
