Microsoft and Amazon have announced significant investments in India to further AI infratructure in the country. A few weeks ago, Google has also promised billions of investment for AI in the country. As AI reshapes economies and societies worldwide, India stands at a crossroads - blessed with a vast talent pool and burgeoning investments, yet grappling with infrastructure gaps and fierce competition from US and China. With a government-backed push for a homegrown AI model, optimists argue India is primed to leapfrog into leadership.
But can it truly claim the crown, or will persistent hurdles keep it in the chasing pack? BBC talks to experts and industry stalwarts to break it down.
India's AI mission
The Indian government's ambitions are clear. Launched about 18 months ago, the nation's $1.25 billion (£940 million) AI mission aims to equip startups, universities, and researchers with high-powered computing resources to build a sovereign AI model supporting more than 22 languages. Officials from the federal electronics ministry have signalled that this multilingual powerhouse – designed to shield against foreign surveillance and sanctions – could debut imminently.
IIT Bombay has registed a company called BharatGen, that is leading this initiative. It's a bold step towards self-reliance, but at a fraction of the scale seen elsewhere. France's AI programme boasts $117 billion, while Saudi Arabia has committed $100 billion.
Big tech AI investments in India
Bolstering this drive are eye-watering private investments. Microsoft has pledged $17.5 billion – its largest in Asia – to expand infrastructure, upskill workers, and foster "sovereign AI" tailored to India's needs. Amazon, meanwhile, plans to invest over $35 billion by 2030, with a chunk earmarked for AI advancements, including data centres and chip production. These commitments are already yielding fruit. In 2024, Indian AI startups secured $1.16 billion in funding, more than double the previous year's haul, fuelling 74 new ventures. Collaborations, such as Intel's tie-up with Tata Electronics for domestic chip fabrication, signal a maturing ecosystem that could soon rival global hubs.
Big challenge: Retaining AI talent
At the heart of India's edge lies its people. The country boasts a concentration of AI-skilled professionals 2.5 times the global average, ranking among the top nations for AI talent and developer activity. It even edges out the US in AI research publications, contributing 9.2 percent of the world's total, according to the Stanford AI Index 2025 – a testament to institutions like the Indian Institutes of Technology churning out innovators.
Unlike China, which dangles subsidies, tax breaks, and special visas to lure experts home, India's incentives fall short, prompting a brain drain that could undermine its advantages.
Real-world application of AI
Real-world applications are proliferating too: apps like MahaVISTAAR are delivering agricultural advice in Marathi to over 15 million farmers, demonstrating AI's potential to tackle India's unique challenges in classrooms, clinics, and fields.
Nandan Nilekani, the architect of India's vast Aadhaar biometric system, captures this promise. He reportedly said, "The hardest places to make artificial intelligence work are also the places where it matters most. If AI can serve India's classrooms, clinics and farms, it can serve the world."
Shailendra Singh, managing director at venture firm Peak XV Partners, reportedly adds a forward-looking note, "I think in the short term, there's this big concentration of AI in the US. But over the next five-10 years, AI will have a massively democratising effect on the creation of new companies. Small founders and entrepreneurs will be numerous and the downstream effect will be amazing for places like India and the Asia-Pacific."
Barriers that India faces to become a global AI leader
Yet, for all its momentum, India faces formidable barriers to outright leadership. It trails the US and China in computational might and long-term research and development spending – the US alone channelled over $100 billion into AI startups last year, with China close behind at nearly $10 billion. A report by consultancy EY highlights "fragmented data ecosystems" and a shortage of semiconductors as critical chokepoints, while talent retention remains elusive amid tightening visas abroad.
Moreover, the rise of AI threatens to disrupt India's flagship IT services sector, which employs millions. Analysts at Jefferies warn of slowed growth, reduced hiring, and wage stagnation as automation bites, potentially turning the country's equities into a "reverse AI trade" – a hedge against a global bubble. HSBC echoes this caution, viewing Indian stocks as offering "hedge and diversification" in an AI-dominated landscape.
So, is India ready to lead?
The evidence suggests it is remarkably well-positioned – not as the upfront innovator like the US or the state-orchestrated powerhouse like China, but as a nimble, talent-rich contender excelling in practical, scalable applications. With targeted policies to plug infrastructure voids and stem the talent exodus, India could not only join the frontrunners but redefine the race for emerging markets. As Nilekani implies, success here could light the way for the developing world. The question now is whether policymakers will seize the moment before the window narrows.
