Big tech bets big on AI - but can India keep pace in the global race?

By Admin

11 Dec, 2025

This week, the global tech spotlight swung firmly toward India. In a landmark show of confidence, Amazon and Microsoft pledged more than $50 billion in combined investments one of the strongest signals yet that India is steadily emerging as a key player in the global AI ecosystem.

Microsoft CEO Satya Nadella announced a record-breaking $17.5 billion investment its largest ever in Asia to help India build the infrastructure, skills, and sovereign capabilities required for an “AI-first future.” Amazon followed with a commitment to invest over $35 billion by 2030, a significant portion earmarked toward scaling AI technologies in the country.

These announcements came at a time when concerns over a potential AI bubble have cast uncertainty across global markets. And yet, several leading brokerages including Jefferies and HSBC view India as a counterbalance to AI-driven volatility. Jefferies even labelled Indian stocks a “reverse AI trade”, suggesting they may outperform if the global AI bubble bursts.

But despite the optimism, the big question remains: Can India truly keep pace in the global race for AI dominance?

Rapid Adoption, Growing Investments – But Still Catching Up

India's AI adoption has been swift. Investments in critical segments data centres, chip manufacturing, AI infrastructure have started accelerating. Just this week, Intel announced a major collaboration with Tata Electronics to manufacture chips locally, strengthening India’s tech hardware capabilities.

The government, too, has pushed toward building a sovereign AI model. Through its national AI mission, high-end computing chips were distributed to founders, researchers, and universities to help develop India’s own large-scale AI model supporting over 22 Indian languages. According to the electronics ministry, its launch is “imminent.”

But while India moves forward, global leaders like OpenAI and China’s DeepSeek continue to pull further ahead with rapid, iterative advancements. Moreover, India’s sovereign AI mission priced at $1.25 billion is far smaller compared with France’s $117 billion or Saudi Arabia’s $100 billion programmes.

Talent Rich, Infrastructure Poor: India’s Structural Challenges

Despite being one of the world’s largest hubs for AI talent India has 2.5x more AI-skilled professionals than the global average the country faces deep structural barriers:

• Limited computational infrastructure
  
  

• Insufficient semiconductor manufacturing
  
  

• Fragmented data ecosystems
  
  

• Inadequate long-term R&D funding
  
  

• Talent flight to the US and Europe
  
  

Top-tier AI researchers remain globally mobile. And while visa tightening abroad could help India retain talent for now, experts stress the urgent need for attractive domestic incentives on par with China’s financial support, subsidies, tax benefits, and fast-track visas.

Punching Above Its Weight: India’s Unique AI Strengths

Despite these hurdles, India continues to outperform relative to its economic stage. According to UNCTAD and the Stanford AI Index 2025:

• India ranks among the top five countries for new AI companies receiving investments.
  
  

• 74 new Indian AI startups were funded last year far fewer than the US, but impressive in context.
  
  

• Indian startups raised $1.16 billion, compared with $100+ billion in the US, highlighting a massive growth runway.
  
  

• India contributes 9.2% of global AI article publications, slightly exceeding the US.
  
  

Experts believe India’s real AI advantage lies downstream in its ability to apply AI to solve real-world challenges at scale.

As Shailendra Singh of Peak XV Partners says, AI is entering a democratized era where small founders can build globally impactful products. India is already witnessing a surge in AI-powered consumer apps and rising startup investments.

Solving India’s Most Complex Problems – A Unique Opportunity

India’s diversity and scale present one of the world’s toughest testing grounds for AI and one of the most rewarding.

Take MahaVISTAAR, an AI-driven Marathi-language app serving over 15 million farmers with agricultural guidance. As Nandan Nilekani wrote recently: “The hardest places to make artificial intelligence work are also the places where it matters most.”

Whether in classrooms, hospitals, or farms, India provides fertile ground for meaningful AI innovation. Success in India could serve as a blueprint for the world.

But There’s a Flip Side: AI Threatens India’s IT Backbone

While AI unlocks new opportunities, it also poses risks especially to India’s massive IT services sector, which has powered the economy for three decades.

Brokerages like Jefferies warn that IT firms are now a point of “vulnerability.” Signs of stress are already visible:

• Slowing growth in IT back-office operations
  
  

• Underperforming tech stocks
  
  

• Shrinking hiring pipelines
  
  

• Flattened wages
  
  

AI automation is poised to reshape outsourcing work dramatically, forcing India’s IT giants to rethink their business models.

So, Can India Keep Up?

India’s AI journey is marked by big strengths and equally big gaps.

Strengths:

• Massive talent pool
  
  

• Rapid startup growth
  
  

• Global investor confidence
  
  

• Real-world application potential
  
  

• Growing focus on sovereign capabilities
  
  

Weaknesses:

• Limited compute infrastructure
  
  

• Underdeveloped semiconductor ecosystem
  
  

• Insufficient R&D investment
  
  

• Strong competition from China and the US
  
  

• Brain drain
  
  

• Fragmented data systems
  
  

With Amazon and Microsoft’s colossal investments, India has undeniable momentum. But capital alone is not enough. The next decade will determine whether India becomes an AI superpower or remains a fast follower.