India’s AI Ecosystem: Can India Become the Next Global AI Superpower?

The rapid evolution of artificial intelligence (AI) has seen countries like the US and China dominate the space with groundbreaking advancements, large-scale computational capabilities, and significant investment in research. India, with its storied history in IT and a burgeoning AI ecosystem, finds itself at a crossroads: while challenges abound, its potential to become a global AI powerhouse is undeniable.

The Groundwork: India’s IT Revolution

India’s tryst with technology began as early as 1955, with the founding of the Indian Statistical Institute (ISI). By importing its first computer in 1962 and creating indigenous systems like TIFRAC under Homi Bhabha’s leadership, India showcased its early interest in computational power.

The seeds of its IT revolution were planted when Tata launched TCS in the 1960s, laying the foundation for IT services in India. This was followed by players like HCL, Wipro, and Infosys in the 1970s and 1980s.

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The liberalisation of software export policies in the 1980s catalysed India’s IT services industry, propelling it to global prominence. By 1999, India’s IT exports hit $4 billion, a figure that skyrocketed during the Y2K boom. Indian IT giants perfected the Global Delivery Model (GDM), revolutionising the outsourcing industry and creating a talent pool that would later form the bedrock of the country’s AI aspirations.

The Rise of Big Data and AI

As IT matured, the rise of big data in the 2010s paved the way for AI. Startups like Fractal Analytics and MuSigma began exploring analytics-driven solutions. By 2012, the establishment of tech giants like Microsoft and Google in Bangalore signalled a new era, which gained further momentum with tools like TensorFlow in 2015.

India’s connection to global AI became more pronounced with the involvement of Indian-origin researchers like Ashish Vaswani, whose seminal paper Attention Is All You Need became the cornerstone of modern AI models. However, India’s direct contributions to large language models (LLMs) were negligible at this time, underscoring a gap between its potential and output.

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Building the Foundation for AI

Despite its lack of homegrown LLMs, India has leveraged its IT services infrastructure to carve out a niche in AI use cases. By 2023, startups like AiDash, NanoNets, and Krutrim emerged as notable players, addressing real-world challenges in sectors like real estate, healthcare, and finance. By this time, India’s talent pool grew to over 13,000 AI researchers, placing it third globally.

The Digital India initiative further accelerated the adoption of AI-driven solutions, integrating technology into governance, agriculture, and citizen services. While India lacked the computational power and R&D investment of the US and China, it focused on optimising resources and fostering innovation through its startup ecosystem.

Toward AI 3.0: The Emerging Superpower

By 2024, India’s AI sector had raised $15 billion, marking a significant leap from earlier investments and signaling a steady climb in the global rankings. Unlike the US and China, which heavily invested in foundational models, India doubled down on applied AI, creating scalable, affordable solutions for industries worldwide.

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Real-world applications of AI in consumer goods, banking, and logistics highlighted India’s unique strengths. The convergence of India’s deep IT history, its rapidly growing GitHub developer base (17 million), and its expanding AI startup ecosystem led NVIDIA’s CEO, Jensen Huang, to predict that India could become a leading exporter of intelligence.

India’s AI Journey Ahead

India’s AI journey mirrors its IT evolution but with a unique focus on applied solutions, emphasising a slow yet steady build-up of infrastructure, talent, and innovation. While challenges like low R&D investment (0.64% of GDP) and limited computational power persist, India’s emphasis on use-case-driven AI positions it uniquely in the global landscape.

As the world transitions from data-driven to intelligence-driven economies, India’s legacy in IT and its emerging AI capabilities could make it the next global AI superpower. The foundation is set, and the future is teeming with possibilities.

Credit: This article is inspired by a LinkedIn post by Mr. Aviral Bhatnagar, an investor in startups through his platform A JuniorVC.

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