India’s artificial intelligence (AI) ecosystem is witnessing extraordinary growth, marked by vibrant competition across the AI value chain. A mix of homegrown startups such as Sarvam AI, Krutrim and Yellow.ai, alongside global players like Google, Microsoft, OpenAI and Nvidia, are shaping this ecosystem. India’s vast market potential and exceptional talent pool have been noted globally, and about 30% of Indian companies are currently involved beyond proof-of-concept AI initiatives, outperforming the global average of about 26%. This underscores the country’s readiness to lead in AI.
This growth has been largely enabled by the government’s capacity-first approach, which aims to foster innovation through capability building, open collaboration and light-touch regulation that encourages both local and global participation. Initiatives such as the IndiaAI Mission have been designed to empower innovators by ensuring that the ecosystem can breathe and grow freely without being burdened by regulatory barriers that could inadvertently disadvantage Indian startups.
To sustain this momentum, India must continue to prioritize capacity building. Whether viewed through the lens of data protection, competition policy or intellectual property, India’s focus must remain on creating an environment that encourages enterprises to innovate at scale. Such an approach could ensure that Indian innovators are not handicapped but rather empowered to compete globally.
By anchoring India’s approach to AI development in capacity creation, we set conditions that should drive India’s long-term competitiveness and leadership in AI. Mission-driven initiatives such as the IndiaAI Mission aim to offer 10,372 crore rupees in compute capacity, including access to over 30,000 GPUs, and establish high-performance computing facilities, thereby helping researchers and enterprises across the country innovate at scale. Further, the creation of IndiaAI datasets and innovation hubs will allow AI developers access to diverse, high-quality data.
Private sector participation should amplify these efforts. Global technology leaders have reaffirmed their confidence in India’s AI vision. Google’s recent investment of $15 billion to establish an AI hub in Visakhapatnam, Meta’s collaboration with the government on open-source AI models, and Microsoft’s investment in data centres demonstrate strong confidence in India’s AI potential. Further, startups like Sarvam AI, which raised $41 million in 2023 to build India language models, exemplify the surge in indigenous AI capability.
Together, these initiatives are creating a self-reinforcing ecosystem where startups can innovate, access high-performance computing and scale globally. They are also enabling the integration of AI across sectors ranging from agriculture and healthcare to logistics and education.
While some jurisdictions have gone in for heavy regulation of AI, India’s approach is measured, consultative and capacity-driven. The EU’s AI Act, though pioneering, has been criticised for its complex classification system and its potential to slow down innovation, particularly for startups and smaller enterprises. In contrast, India has chosen a progressive capacity-first strategy.
Under the forward-looking guidance of Prime Minister Narendra Modi, the government is prioritising infrastructure, skills and collaboration. Investments in semiconductor manufacturing, data centres and technology capabilities, combined with regulatory flexibility, are enabling Indian innovators to thrive. The focus on capacity development rather than regulation is attracting global investments and establishing India as a trusted destination for AI governance.
Recent draft guidelines for AI were unveiled by the Ministry of Electronics and Information Technology, ensuring that AI development adheres to ethical principles while avoiding undue restrictions that could stifle innovation. Among other initiatives, the government’s IndiaAI Mission, the Competition Commission of India’s self-audit framework in its competition and AI market study, and the Reserve Bank of India’s Free-AI framework collectively create a focused yet flexible governance approach.
India’s enabling governance framework sets a global example of how to balance growth with responsible innovation. This offers a novel path for developing economies, allowing them to focus on building digital public infrastructure, advanced compute capacity and skills before introducing complex regulatory regimes.
India’s model reinforces the country’s global position as a trusted partner for both developed and advanced economies. Through partnerships such as the India-US Initiative on Critical and Emerging Technology (iCET) and collaborations with the European Union, India is capacity-building for the next decade.
To conclude, India’s capacity-first approach is building confidence among investors and innovators alike, encouraging both local and foreign AI enterprises to partner with the government and contribute to shaping India’s AI future. With sustained investments, visionary leadership and a collaborative spirit, we are setting the stage for an AI ecosystem that promotes innovation, inclusion and long-term competitiveness.
(Courtesy: Mint)
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