For more than three decades, India’s rise in the global economy has been closely tied to technology. From the software corridors of Bengaluru to outsourcing centres serving Fortune 500 companies, Indian engineers helped power the digital transformation of the world. The country built a reputation as a reliable technology partner, delivering innovation at scale and positioning itself as a cornerstone of the global IT services industry.

Today, however, a new technological revolution is underway—one that may prove far more consequential. Artificial intelligence is rapidly becoming the foundational infrastructure of modern economies, influencing everything from healthcare and defence to manufacturing, finance, and education. In this emerging global race, India’s position remains promising, but uncertain.

The shift from traditional software services to AI leadership demands more than coding talent. It requires sustained investment in research, advanced computing infrastructure, intellectual property creation, and semiconductor capability. This is where India faces measurable structural gaps.

Global data underscores the challenge. The United States and China currently dominate the development of foundational AI models—the core systems that power advanced AI applications. These nations have invested heavily in compute infrastructure, research ecosystems, and industrial-scale innovation. India, despite its vast engineering workforce, has yet to produce a globally dominant foundational AI model that shapes the direction of the field.

One of the most critical constraints is computing power. Training advanced AI systems requires enormous processing capacity, specialised hardware, and significant financial investment. India’s compute capacity, while growing, remains far below that of the leading AI powers. Without sufficient infrastructure, the ability to develop competitive frontier models and retain top researchers becomes limited.

Research investment presents another long-term challenge. India’s total spending on research and development remains below 1% of GDP, significantly lower than advanced technological economies. Private sector participation in research is also comparatively limited, reducing the pace of industrial innovation and product development.

Intellectual property ownership further defines technological leadership. While India has made progress in AI-related patents, its share remains modest compared to global leaders. This reflects a broader structural reality: India’s technology success has historically been driven by services and implementation, while the AI era increasingly rewards product creation, platform ownership, and original innovation.

Yet, India’s position is far from weak. The country possesses significant structural strengths. Its vast pool of engineering talent, expanding digital economy, and large domestic market create a powerful foundation for future growth. India is also one of the fastest-growing markets for AI adoption, with startups, enterprises, and public institutions increasingly integrating AI into operations.

The question facing India is not whether it can participate in the AI revolution—but whether it can shape it.

Encouragingly, policymakers and industry leaders have begun recognising the urgency of the moment. Investments in semiconductor manufacturing, national AI infrastructure, and research expansion are gradually gaining momentum. Indian startups are also moving beyond service models toward building original AI products and platforms.

History offers an important lesson. India’s IT revolution was not inevitable—it was built through policy alignment, talent development, and private sector initiative over decades. The AI era will require a similar national effort, but at greater scale and speed.

Artificial intelligence will define economic competitiveness and geopolitical influence in the decades ahead. Nations that build foundational capabilities will not only generate economic value but also shape global standards and technological sovereignty.

India stands at a decisive crossroads. With strategic investment, institutional reform, and industrial ambition, it has the potential to emerge not merely as an AI user, but as an AI leader.

The window remains open. What India does now will determine whether it leads the next technological era—or follows it.

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