India’s hesitation in AI could prove too costly

India risks becoming a policy commentator rather than a policy architect, advocating for global AI ethics while lacking the AI infrastructure to influence these conversations meaningfully.

As world leaders and AI experts convene at the Paris summit to discuss the future of artificial intelligence (AI), the geopolitical circles are ablaze with talks of collaboration, even as every major nation fiercely pursues supremacy. The rhetoric of global AI governance is seductive, but beneath the diplomatic overtures lies an undeniable truth — AI is the new frontier of economic and strategic power, and no nation wants to be left behind.

Yet, India, despite its technological potential, is conspicuously absent from the league of AI superpowers. The question is whether India has already missed the starting gun. India’s AI strategy has suffered from chronic inertia, belated realisation, and underwhelming financial commitment. The much-vaunted IndiaAI Mission — expected to provide the backbone for AI research and development — has been slow, and its eventual budgetary allocation is laughable compared to the billions being poured into AI by the United States, China, and even smaller European economies. While India debates policy frameworks, others are deploying AI at scale, embedding it into their economies, and shaping global regulatory narratives.

The fragmentation of India’s AI ecosystem stems from fundamental structural deficiencies. India’s education system remains broken, producing graduates en masse but few who are truly equipped for the AI revolution. While the National Education Policy (NEP) attempts to overhaul the system, meaningful impact will take years, if not decades, to materialise.

Meanwhile, India’s STEM (Science, Technology, Engineering, and Mathematics) ecosystem remains weak, with rote learning still dominant, research funding inadequate, and industry-academia collaboration virtually non-existent. India’s AI talent pool is vast in numbers but shallow in depth, leaving the country a provider of AI labour rather than a producer of AI breakthroughs.

The shortfall in R&D investment is a glaring indictment of India’s commitment to AI leadership. India spends a mere 0.64% of its GDP on R&D, one of the lowest among major economies. In contrast, China spends over 2.4%, and the US well over 3%. AI breakthroughs demand long-term investment in foundational research, but India remains fixated on application-layer innovation, relying largely on foreign-built AI models. Without a strong domestic research base, India risks becoming permanently dependent on Western and Chinese AI technologies, with little control over how these systems influence its economy and society.

Compounding this challenge is the lack of private sector capital expenditure in AI. For years, Indian corporates have hesitated to make substantial investments in deep technology, preferring quick-return business models over long-gestation AI R&D. While the government has announced AI policies, execution has been sluggish, and the private sector’s participation remains limited to select tech giants. The absence of AI-focused venture capital, risk appetite in industry, and government-backed incentives has left India’s AI ecosystem fragmented and underfunded.

India’s compute infrastructure deficit is another serious handicap. AI development today is not just about algorithms and datasets — it is about computational power. The US and China have invested heavily in AI-specialised semiconductors, high-performance computing (HPC) clusters, and sovereign cloud capabilities. India, on the other hand, remains reliant on foreign cloud providers, exposing its AI ambitions to geopolitical vulnerabilities. If India fails to build its own compute infrastructure, it will be permanently relegated to the status of an AI consumer, rather than an AI innovator.

Moreover, India has not fully leveraged its data advantage. With its vast and diverse population, India possesses one of the richest data ecosystems in the world. However, the absence of a coherent national data strategy, lack of regulatory clarity on data-sharing frameworks, and concerns over privacy have prevented India from capitalising on this potential. As AI becomes more reliant on proprietary datasets, India’s failure to harness its own data for indigenous AI development could further entrench its dependence on foreign AI models.

The geopolitical risks of India’s delayed AI push are immense. Nations that dominate AI will control not just economic productivity but also cybersecurity, defence technologies, and digital governance norms. China’s AI-driven military strategy, the US’ tech alliances, and the EU’s regulatory leadership all point towards a world where AI is a geopolitical instrument. India, by contrast, risks becoming a policy commentator rather than a policy architect, advocating for global AI ethics while lacking the AI infrastructure to influence these conversations meaningfully.

Even within public governance, AI adoption remains piecemeal. AI has transformative potential in governance, healthcare, agriculture, and public services; yet India’s governmental adoption is slow, fragmented, and largely experimental. Bureaucratic inertia, lack of inter-ministerial coordination, and limited technical expertise within the government have stymied AI integration into policy execution. If India cannot effectively deploy AI within its own governance structures, its aspirations for global AI leadership remain hollow.

India’s AI strategy demands an immediate pivot from cautious deliberation to aggressive execution. The IndiaAI Mission must be backed by serious funding, not token allocations. AI research must be incentivised through grants, tax breaks, and government-industry partnerships. Private sector capital must be mobilised through AI-specific investment funds, startup incubation, and risk-sharing mechanisms.

India must invest in its compute infrastructure, build AI-ready datasets, and scale AI adoption in critical sectors. Above all, India needs a national AI strategy with a clear execution roadmap, backed by the highest levels of political will and accountability. The window for action is rapidly narrowing, and hesitation is no longer an option. For the world is not waiting; and no one else is watching.

(Srinath Sridharan is a corporate adviser and independent director on corporate boards. X: @ssmumbai.)

Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.