Rajeev Narayan

India’s AI (Artificial intelligence) opportunity may lie in a different route to leadership from the one pursued by the United States and China. New research points to the country’s growing talent pool, vast user base and growing digital ecosystem as assets that could help it shape the next phase of artificial intelligence.

The AI race is often described as a contest to build the largest models, secure the most advanced chips and command the greatest computing power. It is, but that is only one part of this story. As AI moves from laboratories into businesses, public services and everyday life, another contest is taking shape: who can turn the technology into useful applications at scale?

A recent report by the Indian Council for Research on International Economic Relations (ICRIER), State of India’s Digital Economy, offers a promising answer. It places the country fourth in its assessment of national AI ecosystems, behind the United States, China and Singapore. It also argues that India need not replicate the capital-intensive strategies of the two largest AI powers. Its comparative advantage lies in talent-led innovation and the development of applications and AI agents for widespread use.

India has the second-largest concentration of AI talent after the United States, the report adds. It is also part of a vast community of AI users: emerging and developing economies account for 72 per cent of users worldwide, with India and China together representing nearly two-fifths. The next phase of the technology will be shaped not only by those who create foundational models, but also by those who apply them to real problems across diverse economies and societies.

Different Route to Leadership

This is where India’s strengths become relevant. Its large technology workforce, engineering expertise, growing startup ecosystem and experience in building digital public infrastructure provide a strong base. Its many languages and diverse public-service needs also create opportunities to develop affordable AI applications suited to Indian conditions.

A June 2026 assessment by JP Morgan Asset Management, drawing on four international measures of AI readiness, offers another useful perspective. It points out that leadership in AI depends on more than research or talent alone. Infrastructure, investment and the ability of businesses and governments to put the technology to use are equally important. The report also highlights the growing role of specialised models. Companies may often get better results from smaller AI systems trained for their own data and specific needs, rather than relying entirely on the most expensive, large-scale models.

Banks, hospitals, manufacturers, farms and logistics companies already understand the problems they face and hold valuable data that can help solve them. AI can improve medical diagnosis, detect financial fraud, streamline supply chains, assist farmers and make services more responsive. Such applications could create enormous value without requiring India to compete directly with the world’s largest models.

India’s opportunity is not to imitate every stage of another country’s journey, but to build capabilities that fit its own economy. The same approach can help Indian firms develop products for international markets, particularly in healthcare, financial services, education and climate adaptation, where local insight and cost-effective solutions can become competitive strengths.

Building the Foundations

That does not make computing infrastructure any less important. AI research, model development and deployment require reliable access to high-performance computing. The IndiaAI Mission, approved with an outlay of Rs 10,371.92 crore over five years, is intended to widen that access, support indigenous models and enable startups, researchers and academic institutions to participate.

Computing capacity available through the shared facility has crossed 45,000 GPUs. By August 2026, 237 projects had accessed subsidised computing, accounting for 93.18 lakh GPU hours. Twenty indigenous foundation-model proposals have also been selected from 506 applications. These steps are helping make advanced computing accessible to startups, researchers and institutions that might otherwise struggle to afford it. The challenge is to translate that access into useful models, products, research and intellectual property, including systems that work across India’s languages and public needs.

The physical infrastructure supporting this ambition is expanding too. India’s installed data-centre capacity reached around 1.57 GW by August 2026, up from about 375 MW in 2020. As per government projects, the capacity could approach 8 GW by 2030. Their expansion can attract investment, strengthen technical services and create opportunities for domestic suppliers.

Growth That Works

Such rapid expansion also calls for careful planning. Data centres need dependable electricity, efficient cooling and careful water management. The government estimates that electricity demand from data centres could reach 13.56 GW by 2031-32. Expanding renewable power, using more efficient cooling systems, recycling water and choosing locations carefully will be essential to ensuring that this growth is sustainable.

AI can help improve agricultural advice, expand access to healthcare, support learning in multiple languages, make public services more efficient and help small businesses compete. The IndiaAI Mission’s emphasis on accessible computing and indigenous models is important precisely because the benefits of AI should not be confined to a handful of corporations or metropolitan centres.

At the India AI Impact Summit in February 2026, India called for AI to be democratised and made a tool of inclusion and empowerment, particularly for the Global South. This ambition is consistent with the country’s potential to develop affordable, accessible solutions for populations and economies with diverse needs. India’s large market and talent pool could help it play an important role in shaping how AI is adopted across the developing world.

India does not have to win every contest on the terms set by others. It must invest in research, make computing accessible, encourage enterprise adoption and help its talent turn ideas into products and businesses. It must also ensure that infrastructure growth is efficient and sustainable.

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A place at the high table of AI will not be secured by rankings or investment announcements alone. It will be earned when Indian researchers, entrepreneurs and institutions help shape the technology, when businesses use it to raise productivity, and when citizens experience its benefits in their everyday lives. India has the talent, the market and the ambition. The opportunity now is to turn these advantages into lasting capability.

The writer is a veteran journalist and communications specialist