Is India Being Left Behind in the AI Arms Race? 

Artificial intelligence (AI) is shaping up to be the defining technological force of the 21st century. Simply put, nations that lead in AI research, development, and implementation will wield immense economic and strategic power.  

The United States and China are locked in a race to dominate AI, investing hundreds of billions of dollars in infrastructure, foundational research, and AI-driven applications. The recent collaboration between SoftBank, Oracle, and OpenAI to build $500 billion worth of AI infrastructure in the U.S. underscores the scale of investment required to stay competitive. 

India, despite being a global IT powerhouse, is trailing behind in the AI arms race. While India’s tech ecosystem attracted $11.3 billion in investment in 2024, this pales in comparison to the $184 billion invested by the West. A historical parallel can be drawn from the industrial revolution—India once led in cotton-spinning but failed to keep up with mechanization, leading to economic decline. AI could pose a similar existential challenge to India’s white-collar industry, which generates $250 billion annually through IT services and software exports. 

“If I have to talk about opportunities, I would say every business would have a lot of areas that can be improved/enhanced or made simpler, having more impact and reach than before, which necessarily translates to us having infinite opportunities to work upon. The challenge is that business should be open to pilots and allow space for failures and retrials. Budgets for these would be challenging, & hence investments from big players in IT would help in taking it forward. There is a gap in awareness of what these solutions can actually achieve vs what, in general, the perception is, which needs to be bridged through constant awareness programs. The fear factor that is built around AI is that it will replace humans and people will lose their jobs is also another myth that needs to be cleared off the air. Security and privacy concerns still loom at large, which is a problem that needs very clear global guidelines to be followed.” 

Shibin Chulliparambil, Head of Information Technology (Head IT/Group CIO/CTO/CDO/ Global CEO), Blue Star Limited 

The Stakes: Control Over the Future 

AI is not just another technological innovation; it is a foundational technology that will dictate global economic and military supremacy. The nation that controls AI will control everything from finance and cybersecurity to national security and governance. AI-driven automation and machine learning applications are already transforming industries, with the potential to replace traditional jobs at an unprecedented scale. 

For India, the challenge is twofold: its IT services industry, which employs millions, is at risk of obsolescence, and the country has not positioned itself as a leader in AI innovation. While tech giants like TCS, Infosys, and Wipro dominate outsourced IT services, they invest relatively little in foundational AI research. Unlike Alphabet, Microsoft, or OpenAI, which allocate significant capital towards AI, Indian companies remain conservative, focusing on short-term profits rather than moonshot investments. 

Also read: Ola’s quantum leap: Unveiling India’s first AI chip by 2026 

India’s Strengths: Talent and Data 

Despite its challenges, India possesses two significant advantages: a vast, affordable talent pool and an abundance of data. India produces millions of engineers annually, and its population generates immense amounts of diverse data, which is crucial for training AI models. These factors theoretically position India as a potential AI powerhouse. 

However, talent and data alone are insufficient. China has leveraged its massive data pool and state-backed AI research to create world-class models and applications. The U.S., through aggressive venture capital funding and public-private partnerships, has