ChatGPT and DeepSeek AI apps are installed as a user holds his phone in Sopore, Jammu and Kashmir, … [+] India, on February 5, 2025 (Photo by Nasir Kachroo/NurPhoto via Getty Images).
With DeepSeek’s recent foray upending the global AI narrative, India’s ambitions in the race to develop the next frontier of AI innovation and consumer technology are becoming harder and harder to ignore.
So far a more quiet contender in the broader AI conversation, India’s tech ecosystem has seen an ostensibly slower, more measured start in carving out a prominent niche — but its burgeoning startup scene is increasingly drawing global attention from venture capitalists and investors alike.
“India is actually quite well positioned to be a leader in global AI and to have a voice at the table,” says Akash Kapur, senior fellow at New America and visiting research scholar at Princeton University.
Consider, for instance, India’s position as co-chair at the recent Paris AI Summit. “It’s a clear indication that India is taken seriously as a major player and has a lot to offer.”
From Bengaluru to New Delhi, several Indian entrepreneurs are making waves in the sector, adopting a distinct approach to AI by focusing on large-scale adoption and cost-effective innovation compared to their counterparts in the U.S. and the UK which have been characterized by more research-driven breakthroughs.
“[India’s] startup ecosystem is on fire — it’s sprouting new AI companies every week,” says Chetan Dube, CEO of AI firm Quant. “There are over 338 reputable AI companies that are seeded in India. These companies are inventing AI technologies rapidly.”
One of the most notable developments is the launch of the IndiaAI Mission, which has already seen over $1.2 billion in investment.
The mission’s vision is to enhance India’s AI infrastructure, supporting AI research, startups and applications across industries like healthcare, finance and agriculture. As part of this commitment, 14,000 GPUs are reportedly being dedicated to support AI capabilities across the country.
“The recent addition of GPUs shows India’s serious commitment to scaling up its AI capabilities,” says Prasanna Arikala, chief technology officer at AI solutions company Kore.ai, adding that India’s public-private partnerships signal the country’s potential to become a global AI innovation hub. From Reliance’s multi-billion-dollar plans to develop the world’s largest AI data center to Microsoft’s $3 billion bet on India’s AI future, global giants are investing in India’s AI potential.
“But here’s where India really has an opportunity — building AI solutions that fit its unique needs,” Arikala continues. “With a focus on sectors like banking, healthcare, agriculture and manufacturing, India has a chance to lead by creating AI that solves local problems in ways no one else can.”
Frugal Innovation & Consumer Tech
India’s large, young, and tech-savvy population — more than half of whom are under 30 — presents a massive market for AI-powered services. This demographic is driving demand for locally developed innovations and AI-powered consumer technology. From retail and transportation to agriculture and banking, consumer tech firms are increasingly using AI to disrupt traditional business models and redefine industries.
“One of the big advantages India faces is the size of its workforce,” says Ramyani Basu, global lead for AI and data at consulting firm Kearney. “India has the second-largest AI workforce globally, with tech hubs in Bangalore, Hyderabad and Pune. While it may lag in foundational AI research and breakthrough innovations, Indian AI startups and IT giants are leading the charge in driving cost efficiencies,” says Basu.
The country’s diverse language ecosystem is also one of its most untapped advantages in AI development, says Mithilesh Ramaswamy, AI innovator and senior engineer at Microsoft.
“India can benefit from funding models like OpenEuroLLMs,” he says. “The goal is not to compete with other models but an attempt to equip Indian companies with the tools to build AI in their own languages and local context, which they can own, modify and use. This will also preserve linguistic and cultural diversity, which outside models don’t have the expertise to capture.”
Despite the progress so far, there are several concerns around how AI should be developed, deployed and governed in a market as complex as India’s.
Research from Kearney and Futurum points to a striking trend: 92% of CEOs not seeing tangible AI results insist on leading AI strategy themselves, compared to just 59% in organizations that are achieving success. That indicates the importance of the right leadership for India’s AI growth, from government and industry leaders to researchers.
“Strong leadership will be key to making AI work,” says Basu.
Furthermore, while the potential to build disruptive technologies is abundant, the path isn’t straightforward.
“India’s got the talent to build its own DeepSeek or ChatGPT-like disruptive innovations, but it’s not going to happen overnight,” says Arikala.
“Firstly, India’s infrastructure requires heavy investment to compete at the level of the U.S. and China, which will take time,” he says.
“Second, long-term research and development in digital technology is needed through government-led and funded projects, where there is currently a greater focus on satellite and space R&D. Just like Unified Payments Interface, Aadhar and IndiaStack that are government-led highly successful tech initiatives, more should be done to further innovation from India.”
Still, bypassing some of the issues surrounding large-scale models like ChatGPT, India has the opportunity to focus on uniquely specialized AI solutions and enterprise-grade platforms tailored to its domestic needs.
“We’re still in the very early stages of AI,” says Vishal Sikka, founder and CEO of AI-driven enterprise platform Vian AI. “With our talent, commitment to education and ability to make things in extreme resource constraints, we are uniquely positioned to lead in AI’s development for a better future.”
DPI Architecture
Privacy, data security and ethical standards will be crucial pillars anchoring India’s AI architecture. Kapur suggests that India could follow the path of its successful digital public infrastructure initiatives, built through strong collaboration between government and industry players.
“The DPI approach offers a real opportunity for AI,” he says. “It was built through a really interesting collaboration between the private and public sectors, and by focusing on use cases and low-cost, frugal MVP-style development.”
However, the pace of tech advancements in AI — particularly in large-scale models — may require keen oversight, with the increasing importance of balancing the rapid development of AI technologies with regulatory safeguards to ensure responsible use.
“As with DPI in general, India will also have to ensure that adequate regulatory safeguards are built into indigenous AI development … The challenges are pretty much the same as those facing the field anywhere: how to balance innovation and regulation, how to ensure that the rapid speed of technical development does not outpace ethical guardrails,” says Kapur.
Moreover, the approach for consumer tech firms may need to be systematic and intentional: prioritizing the reduction of potential biases.
“Anytime we are talking about AI development in a non-English, non-American context, we do need to be mindful of the risk of biases and other shortcomings in the training data,” says Kapur. “India is better positioned to overcome this risk than some other countries, in part because of the wealth of domestic data, but the risk is perhaps more substantial for some smaller regional languages in the country,” says Kapur.
Global South Blueprint
Stable partnerships between countries like India and the U.S. will be essential pieces in India’s AI trajectory and in maintaining a competitive edge, according to Lakshmanan Chidambaram, president of Tech Mahindra Americas.
“As the U.S. puts together its AI Action Plan, we anticipate a great deal of focus on innovation and competition … As we move forward, it will be increasingly important to form strong multilateral collaborations,” says Chidambaram, adding that India has the potential to influence global AI policies and standards.
As one of the world’s most populous countries, India’s growing AI consumer technology ecosystem is one to watch. The intersection of entrepreneurial energy, public and private backing, and emerging talent gives the country a definitive and eye-grabbing position in the AI race — one that could ultimately set a new blueprint for AI development in the Global South.
“While much of the world is obsessed with fine-tuning models and achieving incremental gains, there is a real need to figure out what AI will actually do in the world, what types of advances it can make, etc. — perhaps especially in the Global South,” says Kapur.
Can India’s consumer technology landscape leverage its unique strengths — including its size, diversity, entrepreneurial ecosystem and capacity for frugal innovation — to lead not just in AI applications, but in creating a new paradigm for AI governance?