India's AI ambitions clash with talent and infrastructure gaps

India's bid to emerge as a global artificial intelligence power faces structural, financial, and logistical hurdles, analysts and industry sources say, despite the government's efforts to promote the country as a hub for practical AI adoption.

India is positioning itself as an AI superpower alongside the US and China by hosting international summits and promoting its tech ecosystem. However, unlike other major powers, India is not investing heavily in frontier models or artificial general intelligence (AGI), says The Economist.

Instead, the government is focusing on a "bottom-up" strategy aimed at creating practical applications for education, healthcare, and customer service at ultra-affordable prices. The country aims to become the "adoption capital of the world," rather than a developer of cutting-edge AI models.

"India wants to be the world's adoption capital, building AI solutions for real-world problems that are affordable for our population," said a senior government source.

Despite these ambitions, the country faces significant challenges. India currently lacks the advanced manufacturing capabilities required to produce high-end chips necessary for frontier AI development. While a government semiconductor mission is underway, analysts say it is likely to yield only lower-grade chips in the near term. Although the country is experiencing a data-center boom, it remains a bystander in the global race to build frontier AI models.

Research and development investment is also limited. The government spends 0.7% of GDP on R&D, and domestic risk capital is scarce. India has fewer than 300 skilled AI researchers, far below the numbers in Britain or France, and "brain drain" remains a major hurdle. Many startups move management teams to California to secure funding, even while retaining engineering staff in India.

"The domestic AI ecosystem is still small," said an industry analyst. "While India ranks high in AI vibrancy, it cannot yet compete with global leaders on frontier models."

India does, however, have some advantages. With 900 million internet users, the country offers an essential market for global AI firms to test products and collect data. Indian companies are adopting AI at a higher rate than the global average, particularly in voice-driven applications and models trained on local languages. The government plans to invest in AI labs and PhD programs to retain talent and strengthen domestic research capabilities.

Even India's efforts to showcase itself as a global convenor have faced obstacles. Recent summits meant to highlight the country's AI potential were disrupted by heavy-handed security, three-hour queues, and limited Wi-Fi access, leaving many tech founders frustrated.

"Logistical challenges at our own events have been a source of embarrassment," said one organiser.

Analysts say India's frugal, high-impact approach to AI could succeed in certain niche applications but caution that the country may struggle to keep pace with rapid advancements in frontier AI globally.