The $4.8 trillion global AI market opportunity and India’s ambitions
Among India’s ambitions is to become a leader in artificial intelligence (AI) to achieve developed country status by 2047, the centennial of its 1947 independence, and stand alongside China and the United States as a great technological power.
To that end, Delhi is rolling out investor friendly measures to grab a much greater share of the current $4.8 trillion global market opportunity for artificial intelligence (AI). But profiting from it will take extraordinary foresight, planning and operational skills because huge hype and arguably reckless investment fever are casting fog on the paths forward.
So far power is concentrated in the hands of only about 100 mostly American and Chinese companies that are driving 40 per cent of the world’s private investment in AI research and development (R&D). India is ranked tenth globally for private investment in AI, with $1.4 billion in 2023, according to United Nations estimates. It is far behind China’s $7.8 billion and both are light years behind the United States with $67 billion invested.
The bright spot is that India ranks third globally in scientific strength giving it high ranking in AI research and development. In 2024, it rose to 36th place out of 170 countries from 48th in 2022 in the ‘Readiness for Frontier Technologies’ index and has the world’s second largest talent pool of about 13 million software developers. But sharp challenges persist in key areas like digital infrastructure, where it is ranked 99th, and workforce skills development, where it is in 113th place.
Despite this mix of strengths and weaknesses, US tech giants see India in a positive light and have committed an unprecedented $69 billion for AI investments in India. For instance, Amazon has committed over $35 billion through 2030 to scale AI and cloud infrastructure, which will create one million jobs in India and elsewhere. Microsoft announced a $17.5 billion investment, its largest in Asia, to expand hyperscale data centers, including a massive new region in Hyderabad set to go live in mid-2026. Google is Investing $15 billion to establish a major AI data center hub in southern India and Blackstone is Investing $2 billion in data center infrastructure for AI.
For its part, the Indian government will spend about $1.3 billion to build a national AI ecosystem. It has already set up 38,000 GPUs, up from an initial target of 10,000, to provide affordable computing power for startups and researchers. Different from any other country, Indian AI platforms are also designed to support over 310 million informal workers like street vendors, small farmers and landless laborers.
Indian corporations are also trying to adopt AI-friendly business models and are expected to spend about 1.7% of their revenue on AI in 2026, which is more than double the increase seen in 2025. Emulating US corporations, about 88 per cent of Indian CEOs plan to use AI investments in 2026 for revenue growth rather than just cost reduction. Leading groups like Reliance Jio, Adani Group and Tata Communications have all made significant multi-billion dollar commitments to building nationwide GPU clouds and AI-optimized data centers.
The US, China, Germany and other powerful countries are engaged in a breakneck race for AI leadership while zealously protecting their intellectual property since AI, when used properly, can deliver spectacular productivity gains, generate new industries and deliver world-beating competitive advantage.
Delhi understands these risks and is advancing cautiously but its ambitions could “hit the wall” because of AI needs enormous electric power and energy. Providing hundreds of megawatts in uninterrupted power for giant AI installations may be impossible without thorough overhauls of the country’s sclerotic power generation and transmission capabilities.
Delhi may emulate President Donald Trump’s ideas by allowing large investors to establish their own power generation facilities alongside the national grid for their giant data centers. But that remains a tall order in the current state of Indian infrastructure and the severe instability in energy supplies caused partly by Trump’s punitive tariffs on affordable Indian oil and gas imports from Russia.
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