These announcements arrive at a time of heightened debate around artificial intelligence valuations globally. As concerns about a potential AI-driven market bubble have grown, some financial institutions have taken a contrarian view on India’s position. Analysts at Jefferies described Indian equities as a “reverse AI trade,” suggesting the market could outperform if global enthusiasm for AI weakens. HSBC has echoed similar views, arguing that Indian stocks offer diversification for investors wary of overheated technology markets elsewhere. This perspective has gained traction as Indian equities have underperformed regional peers over the past year, while foreign capital has flowed heavily into AI-centric companies in South Korea and Taiwan.
Against this backdrop, the scale of Amazon and Microsoft’s commitments offers a significant boost to confidence. However, questions remain about how competitive India truly is in the global AI race. Adoption of artificial intelligence across the country has accelerated, with increasing investment in data centers and early movement toward domestic chip manufacturing. A recent collaboration between Intel and Tata Electronics to produce semiconductors locally reflects growing momentum in strengthening AI infrastructure.
Despite these advances, India continues to lag behind global leaders when it comes to building sovereign AI models. The government launched a national AI mission aimed at supporting researchers and startups with high-performance computing resources to develop a large multilingual model. While officials say a sovereign model supporting more than 22 languages is close to launch, global competitors such as OpenAI and China-based firms have continued to release more advanced systems in the interim. India’s public investment in this effort remains modest when compared with the far larger AI spending programs seen in countries like France and Saudi Arabia.
Structural challenges also persist. Limited access to advanced semiconductors, fragmented data ecosystems, and insufficient long-term research investment constrain progress. Although India has a higher-than-average concentration of AI-skilled professionals, retaining top talent remains difficult as global mobility draws developers overseas. Experts argue that policy incentives will be critical if India hopes to convert its talent advantage into sustained leadership.
Even so, international studies suggest India performs strongly relative to its economic stage. The country ranks among the top five globally for new AI startups receiving investment and contributes a significant share of global AI research publications. While funding volumes remain far below those of the United States and China, experts believe India’s advantage may lie in applying AI to real-world problems rather than competing directly in foundational model development.
AI-driven applications addressing agriculture, education, and healthcare are already gaining traction, demonstrating the technology’s potential impact at scale. At the same time, analysts warn that artificial intelligence could disrupt India’s IT services sector, a long-standing engine of economic growth. Slowing hiring, wage pressure, and weaker stock performance indicate that this transition is already underway, underscoring both the opportunity and the risk embedded in India’s AI future.
