Comment by Riaz Haq 6 hours ago

This week, tech giants Amazon and Microsoft pledged an eye-popping $50bn-plus combined investment in India, putting artificial intelligence (AI) in the spotlight.


https://www.bbc.com/news/articles/cd74gjw1j11o


As fears of an AI bubble swept global markets and tech stock valuations soared, several leading brokerages took a contrarian view on India's AI landscape.
Christopher Wood of Jefferies said the country's stocks were a "reverse AI trade". That basically means India should outperform other markets in the world "if the AI trade suddenly unwinds" - or simply put, the global bubble bursts.
HSBC also held a similar view, saying Indian equities offered a "hedge and diversification" for those uneasy with the ongoing AI rally.
This comes as Mumbai stocks have lagged behind their Asian peers over the past year, with foreign investors moving billions into Korean and Taiwanese AI-driven tech companies in the absence of comparable opportunities in India.
In this backdrop, the Amazon and Microsoft investments provide a much-needed fillip - yet it remains worth asking where India truly stands in the global AI race.

There are no easy answers.
The adoption of AI in India has been rapid. Investments into some parts of the value chain - such as data centres, the physical backbone of AI, or chip-making facilities - have begun trickling in. Just this week, American chipmaker Intel announced a collaboration with Mumbai-based Tata Electronics to manufacture chips locally.
But when it comes to a sovereign AI model, it appears India is continuing to play catch-up.
About a year-and-a-half ago, the Indian government launched an AI mission through which it began supplying start-ups, universities and researchers with high-end computing chips to develop a large homegrown AI model like OpenAI or China's DeepSeek.
According to the federal electronics ministry, the launch of the sovereign model - which supports more than 22 languages - is imminent. In the interim though, the likes of DeepSeek and OpenAI have made further advances, launching newer variants.
While the government has recognised the need to reduce over-dependence on foreign platforms because of the risk of surveillance and sanctions, India's $1.25bn sovereign mission is a shadow of France's $117bn or Saudi Arabia's $100bn programmes.
The country's ambitions also face numerous other hurdles - from semiconductor availability to skilled talent and fragmented data ecosystems, according to global consultancy EY.
India currently lacks enough computational infrastructure or the billions of dollars of research and development (R&D) investment made over decades that gave China and the US a distinct leg up.
Despite its global strength in AI talent, India struggles to keep its developers at home.
"The current tightening of overseas work visas provides India a window of opportunity to retain domestic talent and attract Indian-origin talent at home. However, given that top-tier AI talent is mobile globally, attractive policy incentives need to be put in place to incentivise relocation to India," the EY report says.
China, for example, offers a range of incentives such as "financial support and subsidies, tax incentives and funding for research and development, special talent visas and fast-track immigration", the report says.
India has a much higher concentration of AI-skilled professionals than the global average - specifically, 2.5 times more. Policies that retain this talent are not yet in place.

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