India’s AI takeover: The next global powerhouse in artificial intelligence

As the world looks for ethical, scalable, and impactful AI solutions, India has the potential to become the epicenter of AI for the next billion users - bridging the gap between cutting-edge technology and real-world challenges. With sustained investment, collaboration, and vision, India is on track to not just participate in the AI revolution, but to define it.

Artificial Intelligence (AI) is redefining industries worldwide, and India is poised to lead this transformation on a global scale. With a booming AI market, a proactive government, and one of the largest AI talent pools in the world, India has all the ingredients to shape the future of AI. As the world’s fastest-growing digital economy, India is not just adopting AI but building it for the world, positioning itself as a powerhouse of AI innovation that balances economic growth with technological inclusion.

The question is no longer whether India can become a global AI leader - it is about how fast it will get there.

Market expansion in India’s AI sector

India’s artificial intelligence market is experiencing rapid growth. It is projected to reach $17-22 billion by 2027, driven by an annual growth rate of 25-35% (CAGR). This expansion is fueled by rising investments – over $4 billion was invested in AI in India during 2022-23 alone. AI is also expected to have a significant economic impact: official estimates project it could contribute nearly $500 billion to India’s GDP by 2025. Despite this strong local growth, India currently accounts for only about 1.5% of global AI spending, indicating substantial room to grow its share of worldwide investment. The overall trend shows a robust upward trajectory, with public and private funding accelerating the AI ecosystem’s expansion.

Government initiatives and policies

The Government of India has launched several strategic initiatives to establish India as a global AI hub. In 2018, NITI Aayog released the country’s first National Strategy for Artificial Intelligence, emphasizing “AI for All” and focusing on key sectors like healthcare, agriculture, education, smart cities, and smart mobility. The government also introduced Ethical AI guidelines (2021) to promote responsible AI development, underscoring principles of transparency, accountability and fairness.

A major recent push is the IndiaAI Mission, a national AI program approved in 2024 with a budgetary outlay of over Rs 10,000 crore (approximately $1.3+ billion). The IndiaAI Mission aims to build a comprehensive AI ecosystem by democratizing access to computing infrastructure, improving data quality, developing indigenous AI capabilities, and encouraging innovation and startups. Under this mission, the government is funding core AI research, setting up Centers of Excellence, and supporting “AI for All” projects to ensure inclusive growth. Notably, the mission’s components include a national AI compute infrastructure, an AI innovation center, datasets platforms, applied AI development programs, and dedicated initiatives for skilling (FutureSkills) and Safe & Trusted AI. These policies and programs – backed by significant public funding – illustrate India’s strategic commitment to AI leadership.

Talent pool and research strength

India boasts a vast and growing AI talent pool, which is one of its strongest advantages in the global arena. As of mid-2020s, India has the second-largest AI workforce in the world. There are an estimated 600,000–650,000 AI professionals in India today, projected to grow to over 1.25 million by 2027 (about double) as the talent pool expands at ~15% CAGR. In fact, India leads globally in AI skill penetration – a LinkedIn-based index shows India’s rate of AI skills adoption is over 3 times the global average, the highest in the world (versus ~2.2× in the US). This indicates a high concentration of AI-skilled workers in the Indian labor force relative to other countries.

To further develop human capital, the government and industry have launched extensive AI education and skilling programs. The Ministry of Electronics and IT (MeitY) and the Ministry of Skill Development (MSDE) are partnering with tech companies on nation-wide AI skilling initiatives. For example, large tech employers are working with government missions to train professionals in AI, and new specialized courses and AI labs are being introduced in academic institutions.

Through collaborations like the IndiaAI - Microsoft partnership, India plans to train 500,000 people in AI skills by 2026, including students, developers, officials and entrepreneurs. This collaboration will also establish AI innovation hubs in smaller cities and integrate AI curricula in dozens of training institutes. On the research front, India’s universities and institutes (IITs, IISc, etc.) are actively publishing in AI – India ranks #1 globally in AI conference citations and #3 in AI journal publications, reflecting a high-impact research output. This combination of a large skilled workforce and strong R&D contributions forms a critical asset as India vies for global AI leadership.

Industry applications and use cases

AI is revolutionizing key industries in India, driving efficiency, innovation, and economic growth. In healthcare, AI enhances diagnostics, telemedicine, and drug discovery, making healthcare more accessible and cost-effective. The finance sector (BFSI) leverages AI for fraud detection, credit scoring, automation, and algorithmic trading, improving financial inclusion. Manufacturing is embracing AI for predictive maintenance, quality control, and supply chain optimization, with India ranked 3rd globally in AI-driven manufacturing. In agriculture, AI-powered precision farming, crop monitoring, and supply chain analytics help farmers boost yields and adapt to climate challenges.

Beyond these core industries, AI is transforming retail, transportation, and energy, enabling personalized shopping, traffic optimization, and smart grid management. With AI adoption expanding rapidly, India is positioning itself as a global leader in AI-driven innovation, enhancing productivity, reducing costs, and solving real-world challenges across multiple sectors

Key players and ecosystem collaborations

India’s AI ecosystem comprises a mix of large IT firms, nimble startups, and collaborations with global technology leaders. The country has a vibrant startup scene in AI, with hundreds of homegrown AI-focused startups emerging in fields such as computer vision, natural language processing, healthcare AI, fintech, and more.

Investment into Indian AI startups has been robust – with investments exceeding $4 billion in 2022–2023, reflecting strong investor confidence. Startups like Signzy (fintech AI) and Arya.ai (developer tools) are gaining global recognition, showcasing India’s AI competitiveness. Major IT firms like TCS, Infosys, Wipro, and HCL have developed AI platforms for automation and analytics, while Google, Microsoft, IBM, Intel, and NVIDIA operate AI research centers in India, fostering innovation through partnerships with local talent.

Public-private collaborations are accelerating AI growth, with IndiaAI and Microsoft’s 2025 partnership set to train 500,000 individuals and establish AI Centers of Excellence in rural and small-city India. Microsoft is also mentoring startups and co-developing AI safety frameworks.

Overall, the ecosystem “pillars” of India’s AI mission – talent, startups, industry, and international partnerships – are increasingly interconnected. This robust network of stakeholders puts India in a strong position to innovate and scale AI solutions both for domestic use and for global markets.

India vs. global AI leaders: A comparison

While India’s AI sector is on a rapid rise, comparing its standing against global leaders provides perspective on its strengths and gaps. According to Stanford’s AI Index analyses, India now ranks among the top countries globally in overall AI preparedness and activity. In a 2023 global AI Vibrancy ranking, India was placed 4th in the world, behind only the United States, China, and the UK. This high ranking is driven by India’s outstanding performance in several metrics: India has a strong AI research community, leading the world in conference citations (a measure of research influence) and standing third in volume of journal publications.

India also ranked #2 globally in the number of AI projects on GitHub (reflecting a large developer community) and #2 in AI discussions on social media, indicating an active tech community engagement with AI topics. Moreover, as noted, India outpaces other nations in AI skill penetration in its workforce, which is crucial for sustaining an AI-driven economy. These factors demonstrate that India is not only catching up but even excelling in areas like talent and research output when compared to traditional AI powerhouses.

In summary, India is emerging as a formidable player in AI with strengths in talent, research, and diverse application areas. India's AI growth rate is one of the highest in the world, and strategic initiatives are closing some of the gap with global leaders. With sustained investment and focus, experts believe India can leverage its demographic and digital advantages to become one of the top global hubs for AI innovation. The next few years are likely to be crucial, as India's AI ecosystem matures and it strives to convert its potential into a leadership position on the world stage.

Conclusion: India’s AI moment is now

India’s AI journey is not just about catching up with the world - it is about leading in a way that is uniquely its own. With unparalleled AI talent, a rapidly growing digital economy, and strategic government initiatives, the nation is crafting an AI ecosystem that is inclusive, innovative, and globally competitive.

As the world looks for ethical, scalable, and impactful AI solutions, India has the potential to become the epicenter of AI for the next billion users - bridging the gap between cutting-edge technology and real-world challenges. With sustained investment, collaboration, and vision, India is on track to not just participate in the AI revolution, but to define it.

The future of AI is being written now, and India holds the pen.

References

1. NASSCOM Reports – AI market size, investment trends, and workforce statistics.

   • NASSCOM AI Market Insights

2. IndiaAI (Digital India Corporation, MeitY) – Government AI initiatives, IndiaAI Mission, policy frameworks.

   • IndiaAI Official Portal
   • MeitY AI Policies

3. PSA (Office of Principal Scientific Adviser to the Government of India) – National AI strategy, R&D efforts, and ethical AI guidelines.

   • PSA Government AI Reports

4. Stanford AI Index – India’s ranking in global AI research, skill penetration, and AI development metrics.

   • Stanford AI Index Report

5. Ministry of Electronics and IT (MeitY) – AI skill development programs, digital infrastructure, and AI investment reports.

   • MeitY AI Skilling & Innovation

6. RBI (Reserve Bank of India) – AI in banking, fintech, fraud detection, and financial inclusion.

   • RBI AI Reports

7. Microsoft–IndiaAI MoU (2025) – AI skilling collaboration, compute infrastructure, AI governance policies.

   • Microsoft & IndiaAI Collaboration

8. NITI Aayog National AI Strategy (2018) – AI for All framework, policy roadmap, sector-wise AI adoption.

   • NITI Aayog AI Strategy