Global AI Race – Has India lost ground, or are we missing the bigger story

That seems to be the big debate today; has India lost out on the artificial intelligence race? In a recent interaction, a renowned investor like Ruchir Sharma underlined that FPIs were exiting India due to its virtual absence in the AI space.

Is that really why FPIs are exiting India?

India may be invisible in AI, but that does not mean it is non-existent. To be fair, AI could disrupt the Indian IT sector, which led to heavy FPI selling in IT stocks. The bigger reason for the sell-off was rich valuations in traditional sectors, and persistent weakness in the Indian rupee. AI was a factor to the extent that it has the potential to disrupt the traditional IT roles, and that is already visible. India may not have been a prominent name in AI like other big players. India does not have AI Labs like Open AI, Anthropic, Cursor, Deepseek; Chip players NVIDIA, TSMC; or Coders like Windsurf, Cognition. So, what?

Remember, India has an AI story going too

One of the arguments put forth by Ruchir Sharma was that India dominated the IT and pharma wave, but missed the AI wave. That is not entirely correct. Even in IT services, India started to play a major role after hardware, chips, and operating systems had done their job. That is when India combined low-cost manpower with skills. We are seeing a similar thing in AI; in fact, slightly better. Established companies like TCS, Infosys, Wipro, and HCL Tech are leveraging their cash flows to invest in AI; which is already a multi-billion-dollar business at TCS. Other IT companies have also started their AI pivot, although financial numbers are still to be made available.

India is contributing to AI in other ways also

There is another quiet shift happening on the AI front and India is playing a key role in that. When large projects have to be fine-tuned by leveraging AI, most of the Fortune 2000 companies turn to India. That is where the Global Competency Centres have been proliferating in places like Bengaluru, Hyderabad, Pune, and NCR. Over the years, India is likely to become a potent source to build test cases in AI, which is not exactly a low-end job, but a fairly skilled role. Then there is the AI infrastructure part. India is investing billions of dollars in setting up AI data centres with big guns like Reliance, Adani, Google, Microsoft, and Amazon playing a pivotal role. India is on the right AI path.

Is India still playing the price arbitrage game?

Foreign investors ask when India will pivot to being a high value-added model. It will not be a sudden pivot. Today, the cost of setting up an AI data centre is less than half the cost of setting up a similar capacity AI data centre in Singapore. A critical AI data centre in India does not have to run the geopolitical risks like a data centre located at Dubai. The high-quality bandwidth and connectivity in India is another big advantage that India can offer. In AI, India is playing the role of IT code writing, building test-cases through GCCs, and as an infrastructure provider for AI data centres. They may not be high-profile AI valuation stories; but India is quietly making global AI happen!