India’s AI Sovereignty: Will we become a net exporter or importer of AI?

The country has the potential to become a leader in AI. With government’s focus on creating necessary technology infrastructure and infusing capital for further development of resources, the country is poised to achieve significant milestones.

Technologies and economies are constantly being reshaped by the influence of Artificial Intelligence (AI) and India is at a crucial stage where a decision needs to be made on whether it envisions itself as a global AI leader or a dependent entity on foreign AI infrastructure. The way ahead calls for building our own AI systems, managing our data, and ensuring AI aligns with national interests rather than external influences.

Why AI Sovereignty Matters                                                                                                                                           

AI sovereignty means a country can develop, control, and deploy AI systems using its own infrastructure, data, and talent. It’s not just a technological goal—it’s a strategic necessity. As AI drives industries, governance, and national security, retaining control over AI systems ensures India’s digital independence, protects sensitive data, and addresses its unique cultural and economic priorities.

Apart from the massive economic potential that AI offers, control over its development is about much more. Building one’s own AI capabilities bestows nations with influence over the global digital economy. Those relying on external providers risk being consumers of technology they can’t control.

Where does India stand- Talent, Data, and Diversity

The large pool of AI developers and immense amounts of data generated through platforms like Aadhar and Unified Payments Interface (UPI) help back India’s AI potential. This vast dataset offers a strong foundation for building AI models that are relevant and useful in various socio-economic contexts. In addition to this, the clear distinction between the urban and rural divide, impacting millions of consumers makes it unique when it comes to the use of AI in the domestic market.

Moreover, the diversity that India offers in terms of linguistics and culture, creates a conducive space for developing AI solutions. Not just that, unlike global AI models that fail to capture local nuances, India has the right environment to create culturally aware and representative AI systems.

India is a major trading partner of the U.S. and one of the world’s largest exporters of IT and business services. Between April and December 2024, India exported $280.94 billion in services and imported $149.67 billion, resulting in a services trade surplus of over $131 billion. In goods, too, India had a surplus—exporting $87.4 billion to the U.S. while importing only $41.8 billion[1]

With India’s robust IT infrastructure and talent, it’s share in the export of global services has reached 4.3% in 2023 from a meagre 1.9% in 2005. According to a report by Stanford University[2], in the global race for AI skills and start-ups, India’s relative AI skill penetration rate stands at 2.51% between the 2015-2024 period, much higher than countries like the UK and Germany. In 2024 alone, India has funded 74 AI companies, which again is reflective of it’s push for AI tech.

Building AI Infrastructure: Challenges and Progress

Lack of necessary infrastructure: To accomplish the status of AI net exporter, India requires a robust infrastructure including AI chips, data centres and clear regulations. Recent investments in AI, such as the IndiaAI Mission approved in 2024, where the government has allocated ₹10,300 crores to be utilised over a period of five years to strengthen AI capabilities[3], is a clear indicator of the government’s focus. The 18,693 Graphics Processing Units (GPU) of high-end computing facility that this generates is nearly nine times that of the open-source AI model DeepSeek and about two-thirds of what ChatGPT operates on. Similarly, by importing AI chips and building sovereign data centres, India is laying the groundwork for a self-reliant AI ecosystem.

Massive funding requirement: The Indian government has made huge budgetary investments to fortify its AI ecosystem in a major step toward AI sovereignty. The Ministry of Electronics and Information Technology (MeitY) received ₹21,936.90 crore in the Union Budget 2024–2025, with a sizeable amount designated for the IndiaAI Mission, demonstrating the nation's dedication to developing a strong AI infrastructure. In keeping with this trend, ₹500 crore was set aside in the Union Budget 2025–2026 to create a Center of Excellence in AI for Education. This initiative aims to improve skills, facilitate individualized learning, and revolutionize the education industry by implementing AI-driven solutions.

The massive capital and resource requirement challenges in creating large language models (LLMs) like OpenAI’s GPT-4 can be dealt with by shifting India’s focus to Small Language Models (SLMs) instead. Indian startups like Floworks are already building efficient AI tools that deliver high accuracy at lower costs.

The other key aspect of this continuing development is the competition with Big Tech companies.  

Can India Compete with the Giants? 

To gain a competitive advantage over companies like OpenAI or Google, India can put in more effort in developing AI solutions tailored to provide solutions to sectors like healthcare, education and agriculture. While the country has taken steps in edtech, healthtech and agritech, there is a need to keep innovating and keep funding futuristic projects.

Government initiatives like the IndiaAI Mission and the establishment of Centres of Excellence for AI are strengthening the country’s AI ecosystem, paving the way for innovation and self-reliance in this critical sector. The IndiaAI Compute Portal aims to democratize access to high-performance computing for startups, researchers, and students. These highlight the commitment towards building indigenous AI capabilities.

India currently ranks 10^th globally in private investments in AI infrastructure[4], however, its rising position highlights growing interest from both domestic and international investors. Long-term R&D funding and collaboration between government and industry will be essential to maintain momentum.

Urgent action is needed to align AI with National Interests. Given that the priorities of Foreign AI providers may not always align with the socio-political and cultural landscape of the country, AI sovereignty cannot just be about developing models. It’s also important to ensure that they serve the nation’s interests.

India has taken a step towards establishing data centres, such as the AI Kosha dataset platform, governed by local laws[5]. It offers a vast range of data which is designed to ensure that India’s non-personal data remains within reach to local developers.

Another aspect that needs consideration is the training of government officials in AI competency. This would also ensure that policies keep pace with technological advancements.

The Future: AI for India and Beyond

Solutions developed in India have a multi-pronged effect on other emerging markets as the technology produced can address the challenges faced in those markets as well.

For example, AI-driven healthcare solutions that address India’s genetic diversity and disease patterns can be applied globally. Similarly, AI tools for education, agriculture, and financial services can serve as models for other developing countries.

Local solutions can have a global impact, as seen by India's success with platforms like UPI, which have sparked similar systems around the world. India can establish standards that other nations can follow by developing AI systems that take into account its varied needs.

The countrypossesses the skill, data, and motivation to lead the world in artificial intelligence. However, sustained infrastructural investment, moral leadership, and calculated policymaking are necessary to achieve true AI sovereignty. 

The real question is whether India will continue to be a consumer of foreign technologies or will it influence the AI environment on its own terms. India can ensure its digital future and make a significant contribution to the global AI community if it focuses on the right things.

This article was featured on CXO Today on 16 May 2025. Read it here.