Advancements in India’s AI technology, talent, and policy

Adoption of AI technologies is steadily rising across Indian businesses and institutions. With over 520 tech incubators and a projected market growth of 25–35% CAGR, the sector is poised to contribute to innovation and public-sector transformation.

While India does not yet compete at the frontier of AI hardware or global-scale models, its early focus on building AI talent and developing regionally relevant models is beginning to shape a distinctive, use-case-driven AI landscape.

India’s AI moment: Laying the groundwork

India’s AI journey isn’t defined by scale yet, but by steady, purposeful moves. From building relevant models to expanding compute access, the focus is on enabling practical, inclusive innovation. So, how exactly is India picking up pace, and what’s happening on the ground? Let’s take a closer look.

Language models built for Indian needs

India’s AI model development efforts are largely oriented toward solving problems specific to its population, languages, and public services. Several initiatives led by the government and academic institutions are focused on building LLMs that reflect India’s linguistic and civic diversity. Key examples include:

• BharatGen – India’s first government-funded multimodal LLM, launched in 2024, aimed at improving public-facing digital infrastructure.

• Sarvam-1 – A 2-billion parameter LLM optimized for Indian languages and dialects; launched in October 2024 and open-sourced for public and institutional use.

• Hanooman Everest 1.0 – A multilingual AI system currently supporting 35 Indian languages (with plans to scale to 90); launched in early 2024 by 3AI Holding and SML India.

• Digital India BHASHINI – A government initiative, launched in August 2022, to improve digital and linguistic access using AI for translation.

These efforts may not compete with commercial LLMs from the US or China on size or complexity, but they are aligned with India’s goal of enabling inclusive, public-focused AI applications.

Growing AI talent advantage

India’s digital talent pool is expanding rapidly, serving both domestic needs and global AI projects. AI skilling has become a strategic priority, with academic and policy initiatives aimed at embedding AI into education and improving access to technical training across regions.

Highlights include:

• India ranks 2nd globally in public generative AI projects on GitHub and hosts 16% of global AI developers.

• The AI-skilled workforce grew 14x between 2016 and 2023. The demand for AI professionals in India is projected to reach 1 million by 2026.

• The IndiaAI FutureSkills Initiative includes fellowships for PhD scholars, curriculum updates under NEP 2020, and AI labs in Tier 2/3 cities.

• India scores highest globally in AI skill penetration among women, with a score of 1.7 (vs 1.2 in the US and 0.9 in Israel).

The rise of Global Capability Centres (GCCs) - often focused on AI product development and service delivery - further reinforces India’s growing importance as a talent hub.

Accelerating AI adoption

AI adoption in India is accelerating, driven by a growing startup ecosystem and institutional support. With over 520 incubators and a projected 25–35% CAGR, the country’s AI market holds strong potential for scalable applications and job creation.

According to recent reports:

• 80% of Indian companies now view AI as a strategic priority, slightly higher than the global average of 75%.

• 69% of Indian employees used AI at work in 2024, with a majority expressing that it improved their productivity or work quality.

• Funding for generative AI startups reached $230 million in FY25, up 2.7x from the first half of the year.

• 93% of Indian SMBs using AI reported an increase in revenue.

These trends suggest a gradual move toward practical AI integration, particularly in enterprise settings.

Infrastructure takes shape

Under the ₹10,300 crore ($1.2 billion) IndiaAI Mission, the country is building a national AI compute grid and scaling GPU access for startups, academic researchers, and public agencies.

While this budget remains modest (Canada pledged $2.4 billion, China launched a $47.5 billion semiconductor fund, France committed €109 billion, and Saudi Arabia’s Project Transcendence represents a $100 billion initiative), the efforts are focused on addressing India’s dependence on external compute resources and enabling experimentation and model training within the country.

Key developments include:

• Deployment of 10,000 GPUs, with 8,693 additional units planned.

• Launch of an open GPU marketplace, offering compute access at subsidised rates (₹100 per hour).

• Participation of 10 private vendors to ensure a stable supply chain.

• Plans to develop indigenous GPUs over the next 3–5 years.

• Support for semiconductor fabrication, with five new plants under construction.

AI across borders

From global tech giants to nimble innovators, every country is scripting its own AI story. Let us take a look.

United States

No surprises here - the US still leads the global AI. The market is already worth $87.18 billion, and it's projected to touch $300 billion by 2026. Curious how companies are using AI in practice? About 25% of them say they’ve saved $50,000–$70,000 just by using ChatGPT.

In marketing and advertising, nearly 4 in 10 professionals are now integrating AI tools into their daily work. Add to that a strong research foundation, and you get why the US continues to stay ahead. Economists think AI could lift US GDP by 14.5% by 2030—but that depends on how evenly adoption spreads across sectors.

United Kingdom

Did you know the UK has twice as many AI-powered companies as any other country in Europe? That’s part of why AI contributed £3.7 billion to the economy in 2022. Government investment has been steady too—more than £2.3 billion since 2014.

With a roadmap for self-driving cars by 2025 and a projected market of £801 billion by 2035, the UK seems focused on creating a well-regulated, economically productive AI ecosystem.

Japan

Japan has always had a thing for technology, especially robotics. So it’s no surprise that AI is finding its way into sectors like elderly care, infrastructure, and automation. The market is forecast to grow from $8.12 billion in 2024 to $35.52 billion by 2030. Japan’s approach feels more evolutionary than revolutionary—but it’s steadily building momentum.

China

China is shifting gears fast. A former top official recently predicted over 100 DeepSeek-like AI breakthroughs in just the next 18 months, potentially transforming the Chinese economy. While GDP growth is expected to slow to 4.5% this year, AI is a bright spot: by 2026, high-tech sectors are expected to contribute over 18% to GDP. Despite trade tensions and regulatory hurdles, China’s AI ambition is real!

Germany

Germany’s strength lies in industry, so it makes sense that AI is being folded into manufacturing, logistics, and product design. Today, 13.3% of companies are already using AI, and over a third are exploring where it could fit.

In summary

India’s AI journey is still taking shape - steadily. The focus? Building public datasets, skilling talent, and improving access over flashy breakthroughs. While we don’t yet lead in chips or large models, the foundations are quietly growing stronger. The real test will be how this groundwork turns into meaningful outcomes in the years ahead.