India is positioning itself to become a global player in the rapidly expanding fields of artificial intelligence (AI) and chip manufacturing. Experts believe the country’s entry into the AI space, akin to the emergence of China’s DeepSeek, will be driven by strategic public-private partnerships within the next 4-5 years. Kunal Bahl, co-founder of Titan Capital and a prominent entrepreneur, emphasized this potential growth in a conversation about India’s ambitions to compete with leading AI innovators like OpenAI and Anthropic. He noted that the country’s success in building and deploying large-scale public digital infrastructure could serve as a strong foundation for the development of AI technologies.

India’s tech ambitions are underscored by the upcoming shift in its semiconductor industry. According to Piyush Goyal, India’s Commerce Secretary, the nation is on track to produce its first semiconductor chip in the next two years. This goal could significantly reduce India’s dependence on external chip suppliers and mitigate the impact of increasing international trade restrictions, particularly those from the U.S. The U.S. has already implemented policies that restrict the export of high-performance chips to various nations, including India. This move, known as the diffusion rule, could affect India's access to essential AI technologies, making the country’s push toward self-reliance in chip manufacturing even more critical.

The government’s focus on supporting domestic chip production is being bolstered by strategic investments from global semiconductor giants such as Micron and AMD, which are looking to tap into India’s potential. In addition, Nvidia has partnered with Reliance Industries to foster AI research and development in the country. This partnership will provide Reliance with access to Nvidia's cutting-edge Blackwell chip, marking a significant step in building the infrastructure needed for India’s AI and deep tech growth.

Bahl also highlighted the importance of large Indian conglomerates like Reliance, Tata, and Infosys, which are investing heavily in the development of industry-specific AI models. These companies are swiftly emerging as India’s hyperscalers, positioning themselves to lead the charge in AI applications tailored to sectors ranging from telecommunications to IT services. The active involvement of U.S. companies in supporting India’s AI growth, particularly in light of China’s increasingly closed market, further underscores the potential for India to establish itself as a leader in AI development.

One of the key initiatives supporting India’s AI ambitions is the “India AI Mission,” which is allocating significant funds to enhance the country’s capabilities in AI research and development. The mission aims to foster homegrown innovations and reduce reliance on foreign technologies. However, experts have cautioned that while India is making strides, it still lags behind global leaders like the U.S. and China in terms of AI funding and development. Bernstein’s Venugopal Garre warned that without a concerted focus on building deep-tech capabilities, India may struggle to establish itself as a major player in the AI race.

The nation’s efforts, while promising, are not without challenges. Some experts believe India is at a disadvantage in the AI sector due to its historical reliance on U.S. technology products. Unlike China, which has developed indigenous competitors in sectors like social media, electric vehicles, and AI, India’s tech ecosystem has yet to fully prioritize the creation of homegrown solutions. Despite these concerns, there are optimistic voices in the industry, such as Neil Shah from Counterpoint Research, who draw parallels between India’s current position in the AI space and Google’s late entry into the search engine market during the 1990s. The evolution of AI models is still in its early stages, and there remains room for new players to enter and disrupt the industry.

Another significant challenge for India is the potential impact of AI on its labor market. The introduction of AI technologies in the workplace could displace jobs, especially in the technology sector, where automation and productivity tools are becoming more prevalent. Unemployment remains a pressing issue in India, and experts like Akhil Gupta, former head of Blackstone India, warn that the country’s already weak labor market could be further strained by the rise of AI-driven automation. As a result, India’s policymakers and business leaders must carefully consider the socioeconomic implications of AI adoption to ensure that it does not exacerbate existing inequalities.

Despite these challenges, India’s young and growing workforce, coupled with its expanding tech ecosystem, provides the country with a unique opportunity to position itself as a leader in the tech space. However, experts agree that India must divert significant resources and talent toward the development of homegrown technologies if it is to avoid becoming a victim of the AI revolution rather than a beneficiary of it. While India may still be behind in developing its own version of DeepSeek, there is growing recognition of the need to invest in AI and semiconductor technologies. The country is awake to the challenge and is beginning to prioritize innovation in a way that could set the stage for future success in the global AI landscape.

Looking ahead, India’s government is also making strides in the electronics manufacturing sector. A new scheme, backed by a substantial fund of ₹22,919 crore ($2.67 billion), has been approved to support domestic manufacturing of electronics. This initiative could further bolster the country’s tech infrastructure and contribute to its goal of achieving self-sufficiency in critical technology areas. At the same time, India’s central bank is taking proactive measures to manage economic liquidity and stabilize the country’s financial system amid global uncertainties, further supporting the nation’s technological ambitions.

While India still faces numerous challenges in its quest to develop cutting-edge AI models and semiconductor capabilities, its efforts are gaining momentum. The combination of government support, strategic industry partnerships, and growing private sector investments presents a clear path forward for India to emerge as a global leader in AI and semiconductor innovation in the coming years.