WHAT WILL INDIA DO NEXT?
The bigger question is what India does next. In my view, its task now is to make sure this wave of investment strengthens its own digital capabilities.
Building domestic versions of frontier models like ChatGPT or Gemini is beyond reach for now, given the cost, computing power and specialised talent required. India produces vast numbers of engineers, but relatively few focus on advanced AI research, and many of those who do eventually move to the US.
But creating applications that sit on top of LLMs and serve specific industries is far more achievable for India. The country already has a strong startup ecosystem, and local firms such as Observe.ai, which builds AI tools for call centres, and Arya.ai, which develops AI systems for healthcare and finance, are beginning to make a mark in this space.
Moreover, while India’s protectionist digital trade policies are no longer a barrier to US investment, they are still too broad to ensure the country captures enough of the value created. The rules do not spell out which types of data are strategically important, which activities should stay onshore, or how foreign firms should share the gains from using Indian data.
As a result, valuable economic activity – such as data processing, analytics and the development of AI models – can still happen outside India, even when the data originates within the country. To strengthen its position, India will need clearer, more targeted rules on how data leaves the country.
In the short term, the main benefit for India is the promise of new jobs, even if the longer-term numbers prove to be modest. Over time, the bigger gains are access to technologies that can make advanced AI tools available to more consumers, a chance to democratise intelligence by lowering barriers to expertise, and boosting productivity for the world’s fourth-largest economy.
If India can turn this investment surge into stronger digital capacity, it will prove that Silicon Valley made a good bet.
Amit Joshi is Professor of AI, Analytics and Marketing Strategy at IMD Business School.
https://www.channelnewsasia.com/commentary/india-data-centre-us-ai-investment-microsoft-google-amazon-5897291
