SUMMARY
40% of the nearly $8 Bn investment in Indian AI startups was made last year, indicating bullish global sentiment in the sector
To embed AI innovation deep into the ecosystem, AI4Bharat is building open-source AI for Indian languages.
However, what defined innovation in earlier technology revolutions that encompassed products and services may not make the cut with AI
India’s AI story has started well. It ranks fifth globally in terms of investment in AI startups and tops the list for AI skills penetration. It heads a global AI partnership and ranks fourth in the number of AI research papers. It is deploying the technology in diverse and critical use cases across healthcare, education, and defence, besides mainstream corporate businesses.
Let us look at a key dimension – innovation. Countries like the US and Israel have long established themselves as innovation powerhouses in the technology sphere, with impressive outcomes from a profit and influence standpoint. The US is home to some of the world’s leading tech and product companies and continues to set the agenda for each new wave of advancement. Israel has consistently punched above its weight, garnering international repute.
India, meanwhile, came on board as a service hub and, so far, has often been perceived as lagging on innovation. But this narrative is being steadily dismantled. Decades of supportive government policy, a scientific bent of mind, and inspiring success stories have created a vibrant startup ecosystem that is bold and wants to lead from the front, making it a natural candidate for AI innovation.
40% of the nearly $8 Bn investment in Indian AI startups was made last year, indicating bullish global sentiment in the sector. The large pioneering IT and BPO companies are not stragglers either, holding a 60% share with their AI investments in a market that is poised to reach $70 Bn by 2027.
Multinational firms, which are increasingly choosing India for their global capability centres, are focusing them on advanced technology rather than back-office operations, with AI figuring prominently, which will further strengthen innovation DNA.
As an important boost to this, government policy is backing collaborations with AI-led research and development efforts in Germany, the USA, and Israel, among others. In late 2022, India assumed the chair of the Global Partnership on AI (GPAI). To embed AI innovation deep into the ecosystem, AI4Bharat is building open-source AI for Indian languages.
Clearly, with AI, the Indian ecosystem is putting its entire weight behind transforming its reputation as a service leader into an innovation trailblazer. And in an interesting twist, the strengths of the services focus in terms of scale and constant upskilling is giving it an edge in the AI talent game. The current base of 416,000 experienced professionals is 51% short of market demand, lower than some developed economies.
How To Sustain An Innovative Edge
But this narrative is not all perfection. A recent Stanford report found that researchers based in the US comprised 54% of those working on large language models. And India ranks a global eighth for AI patents filed. Given the size and depth of India’s ecosystem, these parameters are not aggressive enough to leverage the current momentum. If India is not alert, it might cede its spot to existing or new trailblazers in AI, missing out on revenue generation as well as global standing.
The ecosystem is aware of this and responding with deep-skilling professionals in AI, embedding AI into its new and existing services, and even kicking off the development of products that will rival ChatGPT and Bard.
However, when the landscape shifts, so do the variables. What defined innovation in earlier technology revolutions that encompassed products and services may not make the cut with AI. This technology can one day replace myriad human activities, experts warn. With each new generation, it will think, create, and plan better, and no one disputes that the curve from here on is very steep.
Therefore, while technical expertise fostered from the bottom up remains crucial, leadership for innovation in AI requires a greater emphasis on collaboration and regulatory foresight. While not to be completely sidelined, India should not dedicate all its time to building AI products with a cost, niche, or integrability advantage.
Instead, significant effort and resources should be directed toward leveraging its global partnerships to share and learn best practices to harness the technology for the least harm and the highest public good.
The country has already set a precedent with the success of IndiaStack and UPI, dispelling the notion that technology for the public good does not translate into profits. This strong showing should be repeated in AI, where a good opening has already been made.
And these developments should happen within a bold, new regulatory framework that recognizes both the disruption and benefits of this technology. The country has signalled that the answer is not in banning advancements, as some nations are, or in being hasty in formulating oversight. But holding back for too long is not advisable either. With Europe and the US framing their regulatory approaches, India should consider shortening its runway from the current two years.
With this focus on public good and regulatory leadership, India will become a participant in history instead of a service provider or technical leader, establishing considerable global standing in AI.
