India is throwing its weight behind AI — but is there substance behind the headlines?

This report is taken from CNBC’s ‘Inside India’ newsletter this week which brings you timely and insightful news and market commentary on the emerging powerhouse. Subscribe here.

The big story

Three years ago, OpenAI CEO Sam Altman He said Audience in India, “It’s absolutely hopeless to compete with us on basic training models but you should try anyway.” Altman retracted his comments the next day.

Two years later, Chinese company DeepSeek emerged as a competitor to OpenAI’s ChatGPT and other American tech giants’ chatbots. Indian citizens resurfaced on Altman’s comments, declaring that China had already proven him wrong.

But can India compete with the United States? Or, at the very least, can the world’s back office now stand up to AI efforts in the Global South, even if it does They seem very far behind United States and China?

Scattered titles

Even as the likes of Altman, Google CEO Sundar Pichai, and Anthropic senior director Dario Amodei walk the red carpet at the India AI Impact Summit, the question is how far they will go to support India’s late AI push.

Some of this support has already come over the past few months. Amazon and Microsoft have pledged to do so Investment of 50 billion dollars In the country’s AI ecosystem. He pumped Blackstone 600 million dollars At Indian AI infrastructure startup Neysa, and Anthropic has partnered with Infosys To build artificial intelligence agents, while also Open office In Bengaluru

The Indian government announced INR 400 billion ($4.4 billion) Payment of electronics manufacturing And a tax holiday until 2047 for foreign companies providing cloud services using Indian data centres. Meanwhile, the Indian multinational group Adani Pledged $100 billion To develop data centers by 2035, Tata Consulting Services plans to do so Establishing the largest artificial intelligence data center in the world.

As for technical progress, India Sarvam I BharatGen has moved forward with sovereign models, which are developed, owned or controlled within a country to ensure critical AI capabilities and data remain under national jurisdiction.

The country also had its first IPO for an AI company in Fractal Analytics.

But are these headline-grabbing stories enough to address the real challenges facing the AI ​​story in India?

Some of these hurdles include the lack of clear enough regulation to encourage the best in AI to come to India, starting the AI ​​race late – where momentum is the ditch – and the urgent need for massive infusion of capital.

One analyst believes that the challenges have not yet been adequately addressed.

“India is making impressive attempts to jump-start its belated AI efforts, but it is doing so primarily by making headline-grabbing pitches without addressing many of the fundamental difficulties of actually doing business in India,” said Udith Sikand, senior emerging markets analyst at Gavical Financial Research.

“The battle is already lost”?

However, New Delhi is confident of developing the domestic AI industry.

A few weeks ago, I interviewed S. Krishnan, secretary of India’s Ministry of Electronics and Information Technology — in other words, the man who runs the ministry responsible for all things AI — in the CNBC studio in Singapore.

“No industry is without challenges, and I don’t think we should underestimate the importance of these challenges,” Krishnan told me, but added that he believed it was “possible” for India to become “a significant player in the semiconductor space within five to 10 years.”

However, Gavekal’s Sikand pointed to the fact that most government funds are allocated to building semiconductor factories for production rather than encouraging more investment in R&D facilities.

Medianama founder Nikhil Pahwa, an early observer of AI progress in India, wrote that while Indian models, like Sarvam, are “fairly good,” the “battle is already lost,” because adoption of global models is much greater than India’s local models.

Changing consumer behavior can be difficult, as people are already accustomed to global platforms, making it less dependent on technical capabilities and more tied to user habits.

Optimistic outlook

However, some critics still issued positive feedback.

Medianama’s Pahwa suggested that the AI ​​Summit will eventually make the technology a priority for ministries and state governments, reducing the overall time for AI adoption by the system.

Cowan Consulting Group Vivan Sharan This is a radically different ideology that has influenced economic policy planning in India, he said — a particularly stark development for someone who has been monitoring the technology sector for more than 15 years.. New Delhi is now prioritizing technology-related industrial policy “in a very public way,” Sharan added.

At the start of the India AI Summit, Altman said that India had “all the ingredients needed to lead in AI” – a major reversal from his statements about the futility of catching up to the leading AI models just three years ago.

But the proof, as they say, will be in the pudding. The ingredients have been prepared, and it will soon be time to taste the dish.

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India’s revised CPI data is unlikely to lead to a “material change” in inflation expectations or the RBI’s policy path in the near term, says Sakshi Gupta of HDFC Bank.

Foreign investors are likely to return to India as global AI stocks decline and AI trading loses momentum, says VK Vijayakumar, chief investment strategist at Geojit Financial Services.

Need to know

Adani announced a $100 billion investment To develop renewable energy AI-ready data centers By 2035.

India joins the US-led Pax Celica initiativeThe Trump administration’s efforts to secure… Global supply chain For silicon-based technologies.

Nvidia partners with venture capital firms in India, Including Peak XV, Z47, Elevation Capital, Nexus Venture Partners, Accel India, to Identifying and financing startups in the field of artificial intelligence.

This week, India is hosting the AI ​​Impact Summitthe latest in a series of government-hosted events focused on artificial intelligence. Among Key attendees They are OpenAI CEO Sam Altman and Alphabet CEO Sundar Pichai.

In the markets

Indian stocks rose amid gains in the region. the Stylish 50’s Data from LSEG showed a decline of about 2% year to date.

The yield on India’s benchmark 10-year government bond rose slightly to around 6.678, while the rupee fell 0.28% to around 91.03 against the dollar.

— Li Ying Shan

Coming

February 16-20: AI Impact Summit in India

February 20: HSBC February PMI

February 25-26: Indian Prime Minister Narendra Modi visits Israel

February 25: Gaudium IVF And Women Health IPO opens

February 26: Clean Max Enviro Energy Solutions IPO opens

Every weekday, CNBC’s ‘Inside India’ news show brings you news and market commentary on powerful emerging companies and the people behind their rise. Stream the show live on YouTube and catch highlights here.

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