Microsoft, Amazon bet big, but where does India stand in the global race?

This week, tech giants Amazon and Microsoft pledged a staggering $50 billion joint investment in India, putting artificial intelligence in the spotlight.

Microsoft Satya Nadella Announce His company’s largest ever investment in Asia – $17.5bn (£13.14bn) – “to help build the infrastructure, skills and sovereign capabilities needed for India’s AI-first future”.

Amazon followed suit, saying it will invest more than $35 billion in the country by 2030, with an unspecified portion of that investment allocated to enhancing artificial intelligence capabilities.

These announcements come at a particularly interesting stage.

With fears of an AI bubble sweeping global markets and valuations of technology stocks rising, several leading brokerages have taken a contrarian view on the AI ​​landscape in India.

Jefferies’ Christopher Wood said the country’s stocks were a “reverse AI trade.” This essentially means that India should outperform other markets in the world “if AI trading suddenly subsides” – or simply put, the global bubble bursts.

HSBC also had a similar view, saying Indian stocks provide a “hedge and diversification” for those who feel uneasy about the ongoing AI rise.

This comes at a time when Mumbai stocks have lagged behind their Asian counterparts over the past year, as foreign investors have transferred billions into Korean and Taiwanese technology companies that rely on artificial intelligence in the absence of similar opportunities in India.

In this backdrop, Amazon and Microsoft’s investments provide a much-needed impetus – yet it is still worth asking where India truly stands in the global AI race.

There are no easy answers.

The adoption of AI in India has been rapid. Investments in some parts of the value chain – e.g Data centersIntel, the physical backbone of artificial intelligence, or chip-making facilities, is emerging. Just this week, US chipmaker Intel announced a collaboration with Mumbai-based Tata Electronics to manufacture chips locally.

But when it comes to the sovereign AI model, India seems to be catching up.

About a year and a half ago, the Indian government launched Artificial intelligence mission Through it, it began providing startups, universities, and researchers with advanced computing chips to develop a large local model of artificial intelligence, such as OpenAI or the Chinese DeepSeek.

According to the Federal Ministry of Electronics, the launch of the sovereign model – which supports more than 22 languages ​​- is imminent. Meanwhile, the likes of DeepSeek and OpenAI have made further progress, launching newer variants.

While the government has recognized the need to reduce over-reliance on foreign platforms due to the risks of surveillance and sanctions, India’s $1.25 billion sovereign mission is a shadow of France’s $117 billion or Saudi Arabia’s $100 billion programs.

The country’s ambitions also face many other obstacles, from the availability of semiconductors to skilled talent and fragmented data ecosystems, according to global consulting firm EY.

India currently lacks sufficient computing infrastructure or the multibillion-dollar investments in decades-long research and development projects that have given China and the United States a distinct lead.

Despite its global strength in AI talent, India is struggling to keep its developers on-shore.

“The current tightening of overseas work visas provides India with an opportunity to retain local talent and attract Indian-origin talent at home. However, as top-tier AI talent is globally mobile, attractive policy incentives must be put in place to stimulate relocation to India,” the EY report says.

China, for example, offers a range of incentives such as “financial support and subsidies, tax incentives, research and development funding, special talent visas and rapid immigration,” the report says.

India has a much higher concentration of skilled AI professionals than the global average – specifically, 2.5 times more. Policies to preserve this talent have not yet been put in place.

However, despite the challenges, India – along with countries like Brazil and the Philippines – is punching above its weight in AI, especially in the context of its stage of economic development, a study by the United Nations Conference on Trade and Development (UNCTAD) said.

According to the widely tracked 2025 Stanford AI Index, the country ranks among the top five countries in the world in terms of new companies receiving AI investments.

Last year, 74 new Indian AI startups received funding, a small fraction of the more than 1,000 companies funded in the United States.

Indian AI startups have raised just $1.16 billion from the private sector, compared to more than $100 billion in the United States and about $10 billion in China.

But there is enough intellectual engagement in AI in India that the country accounts for 9.2% of AI article publications – slightly more than the US, but behind Europe and China according to the Stanford AI Index.

India’s edge in AI may lie less in building expensive language models, and more in using them downstream to stimulate entrepreneurship, experts say.

“I think in the short term, there is a huge concentration of AI in the US,” Shailendra Singh, managing director of Peak

Singh says India is seeing a boom in AI-driven consumer applications, with investments in AI startups doubling compared to last year.

Moreover, many Indian startups are now using AI to address real-world challenges faced by millions who are still on the wrong side of the digital divide.

For example, MahaVISTAAR, an AI-powered app run by the Maharashtra government, provides vital agricultural information in the local Marathi language, reaching over 15 million farmers.

“The hardest places to enact AI are also the places where it matters most,” Nandan Nilekani, the architect of India’s biometrics program, wrote in an article. “If AI can serve India’s classrooms, clinics, and farms, it can serve the world.” The Economist magazine last month.

Some of this is already starting to happen, as apps like MahaVISTAAR and others have shown.

Artificial intelligence brings new opportunities, but it may disrupt India’s IT services sector, which has propelled its economy and created millions of jobs over the past 30 years.

With AI upending some of their business functions, billion-dollar Indian IT companies will become a major area of ​​“vulnerability,” according to Jefferies.

This vulnerability has already begun to appear.

The growth in IT back offices in India is Slow downStocks are performing poorly, employment has shrunk and wages have stagnated with the specter of new turmoil looming on the horizon.

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