India’s Big Tech Tango: Opportunity, Ambition and Friction

“Very few countries in the world have this natural resource,” said Jensen Huang, founder and CEO of Nvidia, during a recent fireside chat with Mukesh Ambani, chairman and director of Reliance Industries Ltd. (RIL), in Mumbai.

Huang’s excitement reflects his belief that India offers a huge market for Nvidia’s chips, which will boost the country’s artificial intelligence ambitions – and, of course, boost Nvidia’s shareholder value. Ambani echoed Huang’s optimism and underlined India’s rise as an innovation hub, fueled by world-class digital infrastructure, after the US and China.

“India is fast becoming an innovation hub for the world,” Ambani said, emphasizing that partnerships with companies like Nvidia and Meta will help develop a skilled workforce capable of delivering AI services globally, thereby the world becomes “a better place”.

Both leaders also recognized Prime Minister Narendra Modi’s crucial role in driving AI adoption and transforming India into a leading digital society. India’s leadership is reflected in its role as founding member and lead chair of the Global Partnership on Artificial Intelligence (GPAI) during 2023-2024.

Self-reliance through global partnerships

Despite the enthusiasm, India’s efforts to build a robust technology ecosystem face both opportunities and challenges. The government’s efforts are in line with Modi’s vision Viksit Bharat (Progressive India), with the aim of reducing dependence on imports, developing domestic semiconductor manufacturing and broadening the Digital Public Infrastructure (DPI) framework from payments to healthcare and agriculture.

However, India recognizes that achieving self-reliance requires collaboration with global technology giants. Companies like Google, Microsoft, Meta, Nvidia and OpenAI are not only essential for boosting research and development (R&D), but also for generating employment. India’s AI and quantum computing missions require advanced infrastructure, making partnerships with companies like Nvidia crucial.

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Global technology companies have built a significant presence in India through Global Capability Centers (GCCs). These centers play a crucial role in deploying cloud-based public services, advancing smart city projects, supporting digital education and contributing to global R&D efforts. India also serves as a strategic alternative for companies looking to diversify their supply chains outside of China.

Apple is exemplifying this trend by exporting nearly $6 billion worth of Indian-made iPhones between April and September 2024, with sales expected to surpass $10 billion by the end of the year. Meanwhile, Indian companies are leveraging OpenAI’s APIs to build localized generative AI models, accelerating India’s AI ambitions.

Intertwined fortunes

High-profile visits by global technology leaders continue to underline India’s growing importance. Yann LeCun, Huang and Meta’s chief AI scientist, visited India in October, followed by Microsoft AI CEO Mustafa Suleyman’s planned visit on November 65. These engagements are in line with India’s drive to become a global hub for AI and GenAI (GenAI) development, with more such visits expected in the coming year.

The mutually beneficial nature of these partnerships is already clear. When Sam Altman, CEO of OpenAI, visited India in June 2023, he sparked controversy by raising doubts about India’s ability to develop a large language model (LLM) like GPT at a cost of $10 billion. His comments drew a sharp response from industry leaders Rajan Anandan and CP Gurnani, who vowed to prove otherwise. Although Altman later clarified his statement, it was a catalyst for efforts to build native AI models.

Today, Indian companies have rolled out several models trained in local languages, including Tech Mahindra’s Indus, Sarvam AI’s OpenHathi, Ola’s Krutrim AI, AI4Bharat, CoRover.ai’s BharatGPT and Two Platforms’ Sutra.

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Meta has also deepened its involvement in India. It runs Facebook, WhatsApp and Instagram – among the largest user bases in the world – and partners with Indian universities to advance research in language processing and healthcare. In collaboration with the Ministry of Skill Development & Entrepreneurship (MSDE), Meta recently launched two initiatives: an AI assistant for the Skill India Mission and five Centers of Excellence (CoEs) focused on Virtual and Mixed Reality.

During his visit LeCun expressed his admiration for India’s enthusiasm for AIespecially in vertical applications, but noted a lack of world-class research laboratories outside universities. He urged the Indian government to follow France’s example by setting up local research centers to retain talent.

Huang, whose company Nvidia is valued at more than $3 trillion, emphasized India’s strategic importance given its AI, semiconductor and quantum computing missions. These initiatives require GPUs, AI accelerators, and quantum processing units (QPUs). During a roundtable discussion with Indian CEOs of US companies in New York, Huang declared: “This is the moment for India.” Nvidia has partnered with Tata Group and Reliance to build an AI infrastructure, in line with Modi’s vision of India “producing its own AI – not exporting data to import intelligence.”

Regulation meets innovation

India’s relationship with global technology companies reflects both collaboration and tension. Governments around the world, including India, are grappling with issues of regulatory compliance, taxation, data sovereignty and monopolistic practices. India’s emphasis on data localization – requiring companies to store citizens’ data domestically – reflects global trends such as the EU’s Digital Markets Act, which aims to limit the influence of big tech companies.

India’s ambition to create a self-sustaining technology ecosystem is in line with efforts to reduce dependence on imports and address supply chain vulnerabilities. Yet achieving these goals requires global expertise, especially in AI and semiconductors. The government has agreed ₹10,371.92 crore on its AI mission, focusing on GPU manufacturing through public-private partnerships and local language model development.

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While India is among the world leaders with about 2,080 AI companies (Nasscom estimates suggest this number could exceed 3,000), its $8 billion AI investment lags far behind the US’s $250 billion and $95 billion dollars in China. Patent applications reflect a similar divide. China leads with 38,000 generative AI patents filed since 2013, compared to the US’s 6,000 and India’s 1,350. However, the 56% annual growth in AI patents signals India’s emergence as a major player.

Semiconductor production is another national priority. China has raised $47.5 billion for microelectronics, while the US has earmarked $50 billion to boost domestic chip production. India is also making progress ₹1.25 trillion in planned projects, including a semiconductor factory by Tata Electronics and Taiwan’s PSMC. While India’s initial focus is on 28nm chips – less advanced than 5-10nm nodes – this strategy offers sustainability as only 2% of global chip production uses sub-10nm nodes.

Building a win-win future

Governments and technology companies must strike a delicate balance between innovation and public interest. Involving companies early in policymaking, as evidenced by India’s success with UPI, can reduce resistance. Encouraging local data centers and enforcing fair competition policies, such as India’s regulation of Amazon and Flipkart, will ensure market integrity.

Ultimately, building trust and fostering collaboration between governments and technology companies will be critical to driving long-term economic progress. There are no shortcuts: India’s rise as a global technology hub depends on dealing with these challenges effectively.