India’s biggest strength in artificial intelligence lies in developing practical applications, while the country is also building the data centres, connectivity and digital systems to support the next phase of growth, Union Minister Ashwini Vaishnaw said in an interaction with Morgan Stanley India Equity Strategist Ridham Desai.
Vaishnaw added that India’s established information technology industry gives it a strong advantage in understanding business needs and creating technology solutions for companies. “Our biggest strength is in the applications layer,” he said.
At the same time, the minister stressed that AI applications cannot grow without reliable digital infrastructure. This includes data centres, telecommunications networks, cloud systems, computing capacity and digital public platforms.
Data centres gain importance in India
Ashwini Vaishnaw identified data centres as one of the areas where India is making strong progress. These facilities store and process the large volumes of data required by AI systems, online services, businesses and government platforms.
“Data centres are one area where we are playing well,” he said, pointing to India’s renewable-energy capacity as an important advantage. Around 250 gigawatts of India’s power-generation capacity currently comes from renewable sources, according to the minister.
The availability of cleaner power could help India support the rapid expansion of data-centre infrastructure. Data centres require a continuous and dependable electricity supply because they operate around the clock. As demand for cloud computing, digital payments, online platforms and AI services increases, the need for such facilities is expected to grow.
India’s progress in renewable energy could also help data-centre operators manage their environmental impact and meet the growing demand for lower-carbon digital services. The development of data centres is therefore linked not only to technology but also to energy planning and infrastructure investment.
AI startups focus on applications
While data centres provide the underlying infrastructure, Indian companies are increasingly focusing on the applications layer—the part of AI that users and businesses directly interact with. Vaishnaw said nearly 80 per cent of the startups being established now are offering AI-based solutions. These startups are working on products and services designed for business, industry and consumers.
India’s existing IT ecosystem gives these companies a base of skilled professionals and experience in serving global enterprises. According to Vaishnaw, Indian technology companies understand enterprise requirements and can develop solutions around those needs.
This combination of business knowledge and technical capability could help India build AI products for sectors such as finance, healthcare, manufacturing, logistics, education and public services. The country’s opportunity, therefore, is not limited to developing foundational AI models. It also includes applying AI to real-world problems at scale.
5G expands the digital base
Vaishnaw also highlighted India’s progress in telecommunications. Around 90 per cent of the country now has access to 5G, making India the world’s second-largest 5G ecosystem, he said. A wide 5G network can support faster communication between people, machines and digital platforms. It can also help businesses use technologies such as automation, connected devices, remote monitoring and real-time data analysis.
For AI-based services, strong connectivity is essential. Applications often need to move large amounts of data between users, devices, cloud platforms and data centres. Wider 5G coverage can improve the performance of these services and make them more accessible outside major urban centres.
The expansion of 5G is part of a broader effort to create a digital infrastructure that supports both established companies and new startups. Better connectivity can help businesses reach more customers and allow developers to build services for a larger section of the population.
Digital public infrastructure opens access
The minister also underlined the role of digital public infrastructure in supporting innovation. Such infrastructure allows companies to build new services on open and widely available digital systems instead of creating every basic function themselves. Vaishnaw said this approach was important for preventing technology from being controlled by only a few companies.
“When we say democratised technology, we mean that technology should not be left in the hands of a few,” he said.
By making core digital systems broadly accessible, India can give startups and smaller businesses an opportunity to create new products. Companies can focus on solving specific problems rather than spending their resources building basic payment or identity systems from the beginning.
He added that this model can encourage competition, reduce entry barriers and support the development of services for different income groups and regions. It also connects India’s digital infrastructure with its larger objective of inclusive growth.
Electronics manufacturing supports AI infrastructure
Vaishnaw compared India’s progress in digital and AI-related infrastructure with its development as an electronics manufacturing hub. He said India built its electronics ecosystem gradually. The country first focused on assembling finished products and then moved towards the production of modules, sub-modules and components.
“So step-by-step, building this entire ecosystem,” Vaishnaw said. “Because of this strategy, in a period of the last decade, we have been able to establish ourselves as an important electronics manufacturing destination.”
The minister suggested that the same step-by-step approach could help India develop capabilities in newer areas, including semiconductors and advanced computing infrastructure. A stronger domestic manufacturing base could support the production of equipment used in telecom networks, data centres, electronics and AI systems.
Developing these capabilities could also reduce dependence on imported components and create new opportunities for companies involved in design, manufacturing, assembly and testing.
Semiconductor design capabilities grow
India’s role in the semiconductor industry is not limited to manufacturing. Vaishnaw said the country accounts for 20 per cent of the global semiconductor design workforce. The government has also provided advanced chip-design tools to 318 universities, he said. Students are using these tools to design chips that are later fabricated, assembled and tested at a semiconductor laboratory.
Access to professional design tools can help build a larger pool of engineers with practical semiconductor experience. Over time, this may strengthen India’s ability to design chips for telecommunications, automobiles, consumer electronics, industrial equipment and AI-related systems.
The development of semiconductor design and manufacturing is closely connected with data centres and digital infrastructure. Modern computing systems require advanced processors, memory, networking equipment and other specialised components. A stronger semiconductor ecosystem could support India’s wider technology ambitions.
Infrastructure improves manufacturing competitiveness
Ashwini Vaishnaw also linked digital infrastructure with improvements in physical infrastructure. He said railway freight volumes had increased from about 1,000 million tonnes a decade ago to 1,670 million tonnes currently.
Improved railway operations can help reduce logistics costs and move goods more efficiently. This is important for manufacturers, electronics companies, data-centre operators and other industries that depend on the reliable movement of equipment and components.
Lower logistics costs can make India more competitive as a manufacturing destination. They can also support the development of technology clusters where factories, suppliers, warehouses, ports and digital networks operate together.
Minister Vaishnaw suggested that India’s digital transformation is being supported by improvements in transport, energy and industrial infrastructure. Data centres and AI applications need more than software and skilled workers; they also require electricity, connectivity, equipment and efficient supply chains.