By Vinod Dhall, Founding Chairman of CCI and Senior Adviser, Touchstone Partners
The Fourth Industrial Revolution is upon us, and is being powered principally by artificial intelligence (AI) combined with accompanying technologies such as advanced robotics, Internet of Things, machine-to-machine communication, and gene editing. As these converge into a single ecosystem, the innovations are game-changing—like the emergence of intelligent automation supported by agentic AI, mountains of data analytics, AI medical diagnosis at stunning speeds, individualised learning, and so on.
India has its own AI ambitions. Recently, BVR Subrahmanyam, the CEO of Niti Aayog, said that this “is a foundational transformation that will redefine how nations create wealth, deliver justice, and secure peace”, and that “The nations that harness AI responsibly will lead the next century”. He aptly called it “the Cognitive Revolution, where intelligence itself is being industrialised”. Some have termed this as the Imagination Age.
India’s vision for AI is wide, though admittedly, in some ways, we are catching up with the US and China who are competing for global AI supremacy. But India’s AI plans do not visualise this. They are more focused on AI sovereignty and shared prosperity with an emphasis on human and ethical values. According to a study by MDI Gurugram for the Competition Commission of India (CCI), the AI market is expanding at a bewildering pace. In India alone, it has grown from a mere $3.20 billion in 2020 to $6.05 billion in 2024, and is expected to expand to $31.94 billion by 2031.
The study observes that AI is progressively transforming Indian businesses. It holds the potential to boost productivity and innovation, and it is reshaping competition dynamics, business operations, and regulatory responses. AI is fundamentally restructuring how companies make decisions, with data analytics and automated decision-making aided by AI agentics. However, research indicates that the core area of work for almost 67% of respondent AI start-ups in India lies in the layer of building AI applications. Notably, 76% of the start-up respondents build their application solutions using open-source technologies which dominate India’s market.
Similarly, a joint survey by EY and CII notes that there is a strong momentum in AI adoption among Indian enterprises. Nearly half of the responding entities reported multiple live use cases of AI, and 76% of them believe GenAI will have a significant business impact. Over two-third of the enterprises feel ready to leverage AI, so it has to be seen to what extent AI fulfils its business potential. The survey further notes that AI is being widely used in banking, financial services, and insurance, healthcare, retail, e-commerce, logistics, and marketing, with applications including dynamic pricing, personalised recommendations, demand forecasting, and automated decision-making. In financial services, AI plays a critical role in streamlining operations, improving risk management, detecting fraud, assessing credit risk, and automating customer service. In healthcare, AI-driven diagnostics and drug discovery are gaining traction. Education, global positioning system and navigation, agriculture, social media, gaming, and astronomy are also witnessing AI integration.
India enjoys some significant advantages fuelled by its outstanding tech talent, rapidly growing economy, and vibrant start-up ecosystem, with reportedly 1,900 start-ups focussed on AI-driven solutions. In September, the Niti Aayog came out with a significant paper titled AI for Viksit Bharat: The Opportunity for Accelerated Economic Growth, which outlined the potential outcomes for AI-led value creation, raising productivity and efficiency, and measures for leap-frogging innovation. The ministry of electronics and information technology has launched an India AI Mission designed to foster and democratise AI growth by making the infrastructure for AI use, public data unique to our country and culture, and facilities for AI use in Indian languages widely available. It seeks to drive the development of indigenous large language models based on uniquely domestic data.
In India, the infrastructure for AI services is being provided by major digital players such as Microsoft, Amazon, and Google as well as by relatively new players like OpenAI, Perplexity, and Anthropic. They are competing fiercely and ramping up their capabilities, with many services being provided for free.
Huge investments are flowing into this field. TCS has announced an investment of $7 billion to set up a new data centre and Google has announced an even bigger investment of $15 billion for a mega data centre in Andhra Pradesh, with regional clouds for Delhi and Mumbai. In addition, Microsoft, AWS, Reliance, and Adani have announced substantial investments. The services of these players are the enablers of our vibrant start-up ecosystem and the widespread use of AI services by the ordinary Indian consumer.
Some players like Microsoft and Google have integrated their AI services into their other products, making them much more convenient to use. This has the potential to improve decision-making by automating mundane tasks, saving valuable time and providing intelligent assistance. For search, AI has made it easy to obtain a summary extracted from dozens of sources in one place. This demonstrates how AI, a general-purpose technology, can be used to meet different ends. The announcement of Google’s Gemini 3 model’s launch, with its extraordinary capabilities, has shaken up competition in this field.
Rival AI companies have an understandable grievance that integrating of their own AI into other products gives companies like Microsoft and Google an unfair competitive advantage in deploying and popularising their AI services such as Copilot and Gemini, and call upon regulatory action to curb such AI use. Such an approach, however, amounts to placing restrictive rails around a new and growing technology whose full potential is still unfolding. It would chill innovation in this area. Nothing should be done by an Indian regulator that becomes an obstacle in the early development of AI in India, especially when it promises immense benefits for the Indian consumer, enterprises, and research.