'What the government is doing would be a drop in the ocean. It has to be matched by investments by industry.'
India risks losing its long-held edge in global technology services unless large technology firms sharply increase investment in artificial intelligence, a senior government official warned on Wednesday.
Additional Secretary at the ministry of electronics and information technology (Meity) Abhishek Singh said government funding for deeptech and AI initiatives is insufficient on its own and must be matched by industry capital to safeguard the sector's competitiveness as machine-driven coding tools advance.
The stakes, he warned, are high. India's IT services industry -- built over the past three decades on the strength of its software engineering talent -- is facing direct pressure from rapid advances in machine intelligence.
"Our prime advantage has been the cognitive power... of Indians to solve world problems," Singh said during a discussion at the Bengaluru Tech Summit.
This advantage, he added, is now being challenged by "AI bots and AI code generators and the AI tools provided by OpenAI and Anthropic and Google," which are increasingly competing with human developers.
Without accelerating skill development, he cautioned, "We run into a huge risk and if that happens, we would have a lot to lose."
To mitigate that risk, Singh said the government is expanding funding for AI applications, foundational model development, and compute infrastructure.
But he stressed that State-led capital is insufficient: "What the government is doing would be a drop in the ocean.
"It has to be matched by investments by industry, and funding support from the venture capital investors."
Singh noted that government support is designed to catalyse innovation, but the long-term trajectory will depend heavily on private-sector commitment.
"What I don't see happening in India particularly is investments that can be done by our big tech companies. That is what we need to target," he said, pointing to established Indian technology firms with comfortable margins and sizable cash reserves.
These firms, he said, need to invest more into building AI applications and solutions.
India crossed $20 billion in combined new and cumulative commitments to artificial intelligence this year, according to estimates from the Meity.
The milestone, however, still leaves the country trailing far behind the US and China in the global AI investment race.
The US is by far the biggest investor in AI, both in the private and government sectors.
Private investment totalled $471 billion from 2013 through 2024, including $109 billion in 2024 alone, according to the Stanford AI Index report.
In the US, a surge of government spending and a rush of commercial opportunities have fuelled an explosion of AI startups.
China remains a distant runner-up in private-sector AI spending.
From 2013 to 2024, Chinese companies invested $119 billion in the technology, including $9 billion last year.
The UK invested roughly $26 billion in AI between 2013 and 2023 --about 8.3 per cent of its GDP -- making it the world's third-largest backer of the technology, according to industry data.
Saudi Arabia has announced plans to deploy $100 billion to position itself as the Middle East's AI hub.
India's momentum has accelerated on the back of several big-ticket commitments.
Google, this year, unveiled plans to build a $15-billion AI data hub in Visakhapatnam over five years -- its largest investment outside the US.
TCS has outlined a $5 billion to $7 billion plan for AI data centres.
Billionaire Mukesh Ambani's Reliance Industries Ltd may spend about $12-15 billion over the next few years on AI infrastructure that could include a giant 1GW data centre, Morgan Stanley said in a report.
Private equity funding has also surged in India, with AI startups attracting over $5.3 billion through October, according to the industry sources.
Meanwhile, the Indian government has set aside $1.2 billion to support the private sector to build domestic graphics processing unit infrastructure and support firms developing large language models, with several projects already underway.
Feature Presentation: Ashish Narsale/Rediff
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