India’s AI Strategy Is Quietly Shifting From Ambition to Use

The global mood around artificial intelligence has been one of frenzied investment which has now started to collide with apprehension of its disruptive potential. From today until 2030, big tech and hyperscalers are projecting a spend of $5 trillion on AI infrastructure – model development, data centres, GPUs, power and cooling. To make those investments lucrative, investors are hoping for a perpetual spiral of increasing valuations, which can only be justified if revenue compounds at breakneck speed. According to JPMorgan, a growth of 67% per year is required to take sales from $50 billion today to $650 billion a year by 2030, which is without precedent in the history of technology.

Meanwhile, investors fear that fast-developing AI tools will disrupt the revenues of the software companies and other industries. Tremors have been felt across industries from the disruptive power of AI - cybersecurity, logistics, wealth management, commercial real estate services, and legal – all have been hit by ‘AI Scare’ trades.

India's IT industry also finds itself caught in the transition. A bearish mood had already set in from the sabre-rattling around H1B visas and outsourcing. Coupled with the sentiment fanned by AI, the Nifty IT index has fallen by over 20% year-to-date, officially entering bear market. From a standing start in 1991, India has gone on to build a software industry with annual revenues over $227 billion. Not only that, India also produced a diaspora of technology professionals, who today sit in the corner offices of two multi-trillion dollar companies and countless other global companies.

This journey has puzzled many. While as an industry, it is recognised for its capacity to execute successfully, the success has come without origination of any global brand or technology. The inflection points in information technology - writing an operating system, making a productivity suite to compete with MS office, building an internet search engine, or producing a social media platform to challenge YouTube, Facebook or WhatsApp – saw India’s industry on the sidelines. Yet, it went on to become a world leader in what it did choose: scale, execution and trust.

Then came the release of ChatGPT and a widely telecasted interview with Sam Altman in June 2023 where he said “It's totally hopeless to compete with us on training foundation models. You shouldn't try.” It touched a raw nerve. In the following few weeks, a hectic news cycle got built around India building its own LLM and went on to fan the existing controversies around user data mining and data sovereignty.

And then came the Deepseek moment in January 2025, firmly establishing China’s entry into the AI arena. While it may have been only a coincidence, the timing of India’s Finance Ministry's circular on January 29, 2025, which stated -  "It has been determined that AI tools and AI apps (such as ChatGPT, DeepSeek, etc.) in office computers and devices pose risks to the confidentiality of government data and documents. It is therefore advised that the use of AI tools/AI apps in office devices be strictly avoided." - went on to be interpreted in myriad ways. Some called it throwing the baby out with the bathwater.

Fast forward to the India AI Summit 2026. The saner voices were heartening. "We are not trying to burn millions of GPUs building artificial general intelligence," said Abhishek Singh of IndiaAI. Nandan Nilekani, the non-executive chairman of Infosys and tech policy evangelist,  framed it even more pragmatically — ‘India should become the AI use case capital of the world.” As a cherry on the top, was a widely circulated missive from the Cabinet Secretariat requiring all officers at Deputy Secretary level and above to attend AI Impact Summit 2026, and submit proposals identifying AI use cases applicable to their own departments.

The move by the government to host the AISummit2026 heralds an AI embrace. The emphasis on finding use cases for the administration holds promise of ease of doing business. Simply by parsing our laws, rules, regulations, and forms for sanity checks could be transformative. There is infinite potential for optimising government websites, cataloguing information and just enabling pleasant navigation.

As the world leaps from digital transformation to AI led transformation, implementation at scale will still demand enormous engineering capacity at the level of each enterprise. And this may yet prove fortuitous for Indian IT behemoths. AI, the very technology threatening their existing model, may well turn out to be their next great opportunity, and doing what Indian IT has always done best — taking powerful tools built elsewhere and deploying them with scale and ingenuity across varied businesses around the globe and at home.

There is a lot left to win!