The narrative we’re sold is one of American and Chinese dominance in artificial intelligence. It’s a simple, compelling duopoly. But this view misses the plot entirely. It overlooks the rise of “middle powers” in tech, countries that are less concerned with winning the “my model is bigger than your model” contest and more focused on something far more practical: making AI actually work at scale. And right now, no one exemplifies this better than India.
### So, What’s Really Happening with India AI Adoption?
Let’s get one thing straight: the India AI adoption story isn’t about chasing the biggest Large Language Model. It’s about application. It’s about leveraging technology to solve real-world problems for a population of 1.4 billion people, from optimising supply chains for a local kirana shop to improving crop yields for a farmer in Punjab.
This isn’t just aspirational talk. A recent report from SAP and Oxford Economics, highlighted during the SAP TechEd 2025 conference, reveals that Indian businesses are earmarking a significant $31 million for AI investments. Now, I know what you’re thinking. In a world where single AI funding rounds can top a billion dollars, $31 million sounds like pocket change.
But that’s precisely the wrong way to look at it. This isn’t speculative venture capital cash being thrown at a moonshot project. According to the Deccan Herald’s coverage of the report, this is planned, strategic investment from established Indian enterprises. It’s not “what if” money; it’s “how-to” money. This figure signals a deep-seated commitment from Indian businesses to integrate AI into their core operations, not just as a flashy PR move but as a fundamental tool for growth and efficiency.
Think of it this way: Silicon Valley is building hyper-expensive, Formula 1 race cars. They are incredible feats of engineering, designed to shatter speed records on a pristine track. India, on the other hand, is busy building a nationwide network of reliable, fuel-efficient motorbikes. They might not win a drag race, but they are what will actually get an entire nation moving.
### The Strategy: Cost-Effective AI for the Masses
What drives this pragmatic approach? Two key factors: necessity and ingenuity. India’s market is incredibly price-sensitive. You can’t just deploy a costly, cloud-based AI solution and expect widespread adoption. This has forced a focus on cost-effective AI, creating a vibrant ecosystem of startups and developers who are masters of optimisation.
This is where the idea of emerging market innovation really shines. When you don’t have infinite resources, you’re forced to be more creative.
– Localised Solutions: Indian companies are building AI tools trained on local data sets and tailored to regional languages and dialects, something a global model often struggles with.
– Resource Optimisation: There’s a huge emphasis on creating smaller, more efficient models that can run on less powerful hardware, making them accessible to small and medium-sized businesses (SMBs) that form the backbone of the Indian economy.
– Leapfrogging: Just as many in India skipped landlines and went straight to mobile phones, businesses are bypassing legacy IT systems and jumping directly to AI-powered platforms for everything from customer service to financial management.
This isn’t happening in a vacuum. It’s being powered by a distributed network of talent and infrastructure.
The Unsung Heroes: Regional Innovation Hubs
While the world might fixate on one or two tech capitals, India’s strength is its decentralisation. We’re not just talking about Bengaluru, the country’s celebrated “Silicon Plateau.” Thriving regional innovation hubs in cities like Hyderabad, Pune, Chennai, and Gurugram are becoming crucial centres of gravity for AI development.
These hubs are creating a powerful flywheel effect:
– They attract top talent from engineering colleges, preventing a total “brain drain” to one or two megacities.
– They foster collaboration between academic institutions, established corporations, and nimble startups.
– They become testbeds for solutions tailored to local industries, whether it’s FinTech in Mumbai or advanced manufacturing in Pune.
This collaborative environment, as pointed out in the analysis of SAP’s collaboration with Oxford Economics, is crucial. It’s where strategic thinking from economic analysts meets the technical prowess of software companies, creating a potent mix for sustainable growth. These aren’t just office parks; they are ecosystems where practical, scalable AI solutions are born.
What’s Next? From Follower to Rule-Maker
The trajectory is clear. India is moving from being a consumer of technology to a creator of it, and AI is at the heart of this transition. As these cost-effective AI solutions mature, they won’t just stay within India’s borders. They are perfectly designed for export to other emerging markets across Southeast Asia, Africa, and Latin America that face similar challenges and have similar resource constraints.
India is writing a new playbook for AI deployment, one that prioritises accessibility and real-world utility over raw computational power. The long-term implication is a potential rebalancing of the global AI landscape. While the US and China might continue to dominate the foundational model race, India could become the undisputed leader in practical, applied AI. It could set the standards for how AI is used to empower economies and societies, not just corporations.
The West is focused on building Artificial General Intelligence (AGI). India is focused on building an Artificially Intelligent nation. One is a fascinating scientific pursuit; the other is a socioeconomic transformation in progress.
So, as we watch the tech titans battle for supremacy, it’s worth asking: where is the future of AI really being built? Is it in the gleaming labs of California, or in the dynamic, and sometimes chaotic, innovation hubs of India?
What do you think? Is India’s pragmatic, cost-effective approach to AI more sustainable in the long run than the high-stakes, high-spend strategy of the West? Let me know your thoughts in the comments below.
References
– Deccan Herald. (2024). Indian businesses are investing 31 million in artificial intelligence. Available online
– SAP and Oxford Economics. (2024). Report on AI Investment in India. Referenced during SAP TechEd 2025.
