AI's future in India: A journey marked by small wins and bigger gaps

Even as Microsoft Chairman Satya Nadella, who was in India last week, asked India to leverage its mathematical talent to undertake core research in artificial intelligence (AI), the country’s aim to become a major player in the global AI sweepstakes faces numerous challenges.  For instance, despite all the noise surrounding AI, venture capitalists are still not making big bets on companies in this space, unlike globally.  According to data from Traxcn in 2024, the total funding raised by technology startups providing AI as a service and AI infrastructure was $145.9 million through 29 rounds — just 1.2 per cent of the $11.2 billion raised by all startups collectively.  From 2019 to 2024, the total amount of funds raised by these companies collectively is only $2.25 billion — an average of $375 million per year.  In the Global AI Index by research outfit Tortoise, which ranks 83 countries on AI capacity based on 122 indicators, the good news is that India has entered the bottom slot of the top 10 for the first time in 2024. 

  However, it also identifies key areas of challenge. India is ranked very low, at 68, when it comes to AI infrastructure, which will require large investments. It ranks 14 in terms of AI research due to the narrow pool of specialised AI research scientists, and 13 in terms of the development of fundamental platforms and algorithms upon which innovative AI projects rely. The country also needs to improve its government strategy, where it is ranked 11. Also, it ranks 13 on the commercial criterion, which focuses on the level of startup activity, investment, and business initiatives based on AI — an area where it is lacking.  While India is ranked second in terms of talent pool (after the US), the research cautions that much of the AI talent moves overseas. Moreover, the country’s success in AI has not translated into high private investment levels or computing capacity.  On the AI patent front, according to the World Intellectual Property Organization report on generative AI (GenAI) in 2024, India’s share of all GenAI patent families filed worldwide between 2014 and 2023 is 3 per cent, compared to China’s staggering 70 per cent, the US at 11 per cent, South Korea at 8 per cent, and Japan at 6 per cent.  At another level, there is no Indian company or research institution in the top 20 patent owners list for GenAI worldwide based on data from 2014-2023, which is dominated by Chinese players, including Tencent, Baidu, Alibaba, and ByteDance, among others.  However, the good news for India is that it has the fifth-largest number of GenAI patents (1,350 between 2014 and 2023) in the world. More importantly, their growth in patents at 56 per cent per year is faster than even China (with 38,210 patents), which is growing at 50 per cent, as well as all other countries like the US, South Korea, and Japan, which are ahead of India.  That’s not all.  India has become the largest market for AI mobile applications (apps) in the world. According to Sensor Tower, in the first eight months of 2024, India accounted for 21 per cent of the downloads, exceeding 2.1 billion. The popular applications downloaded include ChatGPT, Microsoft CoPilot, and Google Gemini.  However, there is a big difference.  Indians mostly use these apps for free, contributing to only 2 per cent of the app revenues for these apps, compared to 68 per cent coming from markets in North America and the US.