Can India Compete in the AI Race Against Big Tech?

Thu Dec 11 2025 10:38:40 GMT+0200 (Eastern European Standard Time)

Amidst significant investments by Amazon and Microsoft, India is racing to boost its AI capabilities, but challenges remain in keeping pace globally.

Tech giants Amazon and Microsoft have made huge investments in India's AI sector, promising over $50 billion to build infrastructure and capabilities. Experts see India's efforts as a potential hedge against a global AI bubble, yet challenges like lack of computational infrastructure, investor skepticism, and competition from countries like China pose hurdles. Despite these, India is seeing rapid adoption of AI, especially among startups focusing on local challenges. The battle to keep AI talent at home and develop a sovereign AI model is crucial for the country's future success.

This week, tech giants Amazon and Microsoft pledged an eye-popping $50bn-plus combined investment in India, putting artificial intelligence (AI) in the spotlight.

Microsoft's Satya Nadella announced his company's largest investment ever in Asia - $17.5bn (£13.14bn) - to help build the infrastructure, skills, and sovereign capabilities needed for India's AI-first future.

Amazon followed suit, stating it would invest over $35bn by 2030, with substantial funding directed towards AI capabilities.

The backdrop to this is an interesting one, as global market fears of an AI bubble rise. Analysts like Christopher Wood of Jefferies suggest that India's stocks might offer a reverse AI trade - suggesting India could outperform if the global AI trend falters.

Foreign investors have moved towards Korean and Taiwanese tech, with Indian stocks lagging significantly.

The investments from Amazon and Microsoft raise questions about India's position in the global AI race.

While India has shown rapid AI adoption and growth in AI startup investments, experts argue the country still faces significant challenges. These include a reliance on foreign tech, insufficient computational infrastructure, and competition with nations like China, which has pledged large budgets for AI development.

Despite these challenges, India has a unique strength in its pool of AI talent. However, retaining this talent proves difficult as many seek opportunities abroad. Policies encouraging skilled professionals to stay and invest in local startups, particularly in using AI for social good, are essential for progress.