Is India On Track To Become The World’s Most Powerful AI Hub?

If you look at the global AI landscape today, India is unmistakably on the map – and they’ve put themselves there very intentionally. A few years ago, the discussion centred mainly on AI adoption and outsourcing, but now, it’s about infrastructure, talent, investment and innovation.

But, does all this add up to India becoming the world’s most powerful AI hub? Or, are we witnessing something more tentative and regionally defined?

The short answer is complicated for a plethora of reasons. India’s AI ecosystem is growing with impressive momentum, and there are many players contributing to this momentum, but transforming that into global leadership requires more than ambition. It’s about more than just who receives investment.

Tax Breaks and Data Centre Incentives: An Invitation to the World

One of the most dramatic moves in India’s AI strategy appeared in the 2026 budget – a zero-tax incentive for foreign companies locating cloud and data infrastructure in Indian data centres through 2047. According to Reuters, this 20-year tax holiday is meant to give tech giants confidence that long-term investments in India won’t be penalised with retroactive taxes. It’s about long-term faith.

That matters because AI, particularly generative AI and large-scale machine learning, is driven by data storage and compute power. India’s push to fill this critical infrastructure gap is essential if it wants to become more than just a service economy – more than just a country that manufactures and provides labour to the rest of the world.

This policy, coupled with major data centre deals from companies like Google (which is investing around $15 billion in a new AI hub, as announced towards the end of 2025) and other cloud players, suggests India isn’t just participating in AI development – it’s very intentionally paving the way for sustained global workloads to run from Indian soil.

Talent, Data and Innovation-Friendly Conditions

India’s strength has always been its talent pool, there’s no doubt about it. With one of the largest populations of engineers and tech professionals in the world, India also boasts a rapidly expanding AI workforce, and its growth is far from slowing down. According to global labour data, India is ranked among the top countries for AI skill penetration, with a growing number of AI-trained professionals and researchers contributing to open-source projects.

That human capital advantage is reinforced by education and research institutions such as the IITs, which have increasingly prioritised AI curricula and research funding.

But talent alone doesn’t make a hub. Innovation ecosystems thrive where startups can access funding, markets and customers.

Now, India’s startup scene is vibrant – it’s home to tens of thousands of new companies, many built on AI – but they still often aim early for global markets rather than building domestic products that scale internationally. This reflects a dual identity – India is both a source of AI talent and services and a consumer of foreign AI models and technologies. That is, it’s home to a great deal of potential, but potential needs infrastructure to be realised.

Public-Private Collaboration and Global Strategy

Another important piece of the puzzle is global positioning. India isn’t just building tech – it’s going way further than that. Rather, it’s trying to shape the global conversation around AI.

The upcoming India-AI Impact Summit, set to be held in Delhi in later this year, represents a far larger effort to bring global stakeholders together, especially voices from the Global South, on topics ranging from safe and trusted AI to inclusive innovation.

There’s also active investment in startups through collaborative programs that connect Indian innovators with global innovation hubs, like partnerships with Station F in Paris and other leading accelerators in the region. These initiatives reflect an understanding that raising India’s profile in AI isn’t just about building infrastructure at home – it’s about embedding Indian founders and ideas in the global ecosystem.

If this is successful, there’s no telling how successful the Indian AI ecosystem may become.

Infrastructure Ambitions and Industry Support

In addition to data policies and tax incentives, India is very actively expanding semiconductor and compute infrastructure, both of which are foundational components of any AI powerhouse. According to the Times of India, the government’s Semiconductor Mission 2.0 aims to build local capabilities in chip fabrication and advanced materials, which would then position India to be less dependent on foreign suppliers in the long run – a potential game changer.

Private sector leaders are joining the push as well. These efforts are, undoubtedly, necessary but not sufficient on their own. According to industry analysts, India still needs to close gaps in data centre capacity and power infrastructure if it hopes to capture more than a fraction of global AI workloads.

Challenges on the Road to Global Leadership

India may be seeing a great deal of momentum, but it’s a lot more complicated than that. Today, AI leadership is dominated by a few major players, the US and China most prominently, whose infrastructure, investment and AI research communities pretty much dwarf those of any other country. But, India’s approach has been a lot more distributed and deliberate, leveraging strengths in services and talent first, and now slowly building heavier infrastructure.

There’s also the question of models and platforms. Most of the foundational AI models that are used globally are developed by a small number of companies outside India. While there are efforts to build indigenous models and AI platforms that are tailored to local needs, they’re just not yet at the scale or market influence of OpenAI’s GPT series, Google’s offerings or any major Chinese counterparts. They’re just not quite in the same league just yet.

Also, building an AI hub means excelling not only in research and infrastructure, but in commercialising AI for products and services that have real impact and that are able to capture market share globally. And, this is a leap that many Indian AI firms are still striving to make.

India May Be On Track, But Global Leadership Is Not Guaranteed

India’s AI trajectory is impressive – we’re talking policy incentives, massive investment commitments, global summits and a very large, very skilled workforce, all of which point towards a future in which India is a major AI hub. But, simultaneously, becoming the world’s most powerful AI hub and surpassing established superpowers remains an uphill climb.

The country’s next decade will be defined by whether its investments translate into globally competitive AI innovations and whether its ecosystem can support not just infrastructure and skills, but also world-leading technology products. Will India just be part of the AI race, a mere resource, or will it be able to emerge as a power in itself?

If recent trends are anything to go by, India’s rise in the AI world isn’t theoretical anymore; it’s very real. But, the question now is whether the momentum will carry it all the way to the top…