Leading Indian equity indices are down 10% in US-dollar terms from their September 2024 peak. Over the same period, Korea is up 80%, Taiwan 46%, and Japan and China 39% and 31% respectively. Foreign investors have been pulling money out of India.
They say India simply doesn’t have an AI story.
The latest note from Citrini Research all but writes an obituary for India’s $200 billion IT-services export industry.
The Nifty IT Index is down 20% from its December 2025 peak, shaken further by Palantir’s earnings-call boast that its AI agents can compress three to four years of SAP integration work into a couple of weeks. Weaker exports would inevitably weigh on the currency as well.
Earlier this year at Davos, the IMF attempted to place India in the “second grouping” of AI players—a neat bit of polite-sounding relegation.
It is against this darkening market mood that India hosted the India AI Summit last week, the first of its kind in the Global South. The heads of France, Spain, Switzerland, the Netherlands and Brazil descended on New Delhi, joined by a broader constellation of global leaders.
More than a hundred CEOs and AI powerbrokers from Alphabet, OpenAI, Anthropic, Microsoft and Qualcomm packed the halls—effectively assembling the world’s AI high command on Indian soil.
Does hosting a summit put India on the AI map? Can India claim the same league as the US and China without a marquee foundational model to point to? Will AI unlock a billion dreams—or crush them through structural joblessness? And will foreign investors find a reason to return?
Before drawing conclusions, it’s worth examining the key messages that emerged from the Summit.
1) Countries See India as the Undisputed Third Pole in a Multipolar AI World
The sheer presence of so many heads of state at the Summit—and the parade of leaders from Europe, Latin America, Africa and the Middle East visiting India in just the first seven weeks of 2026
— speaks volumes. Visiting India was not a courtesy stop; they want close alliance with the third node of the changing global order, India.
In a world where the US is enforcing tariffs and China is holding countries hostage to its supply chain, India stands out as the rare major power still building bridges, signing agreements and inviting collaboration. A vast talent pool on one hand, a massive market on the other — India offers what neither Washington nor Beijing currently does: partnership without coercion.
2) US Big Tech Sees India as an Irreplaceable Talent Base and a Billion-User Market
The turnout of the world’s top tech CEOs—and the heads of every major AI lab—makes one thing clear: for US Big Tech, India is now a critical AI market, both as a talent reservoir and as a revenue engine. It explains why Dario Amodei, CEO of Anthropic, has visited India twice in four months.
* Google is committing $15 billion to data centres and a full-stack AI hub.
* Amazon, already $40 billion invested in India, is adding another $35 billion for AWS cloud and AI.
* Microsoft is deploying $17.5 billion across Azure, sovereign AI solutions and broader AI infrastructure.
* OpenAI, for whom India is now the largest user market with roughly 100 million weekly ChatGPT users, is partnering with Tata on sovereign AI.
* NVIDIA is supplying 21,000 Blackwell Ultra GPUs for a $2 billion hyperscale compute hub with Yotta — one of the largest AI clusters in Asia.
3) India’s Sovereign Project Is to Democratise AI for a Billion People
The Government of India’s message out of the Summit could not have been clearer: it is fully embracing AI — and intends to democratise it. In India’s framing, AI compute will be a public utility.
To that end, the government has assembled roughly $200 billion in public-private commitments to build a national compute grid of more than 50,000 GPUs, around 35,000 of which are already online. Compute is available for under a dollar an hour to researchers, universities, start-ups and developers working on healthcare, agriculture, education and other public-interest problems.
While American AI firms chase $1,000-an-hour workflows, India is backing engineers focused on solving $5-to-$10-an-hour problems — but solving them for a billion people.
This approach is rooted in a decade of population-scale digital delivery, from identity to payments. Frugality is the hallmark of Indian innovation. The same frugality shows up in Sarvam AI, a government-backed AI startup, which built 30-billion- and 101-billion-parameter models for under $50 million. India’s sovereign strategy is unapologetically domestic: open-source models, native-language capability, data housed in India, and compute running in renewable-powered Indian data centres.
4) India’s Entrepreneurs Are All In — Yet Remain the Wildcard
Back in Davos, when India was slotted into the “second tier” of AI players, India’s IT minister, Ashwini Vaishnaw, pushed back eloquently: India is playing across all five layers of AI — applications, models, chips, infrastructure and energy — but its biggest value-add, and highest returns, will come from the application layer.
That thesis remains unproven, in India and also elsewhere. Use cases, user adoption and monetisation are still works in progress outside the foundational-model companies.
It is worth recalling what Nicolai Tangen, CEO of Norway’s $2 trillion sovereign wealth fund, said at Columbia’s Graham and Dodd luncheon last year: the ultimate determinant of business success is leadership. It is leaders — their energy, passion and vision — that carry companies, old and new, through economic cycles, industry shifts and technological disruptions.
The same will prove true of companies in the AI era — in India as much as in the United States. The question is whether India has the next generation of hungry leaders — and an ecosystem that allows them to succeed.
Reflecting on the speeches at the Summit, what stayed with me wasn’t just Naveen Tewari outlining Glance AI or his vision for agentic commerce. It was his remark that he feels the same energy today that he did twenty years ago when he was building InMobi, India’s first unicorn. Vijay Shekhar Sharma of Paytm articulated a high energy, lofty vision for Paytm – AI can democratise credit at population scale. All Global CEOs echoed a sentiment: India’s energy is palpable. With roughly 200,000 start-ups, including 2,000 focused on AI, the pipeline in India is anything but thin.
There is an AI story in India. With roughly $200 billion being committed to AI-related investments over the next few years and deepening collaboration with leading US AI players, India is building a credible AI ecosystem that deserves serious attention.
India is poised to leapfrog the West in many sectors like it did in financial inclusion and mobile connectivity.
The Indian IT-services sector does face real risk. AI-driven disintermediation raises the likelihood of job losses, could dampen discretionary spending and add pressure to the rupee. These concerns are legitimate and should not be dismissed.
India has a much bigger, compelling growth story outside of the IT sector. Manufacturing, defence, renewable energy, data centres and AI infrastructure are scaling simultaneously. Recently signed free-trade agreements with Europe and the UK, a tariff deal with the US, and ongoing negotiations with Israel and the GCC provide structural tailwinds that extend well beyond the IT economy. These sectors create jobs, broaden consumption and support the currency—more than offsetting disruption in IT services.
India is still a brick-and-mortar economy. As GDP per capita rises, India’s physical needs remain vast. The country still needs housing—and those homes still need plumbing, paint, flooring, appliances and furniture. India still needs hospitals, railways, metros, airports, highways and ports— all of which must be built in the real world. Elon Musk’s Optimus robots are not pouring concrete in India anytime soon.
India is the fastest growing large economy. In an economy growing above 6% in real terms and often around 10% in nominal terms, companies serving these foundational needs are positioned to compound earnings, AI revolution or not.
India is growing the pie. Contrast this with the United States. Most sectors are at risk from AI- driven innovation. The US has become a disruption-driven, winners-and-losers market.
Entire segments of the stock market now move on a blog post or a line buried in AI earnings call. The terminal value of whole slices of the economy — software, payments, legal services, education, diagnostics, the gig economy and commerce — is being openly questioned. That uncertainty is beginning to spill beyond equities into concerns around mortgages, credit cards, insurance and pensions.
Jeff Bezos once observed that while people obsess over what will change in the next ten years, the more important question is what will not change—because durable businesses are built on certainties.
India has a durable investment thesis. In a world fixated on identifying AI winners and losers, India remains, at its core, a long-term compounding, bricks-and-mortar economy. Despite the risks to its IT sector, AI will enable India to leapfrog the West across core sectors.
This is the India story the market is mispricing. This is the India story that foreign investors should be underwriting.
(Sachee Trivedi is the founder of Trident Capital Investments- an Indian public equities FPI fund. She lives in Luxembourg.)
Views are personal and do not represent the stand of this publication.
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