OPINION | The Mirage of Big Tech Investment in India: A closer look

Yet, behind these headlines lies a more sobering truth that policymakers must confront. These investment announcements are not a measure of India’s technological ascent. Rather, they are a reflection of the world’s need for a scalable, low-cost operating base to execute its digital ambitions. What we celebrate is, in fact, a familiar cycle with new vocabulary.

Outsourced Capability, Not National Innovation

We should be cautious if we are again positioned merely as the supplier of labour and infrastructure to global corporations that will develop and monetise intellectual property elsewhere. We should not risk mistaking outsourced capability for national capacity.

Take Amazon’s commitment, for example. The company now intends to deploy a cumulative 75 billion dollars in India by the end of the decade. Amazon plans to expand its logistics chain, strengthen its cloud infrastructure, scale export enablement, and roll out AI-driven digitisation tools for 15 million small businesses. These are undoubtedly valuable for commerce and consumer convenience. However, they are not foundational to Indian innovation in emerging technologies. They reinforce India’s role in global supply chains rather than opening new frontiers in domestic research or product development.

Similarly, Microsoft’s 17.5-billion-dollar pledge is centred on hyperscale infrastructure. It will expand data centre capacity and embed AI in national digital platforms. It also promises training programmes to prepare the workforce. While these are necessary interventions in a rapidly growing digital economy, none of them contribute to the creation of intellectual property that India can own or monetise. They strengthen Microsoft’s cloud dominance in one of the world’s most populous markets but do not enhance India’s sovereign AI capability or independent research infrastructure.

Google’s upcoming AI hub in Andhra Pradesh echoes the same story. A data centre is important for compute liquidity, yet it is not an innovation engine in itself. It serves as a backbone for products conceived and controlled outside India. It offers jobs, often of an operational variety, but does not help build India’s next wave of scientific research, hardware design, or AI frameworks.

Structural Challenges to Innovation

The concern is that we mistake the type of investment for what it is not. India has lived with this model since the 1990s when IT-enabled services opened doors for millions. The language has evolved from BPO to KPO to GCCs and now to AI operations. The underlying economic logic is that India offers cost arbitrage and a large talent pool.

A deeper question arises: why has India remained at the periphery of innovation despite three decades of being a global tech hub? The answer lies in our structural weaknesses. India invests far too little in research as a percentage of GDP. University-led innovation remains limited, and the private sector under-invests in R&D because returns are slow and uncertain. These systemic limitations have created a cycle where India becomes the world’s execution centre, but not its thinking centre.

In public discourse, this reality is often dressed up as national technological progress. Policymakers must resist this temptation. If these investments were truly transformative, they would be anchored in large-scale research, original product engineering, hardware manufacturing at the frontier, and deep partnerships with academic institutions. They would shift India from being a service destination to an innovation leader.

The Need for a Strategic Policy Shift

There is another risk that cannot be ignored. The world is in the early stages of an AI-driven productivity shift. Big Tech companies and technology firms have already laid off thousands of workers as automation becomes more capable. Stuart Russell, one of the world’s most respected AI scholars, has warned that even CEOs are not immune to replacement.

Against this backdrop, the promise of large-scale job creation from these investments must be viewed with healthy scepticism. Corporate optimism is often designed to align with political narratives, but it must not replace independent policy judgement.

India must decide what it wants from the global technology race. If the goal is employment generation at scale, then we must acknowledge that the next decade of tech work will not resemble the last. AI will automate the very tasks on which India’s outsourcing economy is built. If the goal is domestic innovation, then our current strategy is insufficient.

India must also integrate digital sovereignty into its policy thinking. The core assets that power the AI economy—such as data, compute, cloud infrastructure, and foundational models—have become strategic resources that influence national security, public service delivery, and economic resilience.

When India welcomes large-scale Big Tech investments, it must evaluate them through a sovereignty lens and identify where foreign dependence could weaken long-term capability. Strategic autonomy in the digital domain is not built by the volume of capital deployed, but by the nature of control retained.

Conclusion: Embracing a New Vision for India’s Tech Future

The global context makes this even more urgent. Europe is building regulatory walls to secure its digital space. The United States is investing heavily in secure compute and advanced chips. China treats AI as strategic infrastructure. Even smaller nations are creating sovereign AI stacks to reduce vulnerability. India must recognise that digital power is now geopolitical power.

A realistic approach begins by acknowledging what India has built well. The digital public infrastructure stack is a global benchmark. India’s startup ecosystem has depth and ambition. The talent base is significant and increasingly diverse. These strengths must serve as the foundation on which India builds its next chapter.

India needs a policy shift anchored in three principles. First, public investment in foundational research must rise sharply. Innovation ecosystems only flourish when governments invest in long horizon science and technology. Second, India must shape incentives that require global firms to co-create intellectual property locally, not merely operate here. Third, the country must build regulatory frameworks that ensure fair valuecapture from data and compute so that Indian society benefits from the digital infrastructure it enables.

(Srinath Sridharan is Author, Policy Researcher & Corporate Advisor, Twitter: @ssmumbai.)

Views are personal, and do not represent the stand of this publication.