Will bold policy moves help India shape the future of AI?

Like the rest of the world, India, too, has been riding the Artificial Intelligence (AI) wave since OpenAI’s generative AI (GenAI) model ChatGPT rocked the tech world three years ago.

From boardrooms to policymakers everyone is discussing this disruptive technology. Not to be left behind, India has also sought to play catch-up in the AI race with the government selecting local firm Sarvam.AI under the IndiaAI Mission to build the country’s first foundational model. This comes six months after Chinese firm DeepSeek released its AI model, built on a more modest budget than OpenAI’s, showing the world that frugal innovations are possible even here.

Indian firms are also racing to build foundational models because of the enthusiasm among domestic users. Consider this: India has the largest user base for ChatGPT, accounting for 13.5% of monthly active users, comfortably ahead of the US at nearly 9%, as per data from technology investment firm Bond. And it isn’t just ChatGPT. Even for DeepSeek, India is the third-largest market, behind China and Russia.

But is India late to the game? “India has embraced AI with unmatched enthusiasm,” says Puneet Chandok, President of Microsoft India & South Asia. Some major companies like Apollo Hospitals, Bajaj Finserv and RailTel are embedding AI into workflows. For instance, Apollo Hospitals has teamed up with Microsoft to develop and implement an AI road map focusing on expanding Apollo’s remote healthcare platform globally and creating new healthtech solutions.

As per Microsoft, Indian enterprises are gaining as much as 5x returns on their GenAI investments, outperforming global averages. Yet, there’s a significant gap between consumer enthusiasm and enterprise-level innovation.

The emergence of agentic AI systems—where humans and machines co-pilot complex workflows—is expected to be another game changer.

The Bond report highlights how GenAI is driving double-digit productivity gains in the West. Consider Bank of America, whose AI-powered chatbot Erica serves over 40 million clients by offering real-time insights, bill reminders, budgeting assistance, and transaction alerts. Or Yum! Brands—the parent company of KFC, Taco Bell, and Pizza Hut—which has deployed AI to streamline restaurant operations by automating routine tasks such as inventory tracking, staff scheduling, and food preparation alerts.

Large companies in the US are integrating AI into business infrastructure, often enabling strategic decision-making and large-scale efficiencies. In contrast, India’s AI adoption, while enthusiastic, remains superficial for most enterprises.

Shekhar Kirani, Partner at venture capital firm Accel, believes the problem lies in Indian companies’ aversion to risk. In a conversation with BT, he explains that Indian firms are hesitant to back AI start-ups unless they have proven themselves in the Bay Area, in the US. “Our entrepreneurs are building innovative use cases,” says Kirani. “But Indian companies want validation from the Bay Area before trusting homegrown solutions.”

Nitin Mittal, Independent Advisor to Samsung R&D Institute, says there’s no doubt that India is a talent powerhouse. “But we lack risk capital and deeptech infrastructure to support foundational R&D,” says Mittal, who also served as Head of Technology Services at UIDAI.

The real gap, according to Mittal, lies in hardware design and development, where India continues to depend on global suppliers. He calls for focused policies to attract such specialised talent back to India.

Jaspreet Bindra, Founder of experiential learning company AI & Beyond, calls for a deeper shift in India. “The US and China are embedding AI into their national infrastructure. We’re still catching up in terms of digital readiness and sector-specific integration.”

As per Deloitte’s latest State of GenAI report, only 29% of the 200 Indian companies surveyed had scaled more than 30% of their proofs of concept. Major barriers include concerns about real-world errors, bias and hallucinations, and data quality.

These hurdles are compounded by the strategic choices Indian firms are making. Saurabh Kumar, Partner at Deloitte India, says most companies are buying off-the-shelf AI tools rather than building them in-house.

“This speeds up deployment, but limits customisation and innovation,” Kumar explains. “It also increases long-term dependency on external vendors.”

Automation of customer service remains the dominant use case, but there is appetite for AI across departments. Deloitte’s study points to interest in applying GenAI for IT, operations, marketing, and finance, where common use cases are document summarisation, competitive intelligence, knowledge management, customer sentiment analysis, claims processing in insurance, etc.

However, most of these applications are still incremental improvements, not transformative breakthroughs. “Indian enterprises need to move from AI-as-a-service to AI-as-core,” says Kumar.

Ganesh Gopalan, founder and CEO of Gnani.ai, which was recently selected under the IndiaAI Mission to build a foundational model, believes that AI adoption among Indian enterprises is gaining momentum. “The number of experiments happening now is 100x,” he says.

Gnani.ai primarily serves clients in the BFSI sector, where Gopalan notes that AI is no longer limited to customer experience. “We’re now seeing deployment in underwriting, reconciliation, claims processing, and more,” he adds.

However, he also points out that Indian enterprises remain “ruthlessly ROI-focused”. They are willing to experiment, but want results fast.

So, what will it take for India to evolve from an AI consumer to a creator? Experts agree that it’s not just about technology, it’s about a mindset change. Chandok of Microsoft believes culture plays a defining role. “Organisations that evolve from a ‘know-it-all’ to a ‘learn-it-all’ culture will unlock AI’s full potential faster than any algorithm can,” he says.

Meanwhile, Bindra warns that fragmented data ecosystems, regulatory ambiguity and shortage of AI-trained professionals in core industries continue to limit scale.

“India’s scale, talent and unmet needs make AI-first adoption not just desirable but urgent,” he emphasises.

Despite the roadblocks, optimism is high. The consensus is that AI is at an inflection point in India. What’s needed is a bolder push from both the government and deep-pocketed private enterprises.

For India, the path is clear: leverage the advantage in AI usage, mobilise talent, fix foundational gaps, and embrace experimentation. Only then can the country truly claim a seat at the global AI high table, not just as a user, but as a leader.

@PalakAgarwal64