‘India is loser in AI race…’ - Ruchir Sharma on sentiment of foreign investors

The global financial landscape has a key focus on artificial intelligence (AI), and the shift is shaping how foreign capital views markets around the world. “Most foreigners have taken the view that India is a loser in the AI race,” Ruchir Sharma said at the Express Adda in conversation with Anant Goenka, Executive Director, The Indian Express.

This comes amid reports that India saw foreign portfolio investor (FPI) net inflows of $106 million after weeks of persistent selling.

Highlighting the discussion, Anant Goenka wrote on X, sharing the video: "The clip that's making a lot of news from Express Adda with Ruchir Sharma,” adding “why foreign investors are not interested in India."

Sharma, who is the Chairman of Rockefeller International and Founder of Breakout Capital, explained that, unlike the IT tech boom of the early 2000s, India is currently missing out. He noted that the world has a “monomaniacal focus", which is AI.

Today's AI landscape is heavily focused on building core infrastructure— ”the picks and shovels, semiconductors, memory, the compute, you know, that's the fail. It's a mad dash going on for that. India, unfortunately, just doesn't have that in terms of that,” Sharma said. 

“And this is, again, it comes back to some structural weaknesses, you know, as far as we have had, and this is well known by now,” Sharma added.

Goenka pointed out that both state and private enterprises are investing across the entire "five layer cake of AI," which covers energy, data centers, chips, applications, and models.

“I'm not saying whether this is right or wrong. I'm reflecting to you what is the foreign investor sentiment on India,” he stated, emphasising that “the numbers do the talking,” Sharma noted.

“In the developed world, it is mainly about US, there's something, there's some about Japan. And then in the emerging markets, two countries have won this race in a huge way, which is Korea, Taiwan,” Sharma said

Sharma shared that a single Taiwanese company, TSMC, currently commands a greater weight in the popular MSCI index than all of India combined. “Where one company of Taiwan, which is TSMC, their weight in the most popular index that everyone uses the MSCI index, their weight is greater than all of India put together,” he said.

“And then you look at Korean companies,” Sharma added, noting that the profit Samsung will make this year will be greater than every single American tech company except Nvidia, greater than Amazon, Apple, Alphabet.