Over 600,000 AI pros, but few hardware expertise—can India fix this gap to chase AI game?

A recent Deloitte report titled Tech Trends 2025 – India Perspective highlights that Indian businesses are swiftly adopting small, multimodal AI models to meet growing demands for faster, more efficient, and highly targeted solutions. It underscores that AI is no longer a standalone tool but the engine powering a host of complementary technologies—ushering in a new wave of innovation.

India is aggressively positioning itself to transition from a services-driven economy to a product-based one, with Artificial Intelligence (AI) as a core pillar. Union Minister for Railways, Information and Broadcasting, and Electronics & IT, Ashwini Vaishnav had reiterated this ambition during the India Today–Business Today Budget Roundtable, highlighting the country’s commitment to building foundational AI models.

However, while India has made significant progress on the software front where it recently announced building its own AI foundational model, a glaring gap remains in AI hardware capabilities—crucial to sustaining and scaling innovations in this space.

The surge in generative AI (GenAI), in particular, has brought hardware back into the spotlight. Once considered a commoditised layer with incremental updates, hardware is now being reinvented to support the growing computational demands of advanced AI systems. From IoT to robotics, AI-powered hardware is transforming industries, enabling smarter devices and more efficient systems.

Specialised chips—for power management, telecom, and cryptographic acceleration—are becoming essential. The integration of heterogeneous computing architectures, where GPUs and NPUs coexist on a single chip, is unlocking new levels of performance and efficiency for AI workloads.

“Taiwan has a mature chip design and fabrication ecosystem, while China excels in large-scale production with deep supply chain integration. Vietnam is rapidly emerging as a fast-growing electronics assembly hub. India is emerging as a key player in the semiconductor industry, focusing on building an end-to-end ecosystem that includes both fabrication (fab) and fabless design, alongside advancements in AI hardware. While the country is already strong in AI software, it is now working to catch up in hardware,” said Abhrajit Ray, Partner and CIO Program Leader at Deloitte India.

To compete globally, India must scale its hardware initiatives swiftly, attract more foreign direct investment (FDI), and bolster its domestic chip design capabilities.

While the country boasts over 650,000 AI professionals, it significantly lags in hardware expertise. Challenges include a lack of deep-rooted hardware knowledge, limited advanced fabrication infrastructure in academia, and a dearth of industry-ready chip designers.

“Addressing these issues is crucial for India to realise its full potential in the semiconductor sector. Potential solutions include integrating semiconductor design curricula and hands-on labs in technical institutions, fostering university-industry partnerships, and leveraging initiatives like Atal Innovation Mission, Semiconductor Mission, and Chips to Start-up to fund specialised tracks at top institutes,” Ray explained.

In a bid to lower the entry barrier for AI careers, the IndiaAI Future Skills initiative is also offering specialised programs at undergraduate, master’s, and PhD levels.

The Deloitte report further touches upon the rise of spatial computing—aided by AI—which is pushing systems to move from being reactive to proactive. By analysing real-time data from sensors like LiDAR, cameras, and motion detectors, AI is powering predictive capabilities in sectors such as defence and healthcare. In defence, for instance, mixed reality simulations are boosting training and strategic planning. In healthcare, virtual environments are enhancing diagnostic precision and surgical readiness.

AI is also at the core of enterprise modernisation. Traditional, monolithic IT architectures are being replaced by modular, AI-integrated systems that allow businesses to optimise resources, automate workflows, and enhance compliance, all while remaining agile to shifting market needs. However, these changes require complex architectural overhauls to ensure scalability and security.

Despite global headwinds—from rising costs and policy volatility to geopolitical tensions—Deloitte notes that manufacturers, including those in India, can navigate this terrain through targeted innovation and adaptive strategies.

India is witnessing what Deloitte calls a "hardware renaissance," with GPUs and NPUs powering AI-led growth across sectors. The government’s IndiaAI Mission is at the forefront, aiming to build over 18,000 GPUs, indigenous AI chips, and state-of-the-art data centres. This vision extends to developing AI models in multiple Indian languages and boosting both software and hardware capabilities.

To support this mission, experts suggest a long-term industrial policy—spanning 10 to 20 years—that promotes R&D and IP creation in hardware, alongside direct funding and talent attraction programs. Building interconnected supply chains, rather than isolated fabs, and forming global partnerships with leading semiconductor nations will also be critical.

As India eyes AI leadership, bridging the hardware expertise gap will be key to turning its ambitions into reality.