India is standing at the crossroads of a historic technological transformation, with artificial intelligence (AI) poised to reshape its economy, workforce, and global standing. In recent months, a flurry of government reports, ministerial statements, and international policy shifts have converged to highlight both the promise and the challenges of this new era. As the world debates the best path forward—between rapid innovation and ethical oversight—India’s unique blend of demographic strength, digital infrastructure, and policy ambition could make it the pivotal player in the future of AI.
On August 9, 2025, a joint report by the Federation of Indian Chambers of Commerce & Industry (FICCI) and KPMG India underscored the rapid AI-led transformation sweeping through the country’s IT, healthcare, finance, and manufacturing sectors. According to the report, this revolution is already creating demand for a new generation of professionals—AI imaging specialists, prompt engineers, and smart grid analysts, to name just a few. But the report also sounded a note of caution: only 26.1% of Indian youth currently access formal vocational training, a figure that reveals a significant skills gap at a time when the so-called "half-life" of skills has dropped to under five years. In other words, the knowledge needed for tomorrow’s jobs is evolving faster than ever, and continuous upskilling is now a necessity, not a luxury.
To address this, the report recommends a host of measures: sector-specific AI skilling frameworks, modernization of Industrial Training Institutes, public–private investments in accelerated skilling, and the creation of localized AI hubs in Tier 2 and Tier 3 cities. There’s also a call for vernacular and blended learning, embedding soft skills, aligning certifications with international standards, negotiating global talent mobility tracks, and ensuring ethical AI adoption that includes marginalized groups. The report was officially released by Jayant Chaudhary, Minister of State for Skill Development and Entrepreneurship and Minister of State for Education, Government of India.
Narayanan Ramaswamy, Partner and Head of Education and Skill Development at KPMG in India, captured the moment’s urgency: "India stands at a critical inflexion point. With the largest youth population and a rapidly growing digital ecosystem, it is uniquely positioned to lead the global workforce transformation." His colleague, Debabrata Ghosh, added, "India’s demographic edge, digital infrastructure, and startup ecosystem create strong foundations for an AI-driven future. Yet, challenges like informality, sectoral imbalance, and digital divides persist."
Meanwhile, India’s AI ambitions are being shaped not only by internal dynamics but also by dramatic policy shifts abroad. On July 23, 2025, former US President Donald Trump unveiled an AI Action Plan that outlined over 90 policy actions, signaling a decisive pivot from the previous administration’s focus on ethical risks and algorithmic fairness to a full-throttle embrace of AI innovation. According to The Economic Times, this plan rests on three pillars: accelerating innovation (largely through deregulation), building national infrastructure (by streamlining permissions for data centers and AI research), and projecting US technological power globally (via export promotion and tighter control on rivals).
The Trump administration’s approach included three executive orders: one against so-called "woke AI," making the battle explicitly cultural; a second slashing data center red tape; and a third boosting exports of American AI technology. The shift prioritizes market dominance and geopolitical competition, potentially at the expense of ethical safeguards, and has already sparked debate worldwide. Some see it as a boon for Big Tech and startups, while others warn it could increase risks like misinformation, algorithmic harms, and unchecked commercial surveillance. As The Economic Times noted, "There is a very real risk that this economic acceleration could outpace ethical oversight, inviting public backlash."
This tectonic shift in US policy is reverberating globally. Europe, with its tradition of regulatory caution, faces pressure to loosen its rules or risk losing startups to the US. China, meanwhile, is positioning itself as a champion of open source AI and global cooperation, launching the Shanghai Initiative to form a World AI Cooperation Organisation. Chinese models like DeepSeek are rapidly catching up with US counterparts, but the country’s centralized, surveillance-focused approach remains a sticking point for many potential allies.
For India, these international developments present both a challenge and an opportunity. As the world’s largest democracy and a leader of the Global South, India is being urged to forge a "third way"—one that balances ambition with caution, and innovation with inclusivity. The FICCI-KPMG report, as well as opinion leaders cited in The Economic Times, suggest that India could reject the binary choice between US-style acceleration and Chinese-style centralization. Instead, it could emphasize ethical innovation, inclusive infrastructure, and co-created governance, leveraging its much-admired Digital Public Infrastructure (DPI) model, which has already balanced innovation and social equity in areas like payments and identity.
India’s government appears to be moving in this direction. Union Minister for Electronics and Information Technology Ashwini Vaishnaw recently outlined a strategy designed to democratize access to AI and create widespread economic and employment opportunities. Aligning with Prime Minister Narendra Modi’s vision, this strategy builds on a technology sector with projected annual revenues exceeding $280 billion and more than six million employed. India now boasts over 1,800 Global Capability Centres—500 of them focused on AI—and a booming startup ecosystem, with 89% of last year’s new startups powered by AI. The country also ranks among the global leaders in AI capabilities and is the second-largest contributor to AI projects on GitHub.
To institutionalize this momentum, the government launched the IndiaAI Mission in 2024. One of its key pillars is AIKosh, a unified platform offering over 1,200 India-specific datasets and 217 AI models, sourced from government departments, academia, and startups. These resources, ranging from farmer queries to medical imaging, are built with a strong focus on privacy and local relevance. The Bharat Data Exchange further supports AIKosh by providing structured access to government-owned data, while Digital India Bhashini is developing AI-driven solutions in 22 Indian languages, with contributions from more than 70 institutions.
Other initiatives include the National Mission on Interdisciplinary Cyber-Physical Systems, which has established 25 innovation hubs, and the Indian Council of Medical Research’s Health Data Repository, which hosts globally compliant clinical datasets. Research programs like IMPRINT, Uchhatar Avishkar Yojana, and the Anusandhan National Research Foundation’s AI-for-Science initiative are advancing AI in science, education, and healthcare. As Minister Vaishnaw put it, these efforts are "developing high-quality, unbiased, and vernacular datasets that can be used for various AI applications, contributing to India’s growth and development."
Looking ahead, India’s role on the world stage is set to expand. In February 2026, the country will host the AI Impact Summit, the largest such gathering of AI leaders globally. This event offers India a platform to clarify its AI stance, create a comprehensive regulatory framework, and make AI a true national mission—focusing on "AI for Good" and "AI for All." If India can successfully balance innovation with ethical oversight, and inclusivity with ambition, it might just help the world write the rules for the AI century—not in Washington, Shanghai, or Brussels, but in New Delhi.
