Indian business leaders face a stark reality check. The country may struggle in stock markets over the next decade, potentially affecting the India AI market. This warning comes from Akshat Shrivastava, founder of Wisdom Hatch.
He believes India is losing ground in the global AI race.
“The next 10 years are going to be challenging for Indian Stock Markets,” Shrivastava said. “Why? SHORT-ANSWER: because India is not needed in the AI race.”
Why It Matters Now
Technological innovation has always shaped economic power. Dutch shipbuilding dominated centuries ago. British industrialization followed. American factory automation came next. Each era created new wealth through innovation.
“It is the ‘innovation’ which creates new wealth,” Shrivastava explained. “Wealth does not appear out of thin air. It is systematically built on the back of technological innovation.”
The current AI revolution follows the same pattern. The US and China are the primary innovation centers. India played a supporting role in the previous tech era, with cities like Pune and Bengaluru providing IT services to Fortune 500 companies.
But the AI era is different. India faces questions about its relevance.
Strategic Challenges for Indian Business
Shrivastava outlined several critical challenges. The data harvesting stage is already complete. India cannot lower AI infrastructure costs due to high energy expenses, which is affecting startup investment. The country lacks capacity to build massive manufacturing facilities.
India also struggles as a consumption market. Getting users to pay twenty dollars monthly for AI services remains difficult due to the country’s low per capita GDP.
“Getting users to pay 20$/month is a challenge for LLMs right now,” he noted.
Market Impact in India
Foreign institutional investors have been exiting Indian markets since 2020, reflecting concerns about India’s competitiveness in the AI market.
Shrivastava connects this to decades of economic policy issues. He blamed “decades of regressive economic policies, unnecessary pride and inability to look at things rationally” for India’s current position.
While productivity gains elsewhere may lift India’s living standards, relative performance could decline. Other countries may advance faster.
Local success stories like Zomato adopting drone deliveries will continue. However, these developments do not transform India into a global innovation hub.
What Business Leaders Should Know
The AI landscape presents both challenges and opportunities. Recent developments show global tech giants investing in Indian AI infrastructure. The Trump administration’s AI Action Plan could benefit India short-term.
Dr. Danish Faruqui from Fab Economics sees potential. “In the short-term three to five-year period, Trump’s AI Action Plan supports the AI infrastructure and AI-for-everyone growth across Asia, including India.”
However, this creates long-term dependency risks. India could return to pre-2020 reliance levels on US companies for critical AI infrastructure.
The Asian datacenter business could generate over 1.2 trillion dollars in AI chip consumption from 2025 to 2029. This growth benefits mostly US-headquartered companies.
Risks and Considerations
India’s ten trillion dollar economic vision depends on AI-led growth. This requires massive AI infrastructure scaling. Most hardware still needs imports from US firms.
Experts recommend a dual approach. India should welcome foreign investment while building domestic capabilities. The country must recalibrate its AI datacenter investment policies.
“India must recalibrate and develop an AI datacenter investment policy amidst recent changes,” Faruqui advised. “In parallel, India must focus on aggressive development of domestic AI hardware and software stack components.”
The window for action is narrowing. India competes with other Asian countries for AI infrastructure projects. Success requires balancing foreign partnerships with domestic development.
Business leaders must prepare for this shifting landscape. Strategic planning should account for potential market volatility. Investment decisions need careful evaluation of AI-related opportunities and risks.
The next decade will test India’s ability to adapt. Companies that anticipate these changes and position strategically will have better chances of success.
