The Indian AI market is mostly nonexistent today, with a handful of activity in specific areas like finance, IT, healthcare, and business services. For a country the size of India, being among the top developing economies with a technology-focused workforce, this comes as a big surprise and a major disappointment. The recent Niti Aayog report from the Indian government’s planning wing is honest in echoing that disappointment:
Low adoption of AI technologies in India is particularly troubling, given the country’s prominence in the global IT industry that could have given it the natural first mover’s advantage in AI. However, the IT industry in India has remained content in delivering traditional IT services and has been slow to adapt to new digital technologies compared to its counterparts in China and the US.
Most of the AI activity is limited to startups, which are beginning to see increasing momentum, but the total venture funding in India for AI startups is less than 5% of China’s. According to Tracxn, Indian AI startup investment in 2017 was less than $100 million, while Chinese AI investment in 2017 was $2.8 billion.
Getting Up to Speed on the AI Boom
Why has India missed out on the AI boom, despite having a $150 billion strong IT and business process management (BPM) sector? For one, the global IT and BPM sector itself has been slow to catch the AI wave, with most companies stuck in the robotic process automation (RPA) technology mindset, focusing on rules-based automation, rather than machine learning and deep learning, where AI has grown by leaps and bounds. India is not an outlier in relation to the industry itself, however, it does not have homegrown equivalents of Facebook, Apple, Amazon, Netflix, and Google (FAANG) in the United States and Baidu, Alibaba, and Tencent (BAT) in China, which have become “AI first” companies, pushing forward machine learning and deep learning flavors of AI and investing billions of dollars in AI research and development (R&D) and data centers.
India’s AI strategy, as laid out in the Niti Aayog report, aims to bring India up to speed on AI. It is bold and creative in its ambition of making India into a “garage” for AI innovation for 40% of the world’s population, excluding China and the developed economies. It assumes that once an AI application is built for an Indian marketplace, it is primed for deployment in other developing countries around the world. India hopes to fill in the gap in the market for developing countries, with most AI activity being focused on either the developed world (North America and Europe) or China.
Creating a Decentralized AI Marketplace
One of the foundational pillars of India’s AI strategy is the creation of a National AI Marketplace, which creates a platform for collecting data, annotating data, and developing AI models. Where India’s AI strategy becomes interesting is in the application of blockchain in creating a decentralized marketplace, which preserves data privacy, enhances security, and creates a level playing field for data. It allows for an alternative AI data warehouse compared to the one-sided advantage that internet companies have in terms of accessing and leveraging user data for advancing their AI models. The AI marketplace is open to all, with the expectation that it will attract a mix of public sector institutions, startups, academic and research institutions, and AI solution developers.
While India’s AI strategy is innovative, ambitious, and carefully curated, it might be a bit too optimistic in its goals. In fact, India might have bigger issues with which to contend. India’s other major national data collection initiative, Aadhar, which has collected biometric data for more than 1 billion Indians, has been criticized for its security holes, privacy issues, and surveillance fears. While the intentions of the Indian government could be legitimate in terms of creating a truly decentralized AI marketplace, its ongoing issues with Aadhar do not put a lot of trust in the ability of the Indian government to deliver, especially in terms of getting the infrastructure and stakeholders in place to pull off something of the scale of a National AI Marketplace that cuts across different datasets, ranging from health and smart city to agricultural data. India also wants to create a CERN equivalent for AI in India, which again seems misplaced. Creating an institution like CERN does not just take a lot of capital investment, but also a culture and reputation for attracting the best researchers in the field. It is unclear what would set India apart from China or the United States when it comes to performing world-class research in AI. India also has a massive challenge on its hands in terms of reskilling its IT workforce, with estimates suggesting that 40% of the 1.2 million strong workforce will need to reskill in AI within the next 5 years.
Government and Private Sector Partnerships Could Attract Investors
The Niti Aayog report does get its focus right in terms of AI sectors. Healthcare, agriculture, education, smart cities, and smart mobility are identified as the key areas where government support might need to supplement private sector activity due to the balance of financial gain versus societal good. All of these areas could benefit massively from AI, and if something like a National AI Marketplace does take shape, it could end up attracting investors and entrepreneurs from North America, Europe, and China.
The success of India’s AI strategy largely depends on how well the Indian government can execute its strategy in partnership with the private sector, both local and from outside India. India will need to specifically reach out to the FAANG and BAT groups or similar companies with large AI plans, with the specific intention of investing in the Indian AI market. While local Indian companies could provide expertise around AI-driven professional services, AI hardware and AI software expertise will need to be developed with the help of companies outside India.
The stakes are high for India and its success in AI ends up determining the future of one-fifth of the world’s population. Anyone interested in participating in that future should seriously look at what India’s AI strategy means to them and areas where they could contribute and benefit.