Big Dreams, Small Budget: Can Indian AI Catch The Bus?

The Indian government had announced in 2024 a US$ 1.25 billion outlay for the India AI Mission, aiming to develop a public AI computing infrastructure and support AI startups. This is accompanied by a US$ 9.1 billion investment under the India Semiconductor Mission, aimed at boosting local chip manufacturing.

A further US$ 4 billion design-linked incentive (DLI) scheme is reportedly in the pipeline to promote indigenous design of electronics and semiconductor components, in response to rising global tariffs and supply chain concerns.

However, when stacked against global players, India’s AI spending still appears cautious.

Take the United States, for instance, which announced a US$ 500 billion AI infrastructure push in 2024 in collaboration with OpenAI, SoftBank, and Oracle. This staggering investment dwarfs all others and signals America's intent to dominate the AI era.

Meanwhile, China, India's geopolitical and technological rival, recently launched a US$ 47.5 billion semiconductor fund to strengthen its own tech ecosystem.

European countries are also ramping up their efforts. France pledged € 109 billion (approximately US$ 118 billion) toward AI infrastructure. Canada is investing US$ 2.4 billion, and Saudi Arabia has unveiled Project Transcendence, a bold US$ 100 billion initiative centred on AI advancements and infrastructure, according to Stanford University's AI Index Report 2025.

India’s relatively conservative spending is reflected in the private sector as well. 

In 2024, private AI investment in India stood at US$ 1.16 billion, ranking 12th globally. In stark contrast, the United States attracted US$ 109.1 billion in private AI funding, which is over 11 times more than China’s US$ 9.3 billion and 24 times more than the UK’s US$ 4.5 billion. From 2013 to 2024, India’s total private investment in AI added up to US$ 11.29 billion, underlining a persistent gap.

Despite the funding mismatch, India has shown promising growth in robotics and automation. According to the International Federation of Robotics (IFR), India recorded a 59 per cent year-on-year increase in industrial robot deployments from 2022 to 2023, the highest among all surveyed nations. This indicates a rising interest in automation-led manufacturing, an essential pillar for future AI integration.

India also saw 74 newly-funded AI companies in 2024, bringing the total number of AI startups funded between 2013 and 2024 to 434. While this growth is encouraging, it still trails behind the startup ecosystems of more aggressive investors. In contrast, the US has 1,073 newly funded AI companies in the year 2024, with the UK trailing behind at 116.

The government’s recent moves such as the India AI Mission, the semiconductor mission and potential design-linked incentives signal a desire to scale up. India’s ambitions may need far deeper pockets to truly compete with global AI superpowers.

(This is the second in a two-part series on India's AI outlook as reported in Stanford University's AI Index Report 2025. Click here to read the first part in which The Secretariat dissected India’s AI priorities in terms of its AI talent, skill penetration and academic capacity. This part highlights both the country's private and government funding, and research capabilities for innovation)