India’s AI Opportunity Lies in Applications, Data Centres and Green Energy, Says Ashwini Vaishnaw

India’s strongest opportunity in artificial intelligence may not lie in competing immediately at every layer of the global AI stack, but in building applications, digital infrastructure and energy-efficient data centres at scale. Union Minister for Electronics and Information Technology and Information and Broadcasting Ashwini Vaishnaw has said India’s established software ecosystem, growing AI startup base, renewable energy capacity and expanding semiconductor capabilities together give the country a strong position in the next phase of the technology economy.

Speaking during an interaction with Morgan Stanley India Equity Strategist Ridham Desai, Vaishnaw said India’s most immediate strength in artificial intelligence is the applications layer, where software companies and startups can use AI models to solve problems for businesses, governments and consumers.

India already has one of the world’s largest information technology and software-services ecosystems. That gives Indian companies a large pool of engineers familiar with enterprise requirements, global clients and complex business processes.

According to Vaishnaw, this experience creates an advantage as AI shifts from experimentation towards practical deployment.

“Our biggest strength is in the applications layer,” he said, pointing to India’s ability to understand customer requirements and translate them into technology solutions.

AI Startups Increasingly Focused on Practical Applications

Vaishnaw said nearly 80% of startups now emerging in the technology ecosystem are offering AI-based solutions, indicating how quickly artificial intelligence is becoming integrated into India’s startup economy.

The next wave of AI adoption is expected to move beyond general-purpose conversational tools into highly specialised applications.

These could include systems for healthcare diagnostics, financial services, agriculture, logistics, manufacturing, education, language translation, cybersecurity and public-service delivery.

India’s large domestic market creates an important testing ground for such applications.

A company that develops an AI product for Indian conditions may need to handle multiple languages, different income groups, enormous transaction volumes and a wide range of infrastructure environments.

Solutions that succeed under those conditions can potentially be adapted for other emerging economies.

Data Centres Could Become Another Major Indian Advantage

Vaishnaw identified data centres as another sector where India is developing a favourable position.

Artificial intelligence requires enormous computing power, and the growth of generative AI is accelerating demand for data-centre capacity around the world.

Training and running large AI models requires thousands of high-performance processors operating continuously. These systems consume substantial amounts of electricity, making energy availability and energy cost increasingly important factors in determining where data centres are built.

India’s rapidly expanding renewable-energy base could therefore provide a strategic advantage.

Vaishnaw said approximately 250 gigawatts of India’s power-generation capacity now comes from renewable sources.

The availability of solar, wind and other renewable energy can help technology companies reduce the carbon intensity of large computing facilities while supporting the massive electricity requirements associated with AI infrastructure.

The relationship between renewable energy and digital infrastructure is likely to become increasingly important as AI workloads grow.

AI Infrastructure Will Require More Than Computing Chips

Building a competitive AI ecosystem involves considerably more than importing advanced processors.

Large-scale computing facilities require reliable electricity, cooling systems, fibre connectivity, high-capacity power transmission, water-management systems, cloud infrastructure and secure data-storage facilities.

India’s potential advantage therefore comes from combining several infrastructure layers.

The country has a rapidly expanding digital network, a large software workforce, growing renewable-energy capacity and an increasingly ambitious electronics and semiconductor manufacturing strategy.

If these elements develop together, India could become an important location not only for AI software development but also for the infrastructure needed to run those applications.

Electronics Manufacturing Offers a Model

Vaishnaw pointed to India’s electronics manufacturing transformation as an example of how the country can develop complex technology industries gradually.

India did not immediately establish a complete electronics supply chain.

The industry initially expanded through the assembly of finished devices before moving progressively into modules, sub-modules and individual components.

Over time, this process created a broader manufacturing ecosystem.

Vaishnaw said this step-by-step strategy has helped India establish itself as an increasingly important global electronics manufacturing destination during the past decade.

The same approach is now being applied to semiconductors and other strategic technology sectors.

Instead of attempting to reproduce the entire global technology supply chain immediately, India is trying to build individual capabilities and connect them progressively.

Semiconductor Design Is Already an Indian Strength

One of India’s most important advantages is its semiconductor-design workforce.

Vaishnaw said India accounts for approximately 20% of the global semiconductor design workforce, reflecting the large number of engineers already working on chip architecture, verification, embedded systems and related areas.

Global semiconductor companies have operated major research and design centres in India for decades.

However, much of India’s historical participation in the semiconductor industry has been concentrated in design rather than fabrication.

The government is now attempting to connect design expertise with domestic chip manufacturing, packaging and testing capabilities.

Advanced Chip-Design Tools Reach Universities

A particularly important part of this strategy involves universities.

Vaishnaw said the government has provided advanced semiconductor design tools to 318 universities, allowing students and researchers to design chips using technologies that were previously difficult or expensive for academic institutions to access.

Students can develop chip designs using these tools before sending them for fabrication, assembly and testing through supported semiconductor facilities.

This approach could significantly expand India’s pool of semiconductor engineers.

Chip design requires highly specialised skills, and global shortages of experienced engineers have become a major constraint on the semiconductor industry.

Giving university students access to professional-grade design environments allows India to develop talent before those engineers enter commercial industry.

It also creates opportunities for university research groups and startups to develop specialised processors for domestic applications.

India’s 5G Rollout Creates the Digital Foundation

Vaishnaw also highlighted the rapid expansion of India’s 5G network.

He said around 90% of the country now has access to 5G, making India the world’s second-largest 5G ecosystem.

Fast mobile networks are important for AI because many future applications will depend on continuous data transmission between devices, cloud platforms and edge-computing infrastructure.

Autonomous machines, connected factories, intelligent transport systems and real-time industrial monitoring all require reliable high-speed connectivity.

India’s large 5G network can therefore act as an enabling layer for the wider AI economy.

The combination of widespread mobile connectivity and inexpensive digital services could also allow AI applications to reach users far beyond major technology centres.

Digital Public Infrastructure Gives Startups a Platform

India’s digital public infrastructure represents another important component of the strategy.

Vaishnaw emphasised that digital systems should not remain controlled by a small number of companies.

India has instead developed public digital platforms that allow private businesses and startups to build their own services on top of shared infrastructure.

The most visible example is the digital-payments ecosystem, where public infrastructure has enabled banks, fintech companies and other businesses to compete while using common standards.

This model can potentially be extended to other areas.

Rather than allowing individual companies to control essential digital rails, shared infrastructure can lower the cost of entry for startups and stimulate competition.

Vaishnaw described this approach as the democratisation of technology.

Physical Infrastructure Remains Equally Important

India’s technology ambitions are also closely connected to improvements in physical infrastructure.

Vaishnaw, who also serves as Minister for Railways, pointed to the expansion of railway freight as an example.

He said Indian Railways now transports around 1,670 million tonnes of freight, compared with approximately 1,000 million tonnes a decade ago.

Greater railway freight capacity can reduce logistics bottlenecks for manufacturing industries.

Factories depend not only on digital networks but also on the efficient movement of raw materials, machinery and finished products.

Improved freight infrastructure can lower transportation costs and make Indian manufacturing more competitive.

This is particularly important as the government attempts to attract electronics, semiconductor, battery and other high-value manufacturing industries.

AI and Manufacturing Are Increasingly Connected

The distinction between digital technology and industrial manufacturing is also becoming less clear.

Artificial intelligence is increasingly being used inside factories for predictive maintenance, quality inspection, supply-chain optimisation and automated production.

Semiconductors sit at the centre of those systems.

Data centres provide computing capacity, while telecommunications networks connect machines and users.

Renewable electricity powers the infrastructure.

India’s broader technology strategy is therefore increasingly based on connecting these individual capabilities rather than treating them as separate sectors.

A semiconductor factory, for example, depends on reliable power, logistics and specialised engineering talent. AI companies depend on data centres and advanced processors. Manufacturing companies increasingly depend on AI and digital networks.

Each sector strengthens the others.

India Seeks a Different Position in the Global AI Race

Global attention around artificial intelligence often focuses on companies developing the largest foundation models or manufacturing the most advanced AI processors.

India’s strategy appears broader.

Instead of defining success solely as producing a domestic equivalent of every global AI model or semiconductor company, policymakers are attempting to build strength across areas where India already possesses advantages.

These include software development, enterprise applications, engineering talent, digital public infrastructure, renewable energy and a large domestic market.

That could allow Indian companies to capture significant value even if the most computationally intensive foundation models continue to be developed by a limited number of global companies.

The applications layer may ultimately become one of the largest economic opportunities because this is where AI technology is converted into products and services used by businesses and consumers.

Renewable Energy Could Decide Where AI Infrastructure Is Built

Energy availability could become one of the most important competitive factors in the global AI industry.

AI data centres require vast quantities of electricity and often operate around the clock.

As computing requirements increase, technology companies are searching for locations that can provide large amounts of reliable power while helping them meet environmental commitments.

India’s renewable-energy expansion could therefore become directly connected to its digital ambitions.

A country capable of combining low-cost renewable electricity with fibre networks, large data-centre campuses and a substantial software workforce could attract both domestic and international investment.

The challenge will be ensuring that generation capacity is supported by sufficient grid infrastructure and reliable round-the-clock electricity.

Building the Technology Stack Step by Step

Vaishnaw’s comments reflect a broader philosophy that has increasingly characterised India’s technology policy.

The objective is not simply to announce large programmes but to build interconnected capabilities gradually.

Electronics assembly led to component manufacturing.

Semiconductor design expertise is being connected with fabrication and packaging.

Digital public infrastructure has created platforms for private innovation.

Renewable energy can support the next generation of data centres.

Universities are being equipped with advanced chip-design tools to create future engineering talent.

At the same time, improvements in railways and logistics are intended to make physical manufacturing more competitive.

The strategy seeks to create an ecosystem rather than an isolated technology industry.

A Broader Economic Transformation

India’s AI ambitions are therefore closely linked with its wider development strategy.

Artificial intelligence requires digital infrastructure. Digital infrastructure requires electricity and telecommunications networks. Semiconductor manufacturing requires advanced engineering and industrial infrastructure. Manufacturing requires logistics.

When these components develop together, they can reinforce one another.

Vaishnaw described India’s growth model as being based on investment across physical infrastructure, digital infrastructure, social infrastructure, manufacturing, innovation and inclusive development.

The emergence of AI adds another layer to that strategy.

India may not need to dominate every component of the global artificial-intelligence ecosystem to become one of its major beneficiaries.

Its strongest opportunity could instead come from combining what it already possesses at scale: software talent, a large domestic market, digital public infrastructure, renewable-energy capacity, rapidly expanding data centres and a growing semiconductor ecosystem.

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Source: DD India, August 20, 2026, based on Union Minister Ashwini Vaishnaw’s interaction with Morgan Stanley India Equity Strategist Ridham Desai.

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