Country’s AI readiness is less bout falling behind and more about failing to align their infrastructure, policies, and talent with the future they want to create.
72nd & Struggling: What’s Holding India Back in Global AI Race?
- May 8, 2025
- By Sagarika Chikhale
Artificial Intelligence (AI) is no longer a futuristic concept; it’s rapidly reshaping economies, societies, and governance worldwide. For a nation like India, with its vast potential and aspirations, harnessing AI effectively is crucial for future growth and development. However, a recent analysis based on the 2023 AI Preparedness Index (AIPI) places India at 72nd globally. While India is making strides, this ranking signal a significant gap compared to leading nations.
This isn’t just about technology; it’s about the entire ecosystem supporting it. The analysis reveals that national AI preparedness isn’t solely driven by GDP, but more profoundly by foundational pillars: Digital Infrastructure, Regulation & Ethics, Human Capital, and Innovation. Understanding where India stands on these fronts, based on the 2023 data, is key to charting a path forward.
Why Are Some Countries More Prepared Than India?
The analysis highlights stark correlations between AI readiness and specific national capabilities:
- Digital Infrastructure (Correlation with AIPI: 0.96): This is the bedrock. It’s not just about having internet users but the quality, reach, and robustness of the entire digital ecosystem like high-speed connectivity, cloud computing capacity, data centers, and crucially, secure servers (correlation with AIPI is 0.46, indicating this specific area might be less dominant but still part of the whole). Nations leading the AIPI charts (like Singapore, Denmark, US) boast highly mature, reliable, and widespread digital infrastructure.
- Regulation & Ethics (Correlation with AIPI: 0.94): Trust is paramount. Countries with clear, well-defined, and enforced regulations governing AI including covering data privacy, algorithmic transparency, accountability, and ethical use, are far better prepared. Strong governance builds public confidence and provides a stable environment for AI deployment and innovation. This factor is almost as critical as infrastructure. Again Singapore, Denmark, US and with other countries having high AIPI are leading in this area.
- Human Capital & Labor Market Policies (Correlation with AIPI: 0.91): AI needs skilled people, not just elite coders, but a broad workforce capable of developing, deploying, managing, and working alongside AI systems. This requires strong education systems, continuous learning programs, AI-specific training, and labor policies that support transitions and reskilling.
- Innovation & Economic Integration (Correlation with AIPI: 0.88): A thriving AI nation needs a dynamic innovation ecosystem like robust R&D, vibrant startups, strong university-industry links, and active participation in the global technology landscape. This fosters the creation and adoption of cutting-edge AI solutions. US is a remarkable example of this as it has also exceptional history in aerospace industry.
- The GDP Factor: While GDP per capita shows a strong positive correlation (0.79) indicating wealthier nations can invest more in these pillars however GDP growth shows a weak negative correlation of -0.19 with AIPI. This is crucial: rapid economic expansion alone doesn’t guarantee AI readiness. Targeted, strategic investment in the core pillars matters more than sheer growth momentum.
India’s AI Adoption: Where are the Key Bottlenecks?
Applying this framework to India’s 72nd rank (based on 2023 data) reveals specific areas needing attention:
- Digital Infrastructure – Beyond Access: India has made enormous strides in digital access (internet users, mobile penetration). However, the analysis’s distinction between access and overall infrastructure quality is pertinent. Many users, even in major cities like Mumbai, experienced inconsistent speeds, patchy reliability, and latency issues. Furthermore, areas like high-performance computing infrastructure, widespread fiber connectivity, and data center density likely lag behind top-ranked nations. While initiatives like Digital India are foundational, the quality and uniformity of infrastructure across the nation require significant upgrades to truly support large-scale, sophisticated AI deployment. Secure server infrastructure might also need bolstering, though the primary focus should be on the broader ecosystem quality.
- Regulation & Ethics – The Need for Clarity and Speed: India is actively discussing AI regulation, but a comprehensive, clear, and agile framework is still evolving. The high correlation of Regulation & Ethics with AIPI underscores the urgency. Ambiguity can stifle innovation and deployment, while inadequate safeguards risk eroding public trust. Striking the right balance between fostering innovation and ensuring ethical, responsible AI use through robust policies is critical.
- Human Capital – Converting Potential into Skill: India has a vast pool of young talent and a strong IT services sector. However, translating this demographic potential into AI-specific skills on a scale is a challenge. This involves curriculum reform in universities, scaling up vocational training for AI technicians and data analysts, and promoting widespread digital literacy for the broader workforce. The 0.91 correlation highlights that readiness depends on having people who can build and use AI effectively across all sectors. Labor policies also need to adapt to support workers whose jobs might be transformed by AI.
- Innovation Ecosystem – Deepening and Broadening: While India has innovation hubs and a booming startup scene, translating research into widespread commercial application and fostering deep-tech AI innovation requires further strengthening. Boosting R&D investment (both public and private), extreme simplifying processes for startups, and enhancing collaboration between academia and industry are vital. The 0.88 correlation suggests that a more deeply integrated and innovative economy is essential for AI leadership.
- Targeted Investment over Relying on Growth: India’s economy is growing, but the analysis cautions against becoming too comfortable, noting a -0.19 correlation with GDP growth. We see examples reinforcing this globally; for instance, a nation like Armenia might experience significant economic expansion yet exhibit AI preparedness levels comparable to India’s with 0.49, demonstrating that growth alone doesn’t guarantee advanced readiness. Conversely, it’s also observed that some nations with more moderate or even slower economic growth can achieve remarkably high AIPI rankings. This underlines that strategic focus often matters more than sheer growth velocity. Therefore, the resources generated by India’s growth must be strategically channeled into the foundational pillars such as enhancing infrastructure quality, building robust regulatory capacity, implementing nationwide skilling programs (although not enough), and boosting R&D. Relying on overall economic expansion alone is insufficient to significantly advance national AI preparedness.
Learning from the Leaders: Who Can India Look To?
India can draw valuable lessons from the nations topping the AIPI rankings:
- Singapore: Exemplifies strategic government planning, investing heavily in world-class digital infrastructure, proactive regulation, and targeted talent development programs. Their cohesive national AI strategy is a benchmark.
- United States: Showcases the power of a mature innovation ecosystem, driven by strong R&D investment, venture capital, leading universities, and tech giants. Their competitive environment fuels cutting-edge AI development.
- Denmark (and other Nordic countries): Demonstrates how to integrate technology with strong social safety nets, ethical considerations, and high levels of digital literacy within the population, fostering public trust and broad adoption.
Learning doesn’t mean copying directly but understanding the principles behind their success including strategic investment, robust governance, a focus on skills, and fostering innovation, and adapting them to India’s unique context. Furthermore, India should not only learn from the current advanced status of nations like Singapore, the US, or China but also study their developmental journeys. Taking lessons from their past, including the periods when they were building their foundational capabilities as developing economies, can offer valuable insights into the long-term strategies, policy shifts, and intermediate steps required for sustained progress in areas like infrastructure, regulation, and skill development. Understanding how these nations transitioned and overcame earlier challenges can be just as instructive as observing their present-day achievements.
The Path Forward: A Balanced Strategy for India
To significantly improve its AI preparedness ranking and unlock AI’s true potential, India needs a multi-pronged, balanced approach:
- Upgrade Infrastructure Quality: Move beyond access metrics. Invest heavily in high-speed broadband nationwide, enhance cloud infrastructure, build data center capacity, and ensure reliability and security. Furthermore, facilitate access to advanced cloud computing resources, especially for startups, researchers, and public projects, to spur AI testing, development, and innovation.
- Accelerate AI Governance: Develop and implement clear, predictable, and agile AI regulations and ethical guidelines that foster trust and responsible innovation. Crucially, these regulations should be accompanied by simplified documentation and easily accessible resources for the public and businesses. This ensures that citizens, developers, and companies can readily familiarize themselves with the country’s rules governing AI, significantly lowering barriers to understanding, compliance, and fostering broader societal acceptance.
- Launch Scalable Skilling Missions: Implement nationwide programs for AI skills, from foundational digital literacy to advanced technical expertise, integrated into education and vocational training. However, recognize that simply providing resources isn’t sufficient, as learning uptake depends heavily on individual interest and motivation. Given India’s current AI readiness position (ranked 72nd in the 2023 data), broad public awareness of AI’s true potential and its relevance to diverse careers might be limited. Therefore, these skilling initiatives must be actively complemented by public awareness campaigns showcasing AI’s practical applications and opportunities, aiming to stimulate genuine interest and demonstrate why acquiring these skills is valuable.
- Boost the National Innovation Ecosystem: Increase R&D funding, streamline regulations for AI startups, foster stronger industry-academia links, and encourage participation in global AI research networks. However, it’s important to recognize that building successful AI startups is not easy challenges like limited access to advanced computing resources, complex compliance requirements, and long development cycles often hinder growth. Moreover, the current collaboration between academia and startups observed relatively weak in India, limiting the practical commercialization of academic research. Strengthening these linkages through dedicated innovation hubs, joint funding schemes, and incentivized co-development programs can help bridge the gap and accelerate AI-driven innovation.
- Adopt Targeted Policies: Ensure economic policies actively direct investment towards these core AI enablers, rather than assuming general growth suffices. This can be achieved by introducing AI-specific public funding programs, tax incentives for companies investing in AI R&D, and dedicated infrastructure schemes for emerging tech clusters. Additionally, mandating AI-readiness benchmarks in public digital transformation projects can align broader development with strategic AI capacity building.
India stands at a critical juncture. Its 72nd rank in 2023 AIPI is not a final verdict but a call to action. By strategically investing in the foundational pillars of digital infrastructure, governance, human capital, and innovation, India can bridge the gap and position itself not just as a user, but as a leader in the global AI landscape. The journey requires focus, investment, and a coordinated national effort, but the potential rewards for India’s future are immense.
