Opinion: Why India Risks Falling Behind In The AI Race

India's tech industry is being less than bold in embracing artificial intelligence. It's hoping to create solutions for corporate clients by building on top of somebody else's investment in foundational technologies, hardly a strategy for pathbreaking success.

ChatGPT's high-voltage debut last year has galvanized China. Baidu Inc.'s Ernie, which claims to have outperformed Microsoft Corp.-backed OpenAI's model on some measures, has pulled Ant Group Co. and JD.com into the bot-building race. Tech czars like Wang Xiaochuan, the founder of the search engine Sogou, have also joined the quest, drawing talent to the industry. On money flow, the US is still beating China six to one, but the number of venture deals in the Asian country's AI industry is already outpacing consumer tech, according to Preqin data.

India's startup landscape, meanwhile, is caught in a time warp, with embarrassed investors marking down their stakes in Byju's, an online education company collapsing under the weight of its own reckless growth. The easy funding from the pandemic era has dried up. As financiers push founders for profitability, they're discovering that in many cases even the revenue is fake. 

This was the perfect time for the traditional Indian coding powerhouses — the likes of Tata Consultancy Services Ltd. and its rival Infosys Ltd. — to put their superior financial muscle to use and assert leadership in generative AI. But they have their own governance challenges. TCS is distracted by a bribes-for-jobs scandal in the US that it is desperately trying to downplay. Infosys is busy managing the blowback from its association with an Australian lobbying firm in the center of a parliamentary inquiry Down Under.