India has the potential to be an AI powerhouse. Can it make the leap from IT?
| New Delhi
As the 2026 AI Impact Summit opened in New Delhi this week, it felt less like a policy conference and more like an Indian festival. Thousands queued outside, with groups of friends snapping selfies beneath colorful billboards promising innovation and transformation. Some came to network, others to witness the spectacle.
This is the first AI summit of this scale hosted in the Global South, bringing together top executives, policymakers, and investors from around the world. For a country long known as the world鈥檚 IT back office, the symbolism is clear: India wants to shape the AI era, not just service it.
Inside, exhibition halls are packed and noisy; young engineers crowd around humanoid machines and four-legged robots, stretching out their hands to shake metal limbs. Booths showcase AI tools for health care, governance, and finance. Announcements about misplaced belongings echo through the corridors, and biryani and tea stalls do brisk business. The air hums with conversations about India鈥檚 future as an AI leader.
Why We Wrote This
Artificial intelligence is transforming economies around the world. But India, hosting the Global South鈥檚 first major AI summit, wants to shape the AI era 鈥� not just service it.
But beneath the optimism lies unease.
Over the past two decades, India鈥檚 IT and business-process outsourcing industries have powered urban middle-class growth, employing roughly 7 to 8 million people. Now, as India tries to catch up with the United States and China and become a major player in AI, some worry these workers will be left behind.
鈥淭his isn鈥檛 just about automation. It鈥檚 about uncertainty,鈥� says Nikhil Pawa, a technology policy analyst based in Delhi. 鈥淎I is moving so fast that even experts can鈥檛 predict which parts of an industry will be compressed next. The question isn鈥檛 whether humans will still be needed 鈥� it鈥檚 how many, and in what roles.鈥�
Model under pressure
A recent by the country鈥檚 planning commission warns that by 2031 India鈥檚 technology services sector could lose up to 1.5-2 million jobs to automation 鈥� even as it could create as many as 4 million new roles, depending on how workforce and policy efforts evolve. 鈥淭he difference lies in the choices we make today,鈥� the report notes.
In July 2025, Tata Consultancy Services said it would cut about 12,200 jobs 鈥撀爎oughly 2% of its workforce 鈥撀燼s it adjusts to automation. Other major IT firms have slowed campus hiring and reduced mid-level roles. Economist Santosh Mehrotra says hiring has 鈥渄ramatically slowed,鈥� with companies freezing recruitment, trimming staff, and retraining workers as clients shift away from routine coding toward more advanced AI-based services.
For young engineers, the squeeze is immediate as campus recruiting drops sharply.
India produces about engineering graduates annually, but in the 2024-25 cycle, major software exporters hired only 70,000 to 80,000 fresh engineers 鈥� the in over two decades. Staffing firms estimate fewer than 1 in 10 engineering graduates will land IT-sector jobs this year.
Engineering student Dishita Nagi has come to the summit to network and search for opportunities. She says the mood among her peers is anxious.
鈥淚t鈥檚 very difficult at the moment to get a job,鈥� she says. 鈥淵ou have to constantly upgrade yourself.鈥�
With traditional pathways narrowing, many graduates are turning to startups.
India now has more than , up from just 500 in 2016, according to government data. Yet most of these are small-scale ventures focused on the immediate needs of the population: Think an AI-driven food delivery service, or an app that helps people study for med school entrance exams. Deep-tech startups 鈥� those building core AI systems or advanced hardware 鈥� remain a small fraction of India鈥檚 ecosystem, and have yet to produce anything close to ChatGPT or DeepSeek.
Competing with AI Goliaths
India made the leap from seventh to third place in Stanford University鈥檚 most recent , a tool which compares AI progress across countries. But experts say closing that gap with the U.S. and China will be a tall order.
India鈥檚 gross domestic expenditure on research and development remains between , well below its competitors, and private-sector participation in research and development is comparatively modest as well. India also lags behind in its ability to manufacture the computer chips essential to AI.
鈥淎 serious transition strategy would require a massive upgrade in STEM education and R&D investment,鈥� says Dr. Mehrotra, currently a visiting professor at the University of Bath in the U.K. Without a stronger innovation ecosystem, he argues, India will struggle to compete at the frontier of AI development.
Yet India is working with some key advantages in the AI era. U.S. visa restrictions have forced top tech talent to return to India, and are fueling a local data center boom. The country now hosts roughly 1,700 to 1,800 ), which increasingly handle the sort of high-level research and product development needed to make breakthroughs on AI.
Summit speakers India鈥檚 digital public infrastructure. The country鈥檚 Aadhaar biometric ID system covers more than 1.3 billion people, while the Unified Payments Interface processes billions of transactions each month, making India one of the world鈥檚 largest real-time payment markets. Low-cost mobile data and widespread smartphone access have brought online over the past decade, and Indian companies, by and large, have been more eager to embrace AI compared with their peers overseas.
Officials this digital backbone 鈥� linking identity, payments, and data systems 鈥� gives India a strong foundation to extend AI tools into public services, agriculture, health care, and small business finance.
At the summit, the atmosphere is upbeat, and the ambition is clear. But as the crowds thin each evening and the robots power down, a difficult question lingers: Can India reinvent the workforce that once made it indispensable to the global economy, or will automation erode the foundation of its biggest employment success story?
For students like Ms. Nagi, the answer will shape not just policy debates, but personal futures.
