As the United States dismantles regulatory guardrails in pursuit of AI supremacy and China doubles down on state-led tech dominance, India is caught between promise and peril in the emerging techno-capitalist order.
The Rise of Techno-Capitalism: Where Technology Marries Capital
A new economic order is taking shape one where technology and capital are co-architects of global power, and the state functions not as a regulator but as an enabler of private tech monopolies. This system, dubbed “techno-capitalism,” is rewriting the rules of innovation, investment, and governance.
Its core features are clear: deregulation in sectors like AI and fintech, massive public-private investment flows, strategic alliances between governments and Silicon Valley elites, and the use of technological dominance as a geopolitical weapon rather than a purely developmental tool.
The United States embodies this shift. The Trump administration’s AI push tore down regulatory guardrails, funneled billions into AI-led manufacturing, and promoted strategic control over global tech norms. Across the Pacific, China pursues a centralised model, pouring state resources into AI, digital surveillance, and the Digital Silk Road to secure both economic and political leverage.
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India’s Hybrid Model: Promise, Pitfalls, and Strategic Tensions
India’s position is more complicated. It has the building blocks for global relevance world-class IT services, expanding space capabilities, and successful digital public goods like UPI and Aadhaar. Yet, systemic weaknesses persist: chronic underinvestment in R&D (less than 0.7% of GDP), regulatory uncertainty in AI and crypto, and slow scale-up of start-ups.
Historically, India–US cooperation in science and technology swung between idealism and suspicion. The SITE project of 1975 symbolised Cold War-era scientific optimism, but trust collapsed after India’s 1974 nuclear test. Today, the Biden-era Initiative on Critical and Emerging Technologies (ICET) has revived collaboration, yet divergences on trade policy, geopolitical alignments, and America’s increasingly nationalist techno-policy could destabilise this momentum.
Adding pressure is the risk of job displacement from generative AI in India’s service-based export economy, uncertainty over H-1B visas, and the widening gap in deep-tech capacity. While American tech firms enjoy Department of Defense contracts and massive venture capital pools, Indian start-ups still struggle with scale and global reach.
The Road Ahead: India’s Strategic Reorientation in a High-Stakes Game
India’s choices in the next decade will determine whether it becomes a central player or a peripheral actor in the global digital order. Experts argue for a National Tech-Industrial Strategy integrating defence, AI, semiconductors, quantum computing, and space into a unified mission.
Policy recommendations include linking universities with industry, creating innovation clusters akin to Silicon Valley, adopting “smart regulation” that balances innovation with risk, and launching a National AI Reskilling Mission to prepare its IT workforce for the AI era.