India is running out of time to reposition itself in a global economy increasingly defined by artificial intelligence, computing power and technological control, the Economic Survey 2025–26 has warned, arguing that the country must urgently move beyond its role as a back-office IT services hub and emerge as a frontline player in the AI ecosystem.
Drawing a direct parallel with oil and steel in the 20th century, the Survey states that the 21st century will be driven by “compute”—a broad term encompassing high-performance processors, graphics chips, energy systems and the critical minerals that sustain them. Control over these assets, it notes, is rapidly becoming a decisive factor in shaping economic hierarchies, global alliances and geopolitical influence.
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The warning comes amid intensifying rivalry between the United States and China, where technology leadership—rather than military power alone—is increasingly determining strategic leverage. The Survey cautions that resilience by itself is no longer sufficient for countries like India. Instead, it calls for the pursuit of “strategic indispensability,” a position where India becomes so deeply embedded in global value chains that it cannot be easily bypassed, substituted or coerced.
According to the Survey, Washington is actively reshaping the global technology landscape through selective partnerships, tighter export controls, licensing regimes and bilateral trade arrangements. Initiatives such as the US-led effort to build a trusted AI ecosystem—covering energy, advanced manufacturing, chips, data centres and critical minerals—are already influencing how capital and innovation flow across borders.
It also flags potential spillover risks for emerging economies from recent global financial and regulatory shifts, including changes in digital finance frameworks that could alter cross-border capital movements at a time when AI-led investment is becoming more concentrated in a few technology-dominant regions.
Against this backdrop, the Survey outlines two sharply divergent models shaping the global AI race. Western economies have largely adopted a top-down approach dominated by frontier models, hyperscale technology firms, massive private capital and highly concentrated intellectual property. This model, while powerful, is also capital-intensive and increasingly closed.
In contrast, much of the rest of the world is moving toward a bottom-up AI strategy—built around distributed innovation, strong state coordination, sector-specific applications and public digital infrastructure. The Survey argues that given India’s constraints and comparative strengths, attempting to replicate the US or Chinese model would be neither feasible nor desirable.
Instead, it calls a bottom-up approach “strategically necessary” for India. This would involve prioritising applied AI in areas such as healthcare, agriculture, education, finance, logistics and governance, while leveraging open-source tools, public datasets and domestic innovation ecosystems rather than betting solely on large proprietary models.
Importantly, the Survey stresses that India enters the AI era with several structural advantages. It ranks among the world’s leading contributors to AI research and has one of the largest pools of technical talent globally. Its workforce is described as highly AI-literate, with capabilities second only to the United States in recent global rankings.
Another underused strength, the Survey notes, lies in India’s vast and diverse domestic data. The scale and heterogeneity of the country—across languages, geographies, incomes and sectors—create the potential for rich, high-impact datasets in health, agriculture, urban planning, climate resilience and public service delivery. If harnessed responsibly, this data could become a major competitive edge.
However, the Survey also issues a clear caution: without coordinated policy action, investment in compute infrastructure, secure access to critical minerals, and strong institutional frameworks for data governance and innovation, India risks being locked into a subordinate position in the next technological cycle.
“The window is narrow,” the Survey underlines, warning that countries that fail to act decisively now may find themselves permanently dependent on foreign technology stacks in the decades ahead.
About the author — Suvedita Nath is a science student with a growing interest in cybercrime and digital safety. She writes on online activity, cyber threats, and technology-driven risks. Her work focuses on clarity, accuracy, and public awareness.
