$700B AI Gold Rush Heads to India—Are We Missing the Point?

What if the next AI breakthrough doesn't come from Silicon Valley or Shenzhen, but from New Delhi?

That's the $700 billion question hanging over global tech after last week's India AI Impact Summit. While everyone's fixated on the eye-popping investment figures—Microsoft's $50 billion pledge, Reliance's $110 billion data center plans, Adani's $100 billion AI buildout—they're missing the real story.

The Talent Arbitrage Play

Here's what the numbers don't tell you: India graduates 1.5 million IT professionals annually. That's more than the US and Europe combined. And unlike China, where geopolitical tensions create hiring complications, Indian talent flows freely to American companies.

OpenAI CEO Sam Altman, Alphabet's Sundar Pichai, and Anthropic's Dario Amodei didn't just show up for the photo ops. They're betting that India's engineering talent can solve AI's next frontier problems. Microsoft President Brad Smith put it bluntly: "There will be a variety of different DeepSeek moments to come, and some of those will be in India."

But here's the twist: while public markets in India are booming, private capital remains scarce. "What we've not seen as much of right now is venture capital and private equity money to invest in Indian entrepreneurs in the AI space," notes Anirudh Suri from India Internet Fund.

The Geopolitical Chess Game

The summit wasn't just about AI—it was about reshaping global tech alliances. The signing of the Pax Silica agreement between the US and India signals a deliberate strategy to create silicon supply chains that bypass China entirely.

This timing isn't coincidental. As US-China tech tensions escalate, India offers something neither superpower can provide alone: a massive market with democratic stability and English-speaking talent. The $18 billion in chip projects India has approved? That's not just industrial policy—it's insurance against supply chain disruptions.

Winners and Losers

The clear winners: hyperscalers like Amazon, Microsoft, Meta, and Alphabet who can leverage India's cost advantages while avoiding China's regulatory risks. Nvidia's expansion of VC partnerships in India shows even chip companies recognize this shift.

The potential losers: any tech company that treats India as an afterthought. While American firms double down on partnerships, European and East Asian competitors risk being locked out of what could become the world's largest AI talent pool.

Yet skeptics remain. Udith Sikand from Gavekal Research warns that India is "making splashy attempts to kickstart its belated AI push" without addressing "the underlying difficulties of actually doing business in India." The summit's controversies—Bill Gates' withdrawal over Epstein connections, a university falsely claiming to have invented a Chinese robot—highlight these execution challenges.