Fire Hose

Interesting article about the promise and peril of AI in India. Artificial intelligence adoption is surging in India, with the country quickly becoming OpenAI’s second-largest user base and a focal point for major American tech companies like Microsoft, Google, Meta, and startups such as Perplexity. These firms are investing heavily in AI infrastructure and forming high-profile local partnerships, drawn by India’s massive population of 900 million internet users and a market more open to international tech than China. India offers immense reach, with hundreds of millions of users generating vast amounts of real-world data, and provides AI firms a unique “testing ground” due to its linguistic, social, and economic diversity.

However, converting India’s huge user base into a profitable subscriber market remains a challenge, as average prices for AI services in India are significantly lower than in the West, and the number of paying customers is proportionally small. Nevertheless, the strategic value for AI companies lies in access to unparalleled data, engagement, and the opportunity to fine-tune models with diverse Indian inputs. India’s favorable regulatory regime, allowing free cross-border data flows, enhances its attraction, offering AI firms access to a “fire hose” of new, high-quality training material at a time when global data sources are drying up. Maybe content in vernacular languages will get a shot in the arm, was one of the thoughts that crossed my mind as I read the story.

Indian users generally welcome foreign AI platforms, but there are concerns about long-term dependency and the negative repercussions for domestic IT firms. Critics warn that American tech giants, with superior resources, could stifle investment in local Indian startups, relegating India’s tech sector to peripheral service roles instead of enabling it to build and own foundational AI technology. Though India boasts a vast pool of developers, it still lacks a robust base of AI researchers and innovators relative to its population and ambitions.

The article questions whether India will become a genuine innovator or remain predominantly a consumer and data provider for foreign tech companies. The outcome depends on India’s ability to nurture homegrown research, invest in foundational AI technology, and shift from being merely a vital user market to becoming an originator of global AI breakthroughs. Also build a moat with local language content and context that only works for India. It is time to get value from the terrific diversity of everything that makes India the country that it is.