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In this episode, our hosts Shouvik Das and Leslie D'Monte break down India’s AI ambitions, the shifting role of the IT industry, and why research spending could decide the country’s AI future. The R&D Gap: Why Indian IT Needs a Reality Check The Indian IT industry has long been a source of national pride, employing millions and bringing in billions in revenue. But when it comes to R&D spending, the numbers tell a different story. TCS, one of India’s biggest tech firms, spends just 1.1% of its revenue on research—compare that to Alphabet, which pours 14% of its massive $300 billion revenue into R&D. That’s $35 billion a year, more than TCS’s entire annual revenue of $29 billion. So why isn’t Indian IT investing more in research? The answer lies in history. The industry was built on cost arbitrage, offering high-quality software services at lower costs. But the world has moved beyond that model, and now, as AI and GenAI take center stage, the Indian IT industry needs to evolve—or risk being left behind. Foundation Models: Sam Altman may have unwittingly triggered a wave of AI patriotism when he questioned India’s ability to build foundation models. The response? A surge in locally developed SLMs (small language models) and a renewed focus on India-centric AI development. As one of the hosts said, "You need to shake up people, give them the ecosystem, and build on it." While India has made promising strides, the real challenge lies ahead: Can we scale these efforts into full-fledged foundation models that can compete with global tech giants? With the government stepping in to support AI startups and research initiatives, the next few months could determine whether India emerges as a serious player—or remains dependent on Big Tech. Big Tech’s AI Investments vs. India’s Startups Microsoft recently announced a $3 billion AI investment for startups focused on deep-tech R&D. Google’s India Fund is worth $10 billion, fueling innovation across the country. In contrast, TCS’s entire R&D budget is just $300 million—a tenth of Microsoft’s new AI push. The issue isn’t just about funding; it’s about who is leading India’s AI revolution. While Indian conglomerates like Reliance have been incubating deep-tech startups for years, the real heavy lifting in AI development is still being done by global giants like Microsoft, Google, and NVIDIA. Most of the GCCs (Global Capability Centers) are doing the work today. Microsoft, Google—they’re solving most of India’s problems. Geopolitics and AI: The Chip Battle India Can’t Afford to Lose AI isn’t just about algorithms and data—it’s about hardware. And in a world where semiconductor supply chains can be disrupted overnight, India needs to ensure it doesn’t get left out of the global chip race. we think If the United States decides not to prioritize India for semiconductor exports, our stock market could crash by 25%. That’s the reality of being dependent on foreign tech. The lesson? If India wants AI independence, it needs to develop core intellectual property (IP), not just build on what others create. The Next 8 Months: With GPU resources expected to go live soon, the Indian government is set to decide who gets access to AI infrastructure and who doesn’t. Startups will have to prove their worth, and Big Tech consultants will play a key role in deciding who gets a seat at the table. But this isn’t just about one policy decision—it’s about the larger roadmap. In the coming months, India will take crucial steps toward building its own foundational models, shaping its AI ecosystem, and navigating its geopolitical ties with the US and other global powers.