How India Is Becoming The World's Most Important AI Consumer Market

The global race is on to identify the next significant AI investment. Investors are scouting locations with affordable energy for data centers, potential bottlenecks in semiconductor production chains promising substantial returns, and companies potentially harboring revolutionary algorithms.

India typically remains absent from these discussions. The country isn't positioned to become a semiconductor manufacturing powerhouse anytime soon. Despite announcements of major data-center projects, India's aspirations are constrained by high energy expenses and limited available land.

Nevertheless, India could represent the most substantial and secure investment in the artificial intelligence era - not as a developer of models, but as their user.

Leading language model companies recognize this potential. Recently, three major firms have offered complimentary access to their premium services exclusively for Indian users. OpenAI Inc. is providing its ChatGPT Go plan free to Indians for twelve months; Alphabet Inc. is making Gemini Pro available to all 505 million Reliance Jio Infocomm Ltd. subscribers for a year and a half; and Perplexity AI Inc. is offering its Pro version to Bharti Airtel Ltd.'s 350 million customers.

Two of these companies partnering with telecommunications providers is partially about achieving scale. India delivers unparalleled user numbers, and its youth population enthusiastically embraces new technologies.

For telecom companies, these partnerships represent opportunities to enhance subscription offerings. However, analysts have noted a key difference: rather than entertainment packages, these AI additions are being marketed as essential utilities.

We are witnessing the beginning of an unprecedented social experiment: What happens when advanced, unlimited AI capabilities are freely distributed to over a billion smartphone users?

Indian officials anticipate positive outcomes. This technological shift might enable the country to escape its persistent low-skill, low-productivity cycle. While growth statistics appear impressive, they're driven by a few high-performing sectors; most citizens are self-employed or work in informal businesses, and according to International Labor Organization data, are only half as productive as global averages.

In a recent AI-focused publication, the government think tank NITI Aayog projected that AI could potentially triple productivity for India's informal workforce within a decade, raising hourly output from $5 to $15. Their analysis suggests widespread AI adoption could contribute between $500-600 billion to India's economy by 2035.

While New Delhi maintains an optimistic outlook, these figures likely incorporate favorable assumptions. Previous attempts to equip India's hundreds of millions of young people with competitive skills have fallen short. Additionally, as noted by Bloomberg columnist Andy Mukherjee, entry-level white-collar positions in India face similar AI-related risks as elsewhere.

Yet governmental optimism about this technological transformation isn't entirely unfounded. Young Indians aren't merely enthusiastic about technology; they're distinctively verbal users. The prevalence of Indian-created YouTube tutorials reflects how many Indians prioritize video platforms when seeking information.

This inquisitive approach aligns perfectly with an era defined by language models that enable competence through conversation. LLMs have demonstrated ability to flatten the skill curve - enabling coding novices to create reasonably effective websites and helping inexperienced individuals navigate complex governmental processes.

Evidence of this transformation is already visible online. On X (formerly Twitter), ChatGPT's characteristic syntax appears in thousands of verified Indian accounts. Despite being recognizable as AI-generated, these posts achieve their engagement objectives - functioning effectively despite concerns.

Similar patterns will emerge offline. Indians will decode previously incomprehensible instructions and teach themselves new systems incrementally, overcoming educational deficiencies. Speakers of languages like Hindi or Marathi will expand their horizons through enhanced linguistic navigation capabilities in India's multilingual environment. They'll deliver services bridging significant cultural divides.

OpenAI and competitors appear to recognize that countries can contribute to AI infrastructure in various ways. Beyond data centers, power facilities, and semiconductor fabrication plants, people represent the essential component - and India has an abundance of human capital.

This positions India as potentially the world's most significant AI opportunity - not as a chip manufacturer or algorithm developer, but as everything else. Not concentrated in one sector, but across all industries. If language models genuinely lower competency barriers and empower the unskilled and disconnected, India's hundreds of millions of underutilized workers could become the world's most significant growth narrative.

While India's government has struggled to empower its citizens and develop their skills, perhaps it's time to see what language learning models can achieve.

(Mihir Sharma is a Bloomberg Opinion columnist. A senior fellow at the Observer Research Foundation in New Delhi, he is author of "Restart: The Last Chance for the Indian Economy.)

Disclaimer: These are the personal opinions of the author

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)