India’s Third Path in the Global AI Race

Amid the Global AI race and India must chart its own course—leveraging DPI, ethics, and frugal innovation for global leadership.

Introduction

Anulekha Nandi, “Navigating the US–China AI Divide: Priorities for India” (Observer Research Foundation, Sept 5, 2025) notes how the United States and China are racing for supremacy in artificial intelligence (AI), each with very different approaches. The US pushes innovation and deregulation, while China stresses governance and global reach. India, caught between them, must find a path that protects its autonomy, strengthens its AI capacity, and promotes its values.

Diverging Approaches

The United States and China show the world two very different AI models. The US promotes rapid innovation, driven by big tech companies and a belief in free markets. This strategy has created powerful AI tools but often ignores ethics such as fairness, privacy, and bias. China, by contrast, uses state control. Its government directs AI development to serve domestic needs and exports governance-heavy systems abroad. China links AI to projects like the Belt and Road Initiative, using them to build dependencies in the Global South.

The American Model

The US relies on Silicon Valley’s energy and creativity. Private firms like NVIDIA, OpenAI, and Google dominate AI research. Deregulation allows fast progress but weakens oversight. Problems like disinformation and misuse of data often remain unaddressed. The US presents AI as a commercial product rather than a shared global good. While strong in innovation, it lacks moral leadership.

The Chinese Model

China takes the opposite path. AI is tied closely to its government’s priorities, including surveillance and social control. Abroad, China offers AI systems along with loans and infrastructure. Nations in Africa, Asia, and Latin America are encouraged to adopt these technologies, often at the cost of their digital independence. While China’s system is efficient, it risks spreading authoritarian-style governance.

India’s Dilemma

For India, copying either path would be dangerous. If it follows the US model, it risks dependence on foreign companies and data exploitation. If it imitates China, it would undermine its democratic values and autonomy. India must therefore carve out a third way, one that builds on its strengths: a large market, democratic values, frugal innovation, and Digital Public Infrastructure (DPI).

Building Capacity

India must first improve its own AI ecosystem. This requires investments in computing power, such as national data centres, and partnerships with private firms. Projects like Bhasha AI, which builds language models in Indian languages, show how diversity can be turned into strength. Training more AI researchers and providing funding for local startups will help India reduce its reliance on foreign technology.

Digital Public Infrastructure

India’s greatest strength is its DPI, including Aadhaar for identity, UPI for payments, and Account Aggregators for data sharing. These platforms are low-cost, secure, and scalable. They have already improved financial inclusion, digital access, and governance for millions of Indians. Exporting DPI to other countries, especially in the Global South, offers India a unique soft-power tool. Unlike China’s model, DPI does not create debt or dependency. Instead, it helps nations build their own systems while protecting sovereignty.

Exporting Values

DPI is not just a technology export but also a value export. It shows that innovation can be inclusive, affordable, and citizen-focused. Nations in Africa, Southeast Asia, and Latin America share India’s challenges of scale and inequality. They can adapt DPI to their needs, building AI systems for farming, healthcare, and education. By offering cooperation rather than control, India can earn trust and leadership.

Frugal Innovation

India’s tradition of jugaad—creative problem-solving with limited resources—fits perfectly with AI for development. Instead of building flashy but costly technologies, India can focus on practical solutions that improve lives. AI-powered tools for farmers, disease detection in rural clinics, and language-based learning apps can bring immediate benefits. Such innovations prove that AI can serve humanity, not just markets or governments.

Ethical Leadership

India must also promote ethical principles. Data privacy, fairness, and transparency should be core to its AI policies. Unlike the US, which often leaves ethics to corporations, or China, which sacrifices rights for control, India can balance innovation with responsibility. Its democratic institutions give it credibility to advocate for inclusive and safe AI standards worldwide.

Global Leadership

India can take its ideas to global forums such as the G20, BRICS, and the International Telecommunication Union. By leading discussions on equity, sovereignty, and ethical AI, India can shape international rules. It can form coalitions with other Global South nations that seek alternatives to US and Chinese models. Strategic partnerships, education exchanges, and research collaborations will strengthen this leadership.

Challenges Ahead

India’s path will not be easy. Its AI research funding is still limited compared to the US and China. Skilled professionals are fewer, and infrastructure gaps remain, especially in rural areas. China and the US also dominate international standards bodies, making it hard for India to push its views. Yet India’s trust-based approach, combined with democratic values and digital successes, can help overcome these hurdles.

The Third Path

India does not need to compete with the US or China directly. Instead, it can offer a “third path” that balances innovation with governance, and technology with ethics. By strengthening domestic capacity, expanding DPI exports, and building global alliances, India can emerge as an independent, trusted leader. It will be seen not as a rival superpower, but as a partner offering practical and fair solutions.

Conclusion

The AI race is shaping the future of technology and geopolitics. The US promotes innovation with little regulation, while China advances governance-heavy systems tied to state power. India must avoid both extremes. Its best strategy is to build on its strengths—democratic values, frugal innovation, and DPI—to offer a unique alternative. If India succeeds, it will not just join the AI race but redefine it by showing the world that AI can be ethical, inclusive, and empowering for all.

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The Source’s Authority and Ownership of the Article is Claimed By THE STUDY IAS BY MANIKANT SINGH