India’s late entry into artificial intelligence could turn into an advantage, the Economic Survey said. This delay allows the country to avoid the costly and risky AI buildouts seen in advanced economies.

The Survey noted that early adopters scaled AI when capital was cheap and regulation light. As a result, they locked themselves into energy-intensive systems, rising financial commitments and uncertain revenue models. As these bets grew, so did the risks. In fact, some countries even debated government backstops to contain potential fallout.

India, the Survey argued, need not replicate this approach. Its advantage lies in application-led innovation, effective use of domestic data and strong human capital. Additionally, it benefits from coordinated public institutions, rather than building frontier-scale models. A bottom-up strategy focused on open systems, sector-specific models, and shared infrastructure offers a more sustainable path.

The Survey also warned of risks from rapid data centre expansion, citing global concerns over energy use and debt-fuelled investments. With power, finance and water remaining constraints, indiscriminate scaling could crowd out other priorities.

Instead, the Survey backed smaller, task-specific AI models running on decentralised compute networks. It called this approach better aligned with India’s resources and long-term public objectives.

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