Mint Explainer | Will 2026 be a turning point for AI in India?

As India strides into 2026, the artificial intelligence (AI) landscape is undergoing a significant transformation, shifting from a phase of experimentation to one of practical application and infrastructure development. Several key trends suggest that 2026 could indeed be a pivotal year for AI in India, marking a transition towards maturity and tangible impact.

One of the most notable developments is the substantial investment pouring into India's AI ecosystem. Major global tech leaders, including Amazon, Microsoft, and Google, are collectively investing nearly $100 billion in India, focusing on building data centers, cloud platforms, and chip design capabilities. This massive capital infusion aims to position India as a strategic AI hub, driven by corporate demand and geopolitical considerations. Specifically, Amazon Web Services plans to invest $35 billion by 2030 in Indian cloud and AI infrastructure, while Microsoft has committed $17.5 billion for AI and cloud expansion between 2026 and 2029. Google is also constructing a gigawatt-scale data center in Visakhapatnam as part of a $15 billion pledge.

This investment surge reflects a broader trend of increased IT spending in India, with an estimated 10.6% growth to $176 billion in 2026. Enterprises are steadily moving away from legacy systems towards cloud-based and AI-driven platforms, prioritizing initiatives that deliver near-term efficiency, resilience, and measurable business impact.

However, the rapid growth of AI in India also brings challenges, particularly in the form of a significant AI skills gap. Demand for AI professionals is expected to cross 1 million by 2026, but current estimates suggest that only a fraction of IT professionals possess the required AI skills. This shortage could hinder innovation and slow down the deployment of AI solutions. To address this, companies are investing in upskilling initiatives, and policymakers are urged to invest in AI centers of excellence and industry-linked learning programs. Microsoft, for example, is doubling its skilling commitment to equip 20 million people in India with AI skills by 2030.

Another key trend is the shift towards "agentic AI," where AI systems move beyond assistance to autonomous action within business workflows. This requires a rethinking of architectures to ensure AI agents have reliable data access and auditable outcomes. As intelligent agents take on operational work, the focus will shift from training models to delivering dependable inference at scale.

Data sovereignty is also expected to play a crucial role in shaping India's AI landscape in 2026. Regulatory and national priorities are aligning around control of sensitive information and trusted environments for AI development. Hybrid models that combine local control with secure mobility will likely become the norm, balancing the need for innovation with policy considerations.

India is also actively shaping the global AI governance landscape. The India AI Impact Summit, scheduled for February 2026 in New Delhi, aims to build consensus on global AI governance norms and promote responsible and inclusive AI, particularly for developing economies. The summit will focus on democratizing AI and bridging the AI divide, ensuring that AI benefits all of humanity.

Several Indian startups are also contributing to the AI revolution by addressing structural constraints related to compute, silicon, model lifecycle, and domain understanding. These startups are working on hardware, platforms, and agentic approaches to transform AI from experimentation into an operational advantage.

Overall, 2026 is poised to be a transformative year for AI in India. The combination of substantial investments, a focus on practical applications, the rise of agentic AI, and a push for global AI governance suggests that India is well on its way to becoming a significant player in the global AI landscape. However, addressing the AI skills gap and ensuring responsible AI development will be crucial to realizing the full potential of AI in India.