India's technology sector is at a crucial juncture, brimming with talent and innovation but still seeking the necessary capital and policy support to match its ambitions. This was a key theme at the Mint Leadership Dialogues 2025 held in Bengaluru, where industry leaders discussed India's tech potential and the obstacles hindering its progress.
The Capital Conundrum
A significant point of discussion was the shortage of capital hindering India's tech aspirations. T.V. Mohandas Pai, Chairman of Aarin Capital Partners, described India's technology moment as being at a "crossroads," emphasizing that while the nation possesses human and physical capital, it lacks sufficient financial capital. He pointed out the massive investments being made in AI and EV sectors by other countries, like the US and China, dwarfing India's efforts. Sudhir Sethi, Founder and Chairman of Chiratae Ventures, echoed this sentiment, noting the dependence on international capital for risk investments in emerging tech areas like AI, semiconductors, and space. He estimated that less than 10% of the $300 billion invested in the last five years came from within India.
Strategic Policy Changes
The panelists emphasized the necessity for strategic policy changes to stimulate innovation and lessen the reliance on international funding. They advocated for policies that would encourage domestic capital investment and promote research and development (R&D) within the country. Pranav Pai, Founding Partner at 3one4 Capital, stressed the importance of increased public R&D funding for universities to fuel the talent pipeline.
The Rise of New Builders
Pai emphasized that transformative changes in technology are typically driven by new companies, not established ones. He argued that established service companies will primarily use AI to transform their clients' businesses, rather than leading in core AI development like LLMs. He stressed the need to scale up new companies that are growing rapidly.
Repurposing Talent
Another critical aspect addressed was the need to reskill and repurpose the existing workforce to align with the evolving tech landscape. One panelist highlighted that a significant portion of the current tech workforce might be left behind in the shift towards AI and other advanced technologies. He suggested that large IT firms should invest their resources in nurturing companies and steering clear of quarter-on-quarter profitability pressures.
Challenges and Opportunities
India's IT sector is experiencing a structural shift in growth, with HSBC projecting a stabilization at 4-5% in the coming years, a notable decrease from the historical double-digit rates. This is attributed to factors such as muted technology spending, the industry's large size, and macroeconomic trends in the US and Europe. Despite these challenges, the Indian IT sector is projected to reach $350 billion by 2026 and potentially contribute 10% of India's GDP. The sector is also expected to add 126,000 jobs in FY25, reaching a 5.8 million-strong workforce.
Emerging technologies like AI, machine learning, IoT, cloud computing, and others are propelling the IT sector forward. India is becoming a global hub for AI research, driven by its robust IT industry and large pool of tech talent. Government programs like the National AI Strategy are further supporting this growth.
Looking Ahead
The Mint CEO roundtable highlighted the critical need for India to address its capital shortage and implement strategic policy changes to fully realize its tech potential. While the Indian IT sector faces challenges such as a global economic slowdown and increasing competition, it also has significant opportunities in areas like AI, cloud computing, and digital transformation. By focusing on upskilling its workforce, fostering innovation, and attracting both domestic and international investment, India can solidify its position as a global tech leader.
