Why sovereign AI is critical to India’s next growth leap?

Supply chains are being redrawn, geopolitical equations are shifting and artificial intelligence is rapidly becoming a defining source of economic power. In this environment, sovereign AI is emerging as a strategic capability, with implications for energy security, defence preparedness and digital infrastructure.

For India, the question is no longer whether AI will transform industries and economies. The more important question is whether India will merely consume AI developed elsewhere or build the capabilities needed to shape, scale and govern it on its own terms.

Economic resilience, national security, technological capability and human capital can no longer be viewed as separate agendas. They are increasingly interconnected, and a country’s ability to compete will depend on how effectively it develops and brings these capabilities together.


AI is becoming a foundation of competitiveness. Much as electricity powered industrialisation and connectivity enabled the digital economy, intelligence is poised to become a critical driver of productivity, innovation and economic value creation. The next decade will reward nations that can translate AI investments into stronger industries, more competitive businesses, better public services and higher-value jobs.

KPMG’s Global AI Pulse Q3 2026 survey found that 64% of organisations in the Americas, 61% in Asia Pacific and 56% in Europe, the Middle East and Africa (EMEA) were scaling AI or had progressed beyond that stage.

The survey also found that 89% of organisations reported measurable value from AI, although only 12% consistently assessed that value against costs across the enterprise. Responsible AI, trust and security remain among the top priorities for business leaders.

The AI conversation has clearly evolved beyond experimentation to focus increasingly on scale, trust, infrastructure and long-term value creation.

For India, the opportunity extends well beyond enterprise transformation. The country has already demonstrated how digital public infrastructure can drive inclusion at population scale. Aadhaar, UPI and DigiLocker have transformed access to services and created a foundation for innovation. The next opportunity is to build AI infrastructure that makes intelligence available at a similar scale.

This is as much an economic investment as a technological one. Countries that build capabilities across data, compute, semiconductors, models and talent are likely to capture a greater share of future digital value chains. These capabilities can help attract investment, create skilled employment, improve productivity and strengthen long-term competitiveness.

Countries that rely entirely on external capabilities risk becoming consumers of intelligence rather than creators of it. The global race for AI leadership is increasingly becoming a race for compute, with access to advanced semiconductors, AI-ready data centres and high-performance computing infrastructure helping determine which economies can innovate independently and scale AI affordably.

India’s investments in digital infrastructure, semiconductor manufacturing and national AI programmes therefore represent far more than technology initiatives. They are investments in future economic capacity.

The strategic implications extend beyond growth. Future battlefields will be shaped as much by software, intelligence and autonomous systems as by conventional military assets. Dependence on external AI systems for critical functions introduces vulnerabilities that few nations can afford.

Building domestic capabilities in AI, semiconductors and advanced manufacturing can strengthen both national resilience and economic self-reliance.

Agriculture presents another significant opportunity. By combining satellite imagery, weather intelligence, soil data and crop analytics, AI can help farmers make better decisions, use resources more efficiently and increase yields.

More resilient agricultural systems can strengthen food security, reduce waste across supply chains and improve farmer prosperity, while helping the country adapt to climate-related challenges.

AI can also help transform sport through better talent identification, performance analytics and athlete development, strengthening both sporting excellence and the broader sports economy.

Across these sectors, digital sovereignty is emerging as a defining source of national competitiveness. Previous industrial revolutions were shaped by access to natural resources, manufacturing capacity and capital. The next wave of value creation will be shaped by access to intelligence, compute and innovation ecosystems.

For India to realise this opportunity, its AI systems must reflect its realities. Solutions for healthcare, financial services, agriculture, education and public services need to understand Indian languages, contexts and operating conditions. This understanding is essential to making AI trusted, inclusive and effective at scale.

India has already created considerable momentum. The priority now is to connect government initiatives, industry investments, academic research and startup innovation into a coherent ecosystem.

Connectivity laid the foundation for India’s digital transformation, and intelligence can define the next chapter. The countries that lead the AI era will build the infrastructure, talent and institutions that shape how AI creates value. India has the opportunity to be one of them.

Nilachal Mishra is Partner and Head of Government & Public Services (G&PS) and National Leader for Government and Infrastructure at KPMG in India. Purushothaman KG is National AI Leader and Head of Technology Transformation at KPMG in India.