The US and China have dominated the development and roll out of artificial intelligence (AI). India, the world’s most populous country, is determined to close the gap.

At the end of February, at the end of the fourth global AI summit hosted New Delhi, India announced that it was set to attract more than US$200bn in AI-related investment during the next two years to accelerate the deployment of the technology across the country. The investment has been earmarked for developing AI models, building data centres, and strengthening energy production, to power new digital infrastructure.

India has already established its position a leading global centre for the AI industry. The country ranks third in the Stanford University Global AI Index and more than 100 million tech-savvy Indians use ChatGPT, according to Bloomberg. Only the US has recorded higher levels of uptake.

India has made strengthening its AI capabilities even further a strategic priority, with the Indian government focused on developing an AI ecosystem that can operate independently to mitigate the risk of disruption from any shifts in corporate strategies or government policies.

An AI market primed for investment

A large population that is already using AI extensively, coupled with firm government commitment to the industry, is drawing in investment from both domestic and international players.

Indian conglomerate Reliance Industries is investing around US$110bn in data centre construction and India’s Tata Group has formed a partnership with ChatGPT developer OpenAI to provide access to 100MW of data centre capacity, rising to 1GW over time.

The deal will allow OpenAI, which opened its first office in India in last year, to operate its most advanced models in India, helping to improve domestic latency performance and meet data residency requirements.

Rival AI-developer Anthropic has opened its first base in India recently too, announcing the launch of a Bengaluru office in February to support its growth in what is already the second-biggest market for its large language model (LLM) Claude.

An active AI M&A market anticipated

The large inflows of capital are already sparking transaction activity in India’s AI market, as businesses turn to dealmaking to strengthen their AI capabilities.

US technology services company Movate, for example, has acquired Prescience, an Indian start-up specializing in AI, data science and advanced analytics, while Indian IT services company Coforge agreed a US$2.35bn deal to acquire Silicon Valley-based AI software engineering business Encora from private equity backers Advent International and Warburg Pincus.

In addition to deal activity driven by dealmakers building up their AI stacks, “acquihires”, joint ventures and partnerships are set to add further momentum behind M&A in India’s AI sector.

Brookfield Asset Management, Reliance Industries and Digital Realty, for example, have formed a joint venture called Digital Connexion to invest US$11bn in a 1GW campus of AI data centres in southern India.

India’s large IT services companies have formed similar partnerships with LLM companies. Bengaluru-based Infosys and Tata Consultancy Services have teamed up with Anthropic and OpenAI respectively to help clients implement AI.

Turning AI ambition into executable deals

India has big AI ambitions. For dealmakers in India and across APAC, the acceleration of AI investment points to three clear priorities.

• Move fast on infrastructure-linked opportunities. The race to build AI data centre capacity is creating a wave of joint ventures, partnerships, and M&A that rewards those who can execute with speed and precision.
• Look beyond traditional acquisitions. Acquihires, strategic partnerships, and JVs are becoming the preferred deal structures as companies seek AI talent and capability quickly. Dealmakers should be prepared to evaluate and close a broader range of transaction types.
• Manage cross-border complexity with the right infrastructure. As Indian and APAC deals increasingly involve multinational counterparties, from Silicon Valley firms to global asset managers, the ability to securely manage due diligence, data residency requirements, and multi-party collaboration is critical.