India will likely emerge as the world’s largest supplier of artificial intelligence services by focusing on deploying cost-effective AI applications rather than building massive frontier models, Electronics and IT Minister Ashwini Vaishnaw said on Tuesday at the World Economic Forum 2026 in Davos.
“We will probably be the biggest supplier of AI services to the world,” Vaishnaw said, arguing that economic returns from AI would come primarily from enterprise adoption and productivity gains, not from developing extremely large models.
Speaking during a panel discussion on AI and geopolitics, Vaishnaw said India was building capabilities across all five layers of the AI stack: applications, models, chips, infrastructure and energy. But was prioritising the application layer where businesses see clear returns on investment.
“ROI doesn’t come from creating a very large model,” he said. “Ninety-five per cent of the work can happen with models which are 20 billion or 50 billion parameters.”
Vaishnaw pushed back against the idea that countries without frontier-scale AI models would be strategically disadvantaged, saying India already had a “bouquet” of mid-sized models that could meet most domestic and enterprise needs. He said such models could often run on far cheaper computing infrastructure, reducing dependence on scarce and expensive graphics processing units (GPUs).
The minister spoke on IndiaAI Mission, through which the government has created a government-backed public-private partnership to pool around 38,000 GPUs into a common compute facility, offering subsidised access to startups, researchers and students at roughly a third of global costs. India is also training 10 million people in AI skills, he added.
Vaishnaw questioned whether large AI models confer geopolitical power at all, warning that some companies investing heavily in frontier models may face financial stress if costs outweigh returns.
“The economics of this fifth industrial revolution is going to come from deploying the lowest cost solution to get the highest possible return,” he said.
The comments come as governments worldwide grapple with how AI could reshape economic power, trade and national security. At Davos, Saudi Arabia’s Investment Minister Khalid Al-Falih echoed the view that AI would ultimately be commoditised and globally distributed, rather than controlled by a handful of countries or companies.
“AI as a general-purpose technology will be quickly commoditised,” Al-Falih said, adding that Saudi Arabia was investing across the AI stack, from data centres and energy to applications and language models.
Microsoft Vice-Chair and President Brad Smith said the biggest near-term political risk to AI adoption was growing resistance to data centre construction, particularly in the United States, over concerns about electricity prices, water usage and local jobs.
“People are asking: what does this mean for me and my family?” Smith said, noting that community opposition had already blocked billions of dollars of private-sector data centre investment.
International Monetary Fund Managing Director Kristalina Georgieva said AI could boost global growth by between 0.1 per cent and 0.8 per cent, but warned that uneven access to infrastructure and skills risked widening gaps between countries and within societies.
“We see jobs that get enhanced, and we also see jobs that are replaced by AI,” Georgieva said, adding that the biggest danger was a “massive divergence” between economies that can absorb AI and those that cannot. |
