AI Is the New Oil, and India Risks Falling Behind, Economic Survey Warns

India faces a narrowing opportunity to secure its place in an economy increasingly shaped by artificial intelligence, advanced computing, and control over critical technologies, according to the Economic Survey 2025–26. The report cautions that without swift and strategic action, the country risks remaining a peripheral player while global power structures are rewritten around AI capabilities.

The Survey argues that just as oil and steel underpinned economic dominance in the last century, the defining resource of the 21st century is “compute.” This includes not only high-end processors and graphics chips, but also the energy systems, data centres, and critical minerals required to sustain them. Nations that control these assets, the report notes, are gaining disproportionate influence over trade, innovation, and geopolitics.

Technology Rivalries Reshaping Global Power

The warning comes at a time of escalating competition between the United States and China, where technological leadership is increasingly outweighing traditional military strength. In this environment, the Survey says, economic resilience alone is no longer enough. Instead, India must aim for “strategic indispensability” — a position where it becomes so integral to global technology value chains that it cannot be easily excluded or replaced.

The report points to the United States’ active role in reshaping global tech ecosystems through export controls, licensing rules, selective alliances, and trade agreements. Washington-led efforts to build a trusted AI supply chain — spanning chips, energy, advanced manufacturing, data infrastructure, and critical minerals — are already redirecting global investment and innovation flows.

At the same time, the Survey highlights risks for emerging economies stemming from changes in global financial regulation and digital finance frameworks. These shifts could influence cross-border capital movement just as AI-driven investment becomes increasingly concentrated in a handful of technology-dominant regions.

Two Competing Models in the AI Race

According to the Survey, the global AI landscape is being shaped by two contrasting approaches. Advanced Western economies largely follow a top-down model dominated by a small number of hyperscale firms, frontier AI models, and heavily concentrated intellectual property backed by massive private capital. While powerful, this model is expensive and increasingly closed to late entrants.

By contrast, many developing and middle-income countries are pursuing a bottom-up strategy that emphasises decentralised innovation, strong public-sector coordination, and sector-specific AI applications built on public digital infrastructure. The Survey concludes that attempting to mirror the US or Chinese model would be unrealistic for India and could divert resources away from more effective pathways.

Instead, it describes a bottom-up approach as essential for India’s circumstances. This would prioritise practical AI use cases in healthcare, agriculture, education, finance, logistics, climate adaptation, and governance. Open-source technologies, shared public datasets, and domestic innovation networks should take precedence over reliance on large, proprietary AI systems.

India’s Untapped Advantages

Despite the risks, the Survey underscores that India enters the AI era with significant strengths. The country is among the world’s leading contributors to AI research and possesses one of the largest pools of technical talent globally. Recent international assessments rank India just behind the United States in workforce readiness and AI literacy.

Another key advantage lies in India’s vast and diverse data ecosystem. Its linguistic, geographic, and socio-economic diversity generates rich datasets with high potential value across sectors such as public health, agriculture, urban planning, and disaster resilience. With appropriate safeguards and governance, this data could become a powerful competitive asset.

A Narrow Window for Action

The Survey, however, is clear that these advantages will not translate into leadership without coordinated policy execution. It calls for accelerated investment in computing infrastructure, secure access to critical minerals, robust data governance frameworks, and institutions capable of supporting sustained innovation.

Failure to act decisively, the report warns, could leave India structurally dependent on foreign technology platforms for decades to come. The message is unambiguous: the window to shape India’s role in the AI-driven global economy is limited, and delay could carry long-term consequences.