It's the ecosystem, stupid! Anand Mahindra celebrates India's rise to the top 3 in the AI race, beating the UK, Japan and South Korea

India may not be leading the world in making advanced artificial intelligence (AI) chips or developing foundational large language models (LLMs), but it has another advantage that could prove equally important in the global AI race: its technology ecosystem. Industrialist Anand Mahindra believes India has a significant opportunity to emerge as a major AI player, pointing to the country's software talent, systems integration expertise and huge domestic market. His remarks came after Stanford ranked India third in its global AI vibrancy rankings, putting it ahead of countries such as Japan and South Korea.

Sharing his thoughts in a post on X, Mahindra said India's position in the AI landscape could be viewed from a different perspective. He also linked the development to renewed interest among global investors in Indian equities. "I recently posted about the irony of India coming back into favour with global investors, partly because we were seen as being outside the supposedly overheated AI trade. But perhaps there’s another way to look at it," he wrote.

Anand Mahindra says 'It's the ecosystem, stupid!'

Mahindra acknowledged that India does not manufacture the most advanced chips or lead the development of foundational LLMs. However, he believes the country's strengths could become increasingly important as AI adoption expands across industries.


To explain his argument, the Mahindra Group chairman recalled an analogy he had used in Tech Mahindra's annual report. He compared the evolution of AI with the rise of smartphones. Smartphones created the platform, but applications eventually unlocked their real potential. Mahindra believes AI could follow a similar path, with applications, specialised industry knowledge and large-scale enterprise adoption driving its next phase of growth.

He invoked the famous political phrase popularised by James Carville, saying the AI equivalent should be: "It's the ecosystem, stupid!" According to Mahindra, the biggest opportunities may emerge when businesses start using AI to solve specific problems, improve operations and develop applications for different sectors.

Why India could have an advantage in the AI race

Mahindra identified three major strengths that could help India benefit from the next phase of AI growth. The first is the country's large pool of software professionals and technology talent. Indian IT companies have decades of experience in developing software, managing complex technology projects and providing digital services to businesses worldwide.

The second advantage is systems integration expertise. As companies move beyond experimenting with AI tools and begin deploying them across their operations, integrating different technologies into existing business systems will become increasingly important. India also has an enormous domestic market that could provide opportunities to develop and test AI applications across different industries and use cases.

These strengths could help Indian companies participate in the AI economy even without competing directly with global technology giants in chip manufacturing or foundational AI models. "The real explosion of applications, domain expertise & enterprise-wide deployment may still lie ahead," Mahindra wrote.

Anand Mahindra links India's AI opportunity to investor interest

Mahindra also connected India's growing position in AI with the changing outlook of global investors towards Indian markets. He had earlier pointed out that India was attracting renewed investor interest partly because it was seen as being outside the overheated AI trade. However, he suggested that investors could be overlooking another potential advantage.

If India's software talent, technology infrastructure and domestic demand translate into meaningful AI opportunities, the country could benefit from the next stage of the global AI boom. "Perhaps India isn't just a refuge from the AI hype. It may have a compelling AI opportunity of its own," he wrote.

Mahindra added that if this opportunity materialises, the renewed interest in Indian equities could have more staying power than investors currently expect.