India will need to step up investment in artificial intelligence, semiconductor manufacturing and quantum technology if it wants to build the technological capabilities required for its next phase of economic growth.
Union Finance Minister Nirmala Sitharaman highlighted these areas as major investment priorities during a fireside chat organised by the IIT Madras Alumni Association. She said India needs to move faster on the hardware, skills and institutional ecosystem needed to turn emerging technologies into wider economic capabilities.
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Her comments come as India continues to expand its technology ecosystem, while questions remain about how the country is positioned in the global AI race.
India’s AI story is bigger than its stock market presence
Sitharaman pushed back against the perception that India has fallen behind in AI. According to her, part of that impression comes from the relatively limited number of AI companies visible on the country’s major stock exchanges.
She pointed to the growing number of Indian AI startups that have already achieved unicorn status or are approaching it. The minister argued that the absence of a large cluster of listed AI companies should not be treated as a measure of how much activity is taking place in the sector.
She also acknowledged that startups can be cautious about going public because of the compliance requirements involved. At the same time, she said listings can give companies greater visibility and help demonstrate the scale of investment and institutional support developing around AI in India.
The broader message was that India’s AI progress needs to be visible not only through startups and private funding but also through stronger market participation and institutional development.
AI investment will need more than software
For India to expand its AI capabilities, investment cannot stop at applications and startups. Sitharaman stressed the need to build the underlying hardware and skills required to support the sector.
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That includes better infrastructure, training and teachers who can keep pace with the rapid development of AI. Educational institutions, she said, will need to continually update the knowledge they provide as AI becomes part of a wider range of industries.
This becomes particularly relevant for India’s micro, small and medium enterprises. The country’s MSME sector spans a large number of manufacturing and industrial activities, and Sitharaman said these businesses will increasingly need AI-based solutions to improve productivity and remain competitive with companies in other markets.
The question, therefore, is less about whether India should invest in AI and more about the scale and timing of that investment. Sitharaman called for academia and industry to help determine what level of investment is appropriate.
Semiconductors and quantum technology enter the same investment equation
AI is only one part of the technology infrastructure India will need to develop. Sitharaman identified semiconductor chips and quantum technology alongside AI as areas likely to attract major infrastructure investment in the coming years. Building these capabilities will require cooperation between universities, researchers, businesses and institutions.
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The connection is important. AI requires increasingly powerful computing infrastructure, while advanced semiconductor capabilities are central to the hardware that supports modern digital systems. Quantum technology represents another emerging area where countries are seeking to develop research and industrial capabilities.
For India, developing these sectors will therefore involve more than attracting capital. It will also require specialised skills, research capacity, supporting institutions and stronger links between academic work and commercial applications.
Defence technology is another emerging investment area
The Finance Minister also highlighted defence production as an area where India has room to expand investment, particularly in technologies such as drones, unmanned systems and other advanced platforms.
She noted that India has moved beyond being primarily an importer of defence equipment and is now exporting products across different categories. However, she said there remains considerable scope for further development.
The global defence technology market is also changing rapidly. According to Sitharaman, even countries that have traditionally been major defence equipment suppliers are facing challenges in keeping up with technological advances, including developments in unmanned systems and drones.
She said both private and public investment would have a role to play in expanding India’s defence production capabilities, while noting the progress already made by the private sector.
What comes next for India’s technology ambitions?
The investment priorities outlined by Sitharaman point towards a broader technology strategy rather than a single-sector push. AI will require computing infrastructure, hardware and skilled professionals. Semiconductor manufacturing will require industrial capacity and specialised expertise. Quantum technology will depend heavily on research and institutional capabilities. Defence technology, meanwhile, is creating new demand for advanced systems such as drones and unmanned platforms.
For India, the challenge will be building these capabilities at the same time while connecting startups, established companies, universities and government-backed programmes.
Indrani Priyadarshini is a journalist and editorial professional specialising in technology, artificial intelligence, smart cities, green energy, and digital transformation. With over four years of experience in tech journalism and digital media, she is known for turning complex industry developments into clear, engaging, and insightful stories. Her expertise spans reporting, editorial strategy, digital publishing workflows, and in-depth coverage of emerging technologies shaping the future.
