India's AI pivot to West challenges 3 decades of strategic autonomy

India's decades-long doctrine of strategic autonomy is giving way to a de facto alignment with the United States as the artificial-intelligence race between Washington and Beijing leaves New Delhi with little room to maneuver.

The artificial-intelligence race between the U.S. and China is pushing India toward an unintended consequence: the effective end of its foreign-policy doctrine of strategic autonomy. India, the world's most populous nation, joined Pax Silica in February, a U.S.-led initiative that seeks to secure AI supply chains from Chinese influence. Of the initiative's 24 signatories — 25 including Taiwan as a participant — eight belong to NATO, and only two (India and the United Arab Emirates) are members of the Brics grouping led by China and Russia, of which India is a founding member.

"India may have a trust deficit with the U.S., but with China, there's zero trust," said Sameer Lalwani, a senior fellow at the Carnegie Endowment for International Peace, in a phone interview. The comment captures the geopolitical calculus driving New Delhi's shift as China actively claims Indian territory and restricts technology transfers, including holding up equipment exports and discouraging Chinese engineers working for Taiwanese firms from passing on know-how to Indian workers.

The scale of Western technology investment in India underscores the direction of travel. Microsoft, Google and Amazon have committed about $67 billion to build data centers and expand cloud capacity in the country, according to the Wall Street Journal. India accounts for roughly a fifth of the world's chip design engineers, with Nvidia, Qualcomm and AMD operating major design centers there. Yet the gap in frontier AI capabilities is widening: a paper published this year by the Foundation for American Innovation described AI development as essentially a two-horse race between the U.S. and China, with middle powers unable to compete on frontier models.

The Limits of Tech Sovereignty

India's ambitions of emerging as a third technological pole face structural constraints. Adam Segal, an expert on emerging technologies at the Council on Foreign Relations, said AI may soon reach the stage of "recursive self-improvement," in which the technology upgrades itself. If that happens, "the gap between the U.S. and China and middle powers will get even larger," Segal said, meaning India would need to adapt either American or Chinese AI rather than develop a frontier model of its own.

Indian elites point to homegrown achievements — the country's nuclear weapons program, which tested its first device in 1974, and a low-budget space program that in 2023 made India the first nation to land a craft near the Moon's south pole — as evidence of technological independence. Indian software services companies and the prominence of Indian-born CEOs at Google, Microsoft and IBM reinforce this confidence. But these strengths do not translate into frontier AI capability, where the capital requirements and compute infrastructure are orders of magnitude larger.

Japan Deepens the Western Pivot

The geopolitical rebalancing extends beyond AI. Japanese Prime Minister Sanae Takaichi visited New Delhi from July 1-3 for the India-Japan Annual Summit, accompanied by more than 50 CEOs. Japan's largest banks have made significant investments: Sumitomo Mitsui Financial Group acquired a 24.2 percent stake in Yes Bank for $1.7 billion, Mitsubishi UFJ Financial Group bought a 20 percent stake in Shriram Finance for $4.45 billion, and Mizuho Financial Group took a 60 percent controlling stake in Avendus Capital for $520 million. The Mumbai-Ahmedabad bullet train, financed by the Japan International Cooperation Agency at a 0.1 percent annual interest rate repayable after 50 years, represents roughly $21 billion in Japanese commitment to Indian infrastructure.

For Washington, the challenge is managing the relationship without appearing to demand digital vassalage. India's membership in rival groupings — Pax Silica and the Quad alongside Brics and the Shanghai Cooperation Organization — reflects its preference for multialignment over formal alliances. But the asymmetry in AI investment and technology flows means India's near-term technological future is tied to the U.S. and its allies, not to China. The last time a major middle power faced such a binary technological choice was during the Cold War, when countries that aligned with the U.S. under the semiconductor supply chain saw outsized economic gains over those that did not.

This article is for informational purposes only and does not constitute investment advice.