A new report on India's artificial intelligence ecosystem has found that 85 per cent of AI developers in the country rely on public cloud infrastructure, while 74.5 per cent believe they have sufficient choice among compute providers — suggesting that access to compute is not yet a widespread competition bottleneck. The findings were released on Wednesday, 19 August by public policy think-tank The Dialogue.

The report, titled 'Competition, Innovation, and Market Structure in India's AI Ecosystem: An Empirical Assessment,' draws on data from AI startups, developers, businesses deploying AI, and end consumers. It maps competition dynamics, market structure, and adoption trends across India's AI value chain.

Compute Access and Affordability

While the majority of developers report adequate provider choice, the report flagged compute affordability as a concern that will demand sustained attention as AI adoption scales. The distinction is significant: access to providers may be sufficient today, but cost pressures could become a structural constraint as workloads grow and smaller players compete for the same infrastructure.

Open-Source Tools Reshaping the Landscape

Open-source technology is emerging as a powerful leveller in India's AI market. A striking 96.2 per cent of AI developers reported relying on open-source tools, with 62.2 per cent indicating a high level of reliance. More than 79 per cent of developers view open-source models as at least a partial substitute for proprietary alternatives — a signal that open-source is actively lowering barriers for startups and downstream developers, and providing a competitive check on dominant commercial model providers.

Data and Talent: Two Persistent Gaps

Data remains a structural challenge. About 63.2 per cent of AI developers identified data standardisation as their biggest data-related hurdle. Only 15 per cent said government-held datasets were readily accessible — a finding that points to the underutilisation of public data as an AI enabler. The report argues that improving the usability and accessibility of existing datasets may matter as much as increasing their volume.

On the talent front, 47.2 per cent of AI developers flagged talent availability as a major barrier to growth. The report recommended strengthening AI skills pipelines, workforce development programmes, and talent mobility frameworks to sustain sectoral momentum.

Business Impact: AI Delivering Measurable Returns

For enterprises, AI adoption is already translating into measurable gains. About 85 per cent of businesses surveyed reported a positive impact from AI deployment. Among them, 61 per cent cited improved decision-making and 55 per cent reported faster delivery of products or services. Around 67 per cent said the cost of AI was reasonable relative to the benefits generated — a favourable cost-benefit perception that could accelerate enterprise adoption in the near term.

What the Findings Signal for Policy

The report's empirical sweep offers a rare ground-level view of where India's AI ecosystem stands relative to global benchmarks. Notably, the combination of high open-source reliance and broad cloud access suggests a competitive market structure at the infrastructure layer — but the data and talent gaps identified point to mid-stack vulnerabilities that policy must address. With India's AI ambitions scaling rapidly, the report's findings are likely to inform ongoing regulatory and investment conversations at the Centre.