Why sovereignty will determine whether India emerges as a true AI leader

The race for dominance in artificial intelligence (AI) has entered a new phase. In September 2025, Oracle and OpenAI announced a landmark cloud computing deal worth an estimated $300 billion over five years—one of the largest technology contracts in history.

The partnership is part of Project Stargate, a multi-billion-dollar initiative launched by OpenAI, SoftBank, Oracle, and MGX, with participation from NVIDIA and Microsoft. The project aims to build a global network of high-performance AI datacentres designed to cement American leadership in artificial intelligence.

Initially centred in the United States, with its flagship site in Abilene, Texas, Project Stargate is now expanding into the UAE, Norway, the UK, and Argentina, signalling a deliberate global footprint for AI infrastructure controlled largely by US corporations.

Industry analysts have described this as the rise of a “circular economy of AI.” NVIDIA invests in OpenAI, which then uses that capital to purchase NVIDIA’s GPUs, hosted on Oracle’s platforms.

Meanwhile, AMD has entered the ecosystem with a $30 billion partnership with OpenAI, including a potential equity exchange. This tight, self-reinforcing loop of capital and technology is creating a concentrated power structure, where a handful of players control not just the AI software but also the hardware and infrastructure layers that fuel it.

The outcome is clear: accelerated innovation on one side, and growing dependence for the rest of the world. Global AI investments announced in 2025 are reported to exceed $1.5 trillion, underscoring the scale and urgency of this technological power shift.

Global power dynamics in AI

Meanwhile, Huawei has showcased significant advancements at its annual conference in Shanghai, unveiling the Atlas 960 and 960 SuperPoDs, which the company claims are the world’s most powerful AI computing clusters.

Huawei benefits from a domestic market advantage, with the Chinese government restricting local companies from acquiring American AI hardware. However, its progress is constrained by global manufacturing limitations, as cutting-edge chip equipment is controlled by the US and its allies.

China has also made strides in AI software, releasing powerful models such as DeepSeek, Qwen, and Kimi K2, which deliver performance comparable to proprietary global models.

This global power shift in AI is creating deeper geopolitical rifts, technological fragmentation, and trade restrictions. Nations and enterprises are grappling with supply chain uncertainties, and control over the fundamental building blocks of AI—hardware, data, and models—has become a central strategic advantage. This is a complex interplay of money, geopolitics, technological advancement, and talent acquisition.

India’s position and opportunities

The world is heading towards fragmentation. Some AI tech nations, with strong alignment between industry and government, as seen in the Stargate initiative and China, are emerging as dominant players.

Others risk becoming “neo-colonies,” falling under the influence of these AI powers, while some may evolve into “neo-feudal systems,” where private tech giants hold disproportionate power relative to local governments.

India, by comparison, is limited in investment scale, with visibility of roughly $8 billion on the near horizon. Geopolitical restrictions also limit access to certain technologies. Yet, India possesses distinct strengths: a highly aware population, a vast talent pool in AI applications, and rapid adoption across enterprises. These factors are driving faster deployment of AI solutions with a tangible impact on citizens.

India has the opportunity to forge strong collaborations between domestic and foreign technology companies, creating a “hybrid fourth fragment” that safeguards sovereignty while benefiting from global partnerships. The strategy is to build a sovereign AI ecosystem that balances domestic capabilities with selective international collaboration, protecting India from dependency and external control.

The case for sovereign AI

Sovereign AI is the ability for a nation or enterprise to build, manage, and control AI systems according to its own rules and values. The concern extends beyond governments—any enterprise fully dependent on a few proprietary external AI platforms faces significant operational and strategic risks, including vulnerabilities and pricing dependencies.

Strong sovereign AI creates not only an alternative but also a competitive environment that accelerates innovation and value creation, establishing control and reducing risk. India has already begun building its own AI infrastructure, models, and data systems. These initiatives are attracting talent back to the country, expanding the domestic talent pool. That talent, in turn, attracts further investment, which fuels innovation. Leveraging open-source software and collaborations with global peers can accelerate this momentum.

Securing India’s digital destiny

India’s leadership in AI will not come from joining the race for supremacy but from striking the right balance, building a sovereign AI ecosystem that safeguards national interests while fostering open global collaboration.

By developing independent capabilities in hardware, models, and data, and engaging constructively with global partners, India can balance external influences with internal strength. This equilibrium between autonomy and collaboration will define true AI leadership for India.

A S Rajgopal is the CEO and MD of NxtGen Cloud Technologies