In the annals of geopolitical transformation, few analogies have proven as prescient as the comparison between artificial intelligence and petroleum in the twentieth century. Just as control over oil reserves once determined the fortunes of nations and shaped the architecture of international relations, the capacity to develop, deploy, and govern artificial intelligence systems has emerged as the defining fulcrum of twenty-first-century power. The parallels extend beyond mere economic value – both resources possess the strategic significance to reshape military capabilities, reconfigure global supply chains, and fundamentally alter the balance of influence among nations. Yet this analogy, while illuminating, understates a crucial distinction: whereas oil remained confined to geological boundaries, algorithmic power transcends territorial sovereignty, creating new forms of dominance that scholars increasingly characterize as digital colonialism.
The United States maintains its position as the preeminent artificial intelligence power, leveraging world-leading universities and companies alongside a global network of allies and partners, while China continues executing long-term, state-led policies, including initiatives like “Made in China 2025” to increase self-reliance and bolster its domestic AI industry. This bipolar concentration of technological capability has profound implications for medium powers and developing nations, potentially relegating them to permanent subordination within an emerging techno-economic hierarchy. Technology itself could become a geopolitical actor, with AI possessing motives and objectives that differ considerably from those of governments and private entities, fundamentally altering the traditional Westphalian system of sovereign nation-states.
For India, this transformation presents both an unprecedented opportunity and an existential challenge. With a population exceeding 1.4 billion, India ranks first globally in AI skill penetration with a score of 2.8, surpassing the United States and Germany according to the Stanford AI Index 2024. This human capital advantage, combined with the government’s substantial investment through the IndiaAI Mission approved in March 2024 with an allocation of ₹10,300 crore over five years, positions the nation to transcend the binary choice between American and Chinese technological paradigms. India’s approach, articulated through its #AIforAll framework, represents a distinctive third path – one that prioritizes developmental objectives, open-source innovation, and Digital Public Infrastructure as foundational elements of algorithmic sovereignty.
The geopolitical stakes surrounding artificial intelligence extend far beyond commercial competition. AI has emerged as a key driver of geopolitical power imbalances, with the theorized potential to transform industries, enhance military capabilities, and influence societal norms having far-reaching implications that transcend borders. The concentration of AI development within a handful of American and Chinese technology conglomerates has created what critics describe as a form of algorithmic hegemony. Five American companies – Google, Amazon, Facebook, Microsoft, and Apple – and three Chinese companies – Baidu, Tencent, and Alibaba – lead not only market applications but also a significant portion of AI research. This concentration enables these entities to function as what Microsoft Chairman Brad Smith termed “Digital Switzerlands,” positioning themselves as peers to nation-states rather than subordinates subject to sovereign regulation.
The extractive dynamics inherent in contemporary artificial intelligence development mirror historical patterns of colonial exploitation, albeit through novel mechanisms. The AI industry seeks to expand its reach by acquiring users for its products, subjects for its algorithms, and harvesting resources – data -from their activities, movements, and bodies. This data extractivism disproportionately affects populations in the Global South, where the exploitation of African data exacerbates economic imbalances and perpetuates a digital wealth transfer that undermines local prosperity. The mechanisms of this new colonialism operate through algorithmic systems trained predominantly on datasets reflecting Western cultural norms and values, thereby perpetuating global inequalities and limiting the sovereignty of entire populations through AI that reflects and amplifies existing biases.
India’s response to this challenge has been to articulate a vision of AI autonomy grounded in three interconnected pillars. The strategy emphasizes democratizing AI through open innovation by leading the development of open-source models and platforms, including the Bhashini initiative, which incorporates twenty-two official Indian languages in large language model processing. This linguistic inclusivity directly challenges the Anglophone dominance of global AI systems, ensuring that algorithmic intelligence serves India’s diverse population rather than homogenizing cultural expression. The second pillar focuses on building robust indigenous AI infrastructure, with five semiconductor plants under construction to support AI chip production and strengthen India’s role in global electronics and AI supply chains. The third pillar positions India as a champion of AI for sustainable development, advocating for the integration of artificial intelligence to achieve the United Nations Sustainable Development Goals while promoting ethical governance and South-South collaboration.
The infrastructure requirements for maintaining AI competitiveness have themselves become instruments of geopolitical leverage. Export controls and sanctions can restrict access to the latest processors needed to operate modern data centres, with high-performance AI chips made by US firms caught up in export bans. This weaponization of technology supply chains compels nations to pursue greater self-sufficiency, though global capital expenditure on data centres reached $455 billion in 2024, driven primarily by growing compute demands of AI – investment levels that strain the fiscal capacities of developing economies. India’s Semiconductor Mission represents a strategic response to this vulnerability, though success requires not merely constructing fabrication facilities but cultivating the entire ecosystem of critical mineral supply chains, specialized expertise, and domestic innovation capacity.
The regulatory dimension of algorithmic governance has emerged as another arena of geopolitical contestation. The European Union’s Artificial Intelligence Act, enacted in August 2024, represents the world’s first comprehensive legal framework for AI, classifying applications into risk categories and imposing strict regulations on high-risk systems. While the European approach emphasizes precaution and fundamental rights protection, it contrasts sharply with the United States’ market-driven model, where private companies spearhead innovation with minimal government interference, fostering rapid technological advancement through competition and venture capital investment. India has pursued what might be termed a developmental regulatory philosophy – maintaining a light-touch approach that encourages innovation while gradually building governance frameworks addressing data protection, algorithmic transparency, and sectoral applications.
The financial dimensions of AI development underscore the magnitude of transformation underway. Private-sector spending on generative AI-centric systems increased from $14 billion annually in 2020 to $137 billion in 2024, totaling $280 billion over five years. India has surpassed $20 billion in cumulative investment commitments in artificial intelligence as of 2025, with private sector contributions accounting for over $11 billion between 2013 and 2024. While this represents substantial progress, India’s AI investment remains below the levels of the United States and China, necessitating strategic prioritization and leveraging of comparative advantages rather than attempting to match resource deployments across all technological frontiers.
The military applications of artificial intelligence constitute perhaps the most consequential dimension of algorithmic power. Unlike traditional technological developments, where military applications preceded commercial ones, military AI research follows the lead of business, with sensing algorithms for package delivery quickly modifiable for battlefield surveillance. This convergence between commercial and defense applications intensifies the strategic imperative for indigenous capability development. Reliance on foreign AI systems for critical national security functions creates vulnerabilities to disruption, surveillance, and potential backdoors that could be exploited during geopolitical tensions. The integration of AI into autonomous weapons systems, cyber operations, and intelligence analysis has prompted observers to characterize current dynamics as an arms race comparable to the nuclear competition of the twentieth century.
Looking forward, the geopolitics of AI in 2025 stands at a crossroads, with one path leading toward further fragmentation and a digital iron curtain separating US-led and China-led tech spheres with incompatible standards and mutual suspicions. The alternative trajectory envisions the emergence of common baselines for AI safety, transparency, and infrastructure resilience despite intensifying competition. India’s positioning within this evolving landscape will depend on its capacity to maintain strategic autonomy while engaging constructively with both major powers and multilateral institutions. The recently announced IndiaAI Safety Institute, in 2025, is dedicated to fostering AI safety standards, signaling recognition that technical capability alone proves insufficient – normative leadership in establishing ethical frameworks and governance architectures represents equally vital dimensions of influence.
The challenges confronting India’s AI ambitions extend beyond resources and infrastructure. Despite being among the top ten AI research-producing countries, India demonstrates the lowest level of international collaboration, and the quality of AI research and patent activity is not in line with global peers. Addressing these deficiencies requires cultivating research excellence, strengthening intellectual property frameworks, and fostering deeper collaboration between academic institutions, industry, and government laboratories. The brain drain phenomenon, whereby talented AI researchers migrate to institutions offering superior resources and compensation, represents another persistent challenge demanding policy innovation – perhaps through visa regimes that attract high-skilled immigrants from South Asia, Southeast Asia, Central Asia, Eastern Europe, Africa, and the Middle East, establishing India as the “Silicon Valley of the East”.
The transformative potential of artificial intelligence for India’s developmental objectives remains substantial. AI has the potential to contribute $500 billion to India’s economy by 2025, revolutionizing key sectors such as agriculture, healthcare, urban planning, and manufacturing. Realizing this promise requires not merely importing technologies developed elsewhere but cultivating indigenous innovation ecosystems capable of addressing India-specific challenges through India-developed solutions. The Digital Public Infrastructure model, encompassing platforms like Aadhaar, UPI, and CoWIN, demonstrates India’s capacity for building scalable technological systems serving developmental objectives. Extending this approach to artificial intelligence – creating open platforms, shared datasets, and collaborative frameworks – offers a pathway toward technological sovereignty that neither mimics American market concentration nor Chinese state direction.
The philosophical and ethical dimensions of algorithmic governance demand equal attention alongside technical and economic considerations. African countries often must choose between US systems emphasizing individual autonomy and commodified social relationships versus Chinese systems advancing social control, with neither necessarily benefiting local cultures or providing genuine public goods. India’s alternative vision, grounded in constitutional values of pluralism, inclusion, and social justice, offers a model potentially resonant for other developing democracies navigating technological transformation. The emphasis on transparency, accountability, and human-centered design within India’s AI governance frameworks reflects recognition that algorithmic systems inevitably encode particular value structures and power relationships – making their democratic governance essential.
As the contours of a new global order shaped by algorithmic power continue to crystallize, India confronts choices with generational implications. The temptation toward technological nationalism, manifested through data localization requirements and restrictions on cross-border information flows, must be balanced against the benefits of international collaboration and knowledge exchange. Similarly, the imperative for rapid capability development cannot justify neglecting the ethical guardrails and inclusive governance mechanisms distinguishing democratic technological advancement from authoritarian surveillance capitalism. India’s success in navigating these tensions will determine not merely its own trajectory but potentially model alternative paradigms for the dozens of nations seeking to avoid permanent subordination within emerging technological hierarchies.
The comparison between artificial intelligence and petroleum, while instructive, ultimately understates the magnitude of transformation underway. Oil-fueled transportation and industry did not fundamentally alter human cognition or social organization. Artificial intelligence, by contrast, possesses the capacity to reshape decision-making processes, mediate human relationships, and even contribute to scientific discovery in ways humans cannot fully comprehend. This qualitative difference elevates algorithmic governance from a technical or economic question to a civilizational one – touching fundamental issues of autonomy, dignity, and the proper relationship between human agency and technological systems. India’s approach to these questions, grounded in its democratic values, developmental imperatives, and cultural pluralism, represents not merely a national strategy but a contribution to the global discourse on technology and human flourishing in the algorithmic age.
