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Prime Minister Narendra Modi highlighted India’s stance on the evolving Artificial Intelligence (AI) landscape at the AI Action Summit in Paris on February 11, stressing the need for “governance and standards that uphold our shared values, address risks, and build trust”. This perspective is also reflected in the joint statement signed by India and over 50 other countries. Commitments to trust, safety, and universal access align well with India’s efforts to advance AI technologies while mitigating risks. The nation’s approach to AI will be crucial as the technology progresses and costs decline. Innovations such as Chinese firm DeepSeek’s breakthrough reasoning models underscore the growing risks to labour markets. The IT and services sector constitutes a significant portion of India’s economy but employs a relatively smaller workforce. AI-driven efficiency gains present an attractive business proposition, yet the potential for job losses or stagnant wage growth in this sector poses serious risks. The Prime Minister rightly pointed out that technological advancements historically create new employment opportunities. However, as noted in the Economic Survey, there is a valid concern regarding an Engels’ pause, a phase where firms reap the benefits of new technology while real wages stagnate. India cannot afford even a brief period of such economic strain, making proactive policy responses essential.
The summit’s emphasis on sustainable AI growth and energy efficiency is equally timely, given global climate imperatives. The United States produces more than twice the electricity of India, despite having just a quarter of its population. A growing share of this energy is now consumed by data centres, which power AI training and deployment. As AI-driven energy demand surges, ensuring that this growth is powered by renewable sources is critical. Commercial AI success remains elusive, with substantial investments flowing into top market players but offering limited financial returns. While India may not replicate this high-investment, low-return model, developing foundational AI models that are tailored to Indian needs is imperative. Leveraging emerging efficiencies and maximising AI’s potential must remain central to India’s strategy. The IndiaAI Mission’s initiatives, such as subsidised access to Graphics Processing Unit (GPU) clusters and funding for promising projects, are encouraging steps toward this goal. Looking ahead, integrating AI education and skills training at scale will be essential. Even if a significant share of top AI talent moves abroad, India must ensure that its domestic industry retains sufficient expertise to remain competitive. AI will undoubtedly reshape industries, and preparing a robust talent pipeline will be key to ensuring that India not only adapts but also thrives in this transformation.
Published – February 13, 2025 12:10 am IST
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Averting Engels’ pause: On the AI Action Summit in Paris
