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Recap: I hope you enjoyed last week’s guest article “India is calling. What now?” by Gopal Nadadur. The key takeaway: India’s governance structure requires you to develop a dedicated India strategy if you want to be successful!

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The target size of India’s semiconductor manufacturing sector by 2035.

AI is changing today’s workflows and roles significantly faster compared to prior technological innovations. With a growing number of European businesses seeking access to India’s technology ecosystem, it’s crucial to understand the impact of AI on exactly these innovation hubs and how companies such as Deutsche Bank increasingly try leveraging them.

India has a leading technology ecosystem that was built from the ground up and is the 3rd largest start-up market globally today. Moreover, it ranks 3rd in Stanford’s AI Vibrancy Index (see India Rising Issue 40) and was globally recognised as it recently held this year’s Global AI Summit. Thanks to targeted public initiatives to build India’s AI Stack, and the successful implementation of India’s Tech Stack as foundation, India’s AI ecosystem is entering a phase of category-defining companies that will not only impact local technology players, but multinationals and their Global Capability Center (GCC) strategy alike.

Two recent reports by Zinnov uncover the implications of AI on India’s tech ecosystem and also share a playbook for multinationals to realign their innovation strategies:

Bengaluru remains India’s most important AI and DeepTech hub thanks to talent and infrastructure density, followed by NCR and its close proximity to regulating bodies. Interestingly, the adoption of AI is also accelerating outside of the Tier 1 cities and coincides with the development of emerging tier 2 and 3 cities. This highlights the increasing focus and specialisation, underlying the theme of domain expertise as success factor in the age of AI.

In my prior work of setting up GCCs and regular discussions with business leaders, access to these ecosystems is a key factor why multinational businesses set up GCCs in India. Innovation and tech hubs proactively seek opportunities not only to secure core talent, but collaborate and invest in start-ups and integrate their solutions in core business operations alike.

Over the past decade, this meant that work increasingly transformed from commodity (standardized and repeatable) and procedural (complex but well-understood) tasks to “Grey Hair” (complex problem solving, requiring expertise and capacity) and “Rocket Science” (cutting-edge R&D). Often in Europe still misunderstood, this means that many GCCs today replicate HQ functions and are key drivers for innovation in multinational businesses worldwide.

Most interestingly, cutting-edge technology businesses such as in the semiconductor space actually drive more innovation from India than their HQs today:

This thrive for frontier work is crucial for local innovation hubs, as Zinnov expects that around 55% of the workflows in today’s GCCs are at risk of getting displaced by AI. This is crucial for multinationals to understand as it confirms the extremely fast pace of technological adoption in AI even in a leading technology market as in India.

But how can businesses navigate these developments?

One recent example is Germany’s Deutsche Bank and the reorganisation of its global transformation strategy.

The bank tries to accelerate company internal AI adoption through its India GCC and via a dedicated India based in-house incubator that targets to develop “100 ideas in 100 days”. The "AI Forward" programme lets employees pitch AI concepts directly to local leadership and routing this through India is explicit: Deutsche Bank appointed Stefan Schaffer, who also serves as CIO for corporate functions and head of global technology centres, as CEO of Deutsche India at the end of last year, and he has physically relocated to India to lead the transformation.

Rather than overhauling core systems, the bank is focusing on embedding AI into existing technology stacks, particularly in the later stages of development cycles where AI can enhance outcomes without disrupting the bank’s core infrastructure. The operating model is also being restructured to decentralise decision-making and give the GCC a genuinely strategic role.

European businesses sought access to ecosystems before, whether it was via tech hubs in Berlin or Silicon Valley. Those still evaluating India from the sidelines might now miss out a key market for AI adoption.

The clear message is that India may not necessarily build the next globally leading model, but that domain expertise, workflows, distribution, and data at scale are the core ingredients for a successful positioning in increasingly automated environments. And that India, and multinational businesses present here, have the opportunity to outperform in exactly that thanks to decades of ecosystem building.

Sources: Zinnov, Indiaspora, Times of India, Business Standard

Bosch and Tata AutoComp Systems announced a 50/50 joint venture (JV) focused on the development, manufacturing, and sales of e-axles and e-motors for the Indian market. Subject to regulatory approval, operations are expected to begin mid-2026 in Pune.

The structure of the JV is worth noting, as it is not an outsourcing arrangement or a licensing deal, but a co-ownership model with equal stakes and shared accountability across the full product cycle, from engineering to sales. Such commitment from Bosch, wo has been present in India for over 100 years, carries real weight as the Stuttgart-based group has invested more than EUR 6 billion in e-mobility globally. Choosing to invest in a JV in India clearly indicates where the next phase of EV growth will take place.

A global player with over 100 years of market experience is once again a clear example why “Make in India, for India” is the basis for success here. India can’t be trated as an import or assembly hub for technology designed elsewhere and European industrials need to understand that local presence will be crucial for their success.

Sources: Handelsblatt

India's semiconductor market is projected to nearly triple to USD 120 billion by 2030 and reach USD 300 billion by 2035, driven by AI adoption, automotive growth, and data centre expansion. With its semiconductor and electronics manufacturing ecosystem expanding, the structural shift behind that number will be significant.

India currently imports over 90% of its semiconductor needs, but targets to meet over 60% of its domestic demand via local production by 2035. According to Deloitte, this ambitious target requires stronger coordination on infrastructure development which is expect to reach the following numbers:

The ecosystem build-up is expected to create 2 million jobs by 2035, with 30% both in manufacturing as well as design services, and 40% in the remaining value chain.

Two announcements this week are proof of such developments:

India’s semiconductor strategy is developing as planned and well supported by public and private stakeholders. The opportunities for the ecosystem and adjacent sectors such as the chemical industry are substantial. European businesses have a unique opportunity to establish themselves as ecosystem partners now.

Sources: The Hindu, The Economic Times, IndianWeb2

At this year’s Intersolar Europe, dedicated roundtables and industry exchanges focused on India’s solar sector will be organised by VDMA, the German Solar Association and the Indian NSEFI.

You can find all information here.

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