FOR some time now, India's tech industry has been reluctant to plainly say an uncomfortable truth: the engine that powered three decades of economic growth is sputtering. Tata Consultancy Services, India's largest IT employer, shed over 23,400 jobs in the year ending March 2026. Infosys cut the headcount by nearly 20,000. Close to 40,000 layoffs have hit the sector in a year. The culprit is not a recession. It is artificial intelligence (AI), the very technology India's leaders now race to harness.
Prime Minister Narendra Modi's recent tour to the UAE, Netherlands, Sweden, Norway and Italy was shaped around this reckoning. It is pertinent to understand why each agreement matters and what the country is up against as the tech ecosystem changes.

India's IT services sector was built on a simple proposition: hire large numbers of engineers, train them cheaply and sell their labour to western corporations. It worked brilliantly for a generation until generative AI began automating the routine coding, testing and back-office work that formed that model's bedrock. Agentic AI is projected to redefine over 10 million Indian jobs by 2030. The traditional pathway — graduate, join a mid-tier firm, bill hours to a US client — is narrowing fast.

India can’t wait for AI to create replacement jobs. It must own parts of the global AI economy, not just service it. That means building the hardware that AI runs on, infrastructure that powers it and research pipelines that advance it. Each stop on Modi's tour addressed one of these gaps.

The most impactful announcement came in Abu Dhabi. Modi and UAE President Sheikh Mohamed bin Zayed Al Nahyan oversaw the signing of an agreement between the G42 Group, the Mohamed bin Zayed University of Artificial Intelligence, and India's Centre for Development of Advanced Computing (C-DAC) to establish an 8-exaflop supercomputing cluster in India which will be among the most powerful computing infrastructure anywhere on the planet.

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AI is fundamentally a compute problem. The more powerful your infrastructure is, the more sophisticated the models you can build. India's researchers and startups have historically rented expensive computing from US cloud providers like Microsoft, Amazon and Google. This dependence limits what they can build and who controls it. The UAE deal gives India sovereign computing muscle to train AI models domestically, in Indian languages, for Indian priorities, rather than adapting tools built for western markets.

Every AI model, smartphone and electric vehicle runs on chips. India has world-class chip designers at Qualcomm, Intel and NVIDIA, but India has never manufactured its own chips, remaining dependent on Taiwan and South Korea. This vulnerability was exposed sharply during the Covid-era chip shortage.

In The Hague on May 16, Tata Electronics and ASML, the Dutch company holding a global monopoly on lithography machines without which no advanced chip exists, signed a landmark MoU. ASML will supply equipment and expertise to Tata's $11 billion, 300-mm semiconductor fabrication plant in Dholera, Gujarat. This is India's first commercial front-end chip fab, covering workforce training and supply chain development too. Semiconductor fabrication is one of the most complex manufacturing endeavours in human history. The Dholera plant will produce chips specifically for AI, automotive and mobile applications.

Link: https://www.tribuneindia.com/news/comment/how-pms-europe-visit-signals-indias-ai-shift/amp