Global financial services firm Bernstein has cautioned Indian digital creators and the local tech ecosystem about the possible re-entry of Chinese companies into India. The warning comes as signs of improving India-China relations raise concerns about competition for Indian startups.
Chinese Tech Firms Could Re-Enter Indian Market
In its latest report titled “OpenAI, Perplexity’s India Push – A Wake-Up Call for Indian AI” (dated September 4), Bernstein highlighted that if Chinese firms re-enter India, it could further shrink opportunities for Indian players in the digital space.
The report stated that India faces challenges from predatory capital, heavy import dependency on digital hardware, and dominance of foreign firms, which risk turning the country into a digital marketplace rather than a digital creator.
Dependence on US Tech and AI
Bernstein also pointed out that India’s digital ecosystem is already dominated by US technology companies, especially in the field of artificial intelligence (AI). Most major platforms in search, social media, messaging, and e-commerce are controlled by American giants.
The report noted:
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After India banned TikTok, it was not an Indian platform but Instagram that gained millions of users.
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Indian startups lack funding and regulatory support, while global tech firms have billion-dollar budgets.
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Top Indian talent often prefers to work with US firms instead of building homegrown solutions.
India’s AI Investments Lagging
Bernstein emphasized that India’s investments in large language models (LLMs) and AI are far behind those of the US and China, and even smaller economies are ahead in some cases. Without strong funding, India risks falling further behind in the global AI race.
Policy Recommendations for India
To protect its digital future, Bernstein suggested bold steps such as:
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Ensuring 51% Indian ownership in major tech platforms to capture value creation.
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Strengthening data protection laws and enforcing data localization, requiring global tech firms to set up local offices and data centers.
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Prioritizing long-term national interests over short-term excitement around “free” AI platforms offered by US companies.
The report concluded by urging Indian policymakers to take decisive measures, similar to China, which has protected its tech industry while maintaining strong trade ties with the US.
