In the wake of trade convulsions, an incendiary H-1B visa debate, and bitter diplomatic ruptures following lethal hostilities between India and Pakistan last spring, the United States and India are finally poised to turn over a new leaf in the coming weeks as a trade deal solidifies, reopening the door to much broader cooperation that both nations have sought for many years. But the basis of a rapprochement between the two behemoths is anything but clear, as two of the traditional pillars of closer US-India collaboration are beginning to look wobbly: high-skilled Indian immigration is increasingly under fire in the United States, and offshoring cheap manufacturing to Asia looks more unsustainable than ever before.
Finding new areas of robust cooperation for India and America is a daunting but necessary task as the two nations grapple with their strategic interdependence in the shadow of China’s growing heft and belligerence. Artificial intelligence looms large as the most obvious solution.
Momentum favors it. Recent trade agreements—including Technology Prosperity Deals signed with Japan, South Korea, and the UK this fall—have featured strong AI components, emphasizing coordination on AI exports, standards, and infrastructure development. India brings its own unique AI complementarities to the United States: a hunger to adapt and iterate on American breakthroughs for cost-effective applications, a massive talent pool, and a pressing need to attract greater American computing capabilities.
India would be a willing partner. It has also long sought deeper technology partnerships with the United States, viewing such collaboration as essential to its development ambitions. AI cooperation became a pronounced feature of US-India relations as far back as 2021, when the Indo-US Science and Technology Forum launched the US-India Artificial Intelligence Initiative.
The Biden administration further elevated this partnership in 2023 when it launched the Initiative on Critical and Emerging Technologies (iCET), which included provisions for expanding collaboration on AI, quantum technologies, and advanced wireless systems. The place of AI has only grown in preeminence within the expanded TRUST initiative—Transforming the Relationship Utilizing Strategic Technology—announced in February 2025 as the successor to iCET, before the bilateral relationship went off the rails around April.
But most of all, AI has the potential to be cohesive because of its momentous scope; the most transformative technology in a generation has vast, untapped potential for the United States and India to work together across a wide range of areas, with massive upsides for both. However uncertain the specifics of AI’s technical progress may be, its virtually boundless range of uses means that there will always be practical areas for substantive cooperation. The enormity of this historic moment of technological acceleration mirrors the enormity of the geopolitical challenge propelling closer US-India ties—a rare convergence of ambition and necessity.
One clear, immediate area of mutual interest is in providing a better alternative to China’s Digital Silk Road. American policymakers have lamented losing ground to China globally in the digital domain for years, but still struggle to turn the trend around, in large part because the United States lacks the price incentives and contextual similarities with the Global South that would be needed to compete effectively.
Not only does India have those missing pieces, but it has also demonstrated a positive vision for what pro-democratic, next-generation digital infrastructure could look like in the developing world. India’s digital public infrastructure stack (DPI) leveraged new technologies to scale solutions in a developing context: opening a staggering 560 million bank accounts through its digital banking program, and enabling the Unified Payments Interface (UPI) to process over 20 billion transactions monthly. This has opened the door to direct, transparent benefit transfers from the government, slashing corruption and inefficiency in the process. According to World Economic Forum estimates, the UPI saved the Indian economy nearly $67 billion in its first seven years of operation.
India has also worked to avoid China’s insecure Huawei 5G networks in favor of developing its own alternatives. It is not hard to imagine that, with the right American support, the next tranche of AI-enabled technologies flowing from China to the Global South could have a viable alternative from India—one that reflects democratic values and open systems rather than surveillance and control.
In AI’s frontier models, too, there is a unique complementarity between the United States and India. Given the extremely capital-intensive nature of frontier model development—where the rapidly growing costs of training a single large model run into the tens of millions of dollars—India is unlikely to be competitive in foundational development on its own. According to Tortoise Media’s Global AI index, India ranks 68th globally for its AI infrastructure, making training at the cutting edge a distant prospect.
But that doesn’t mean India cannot be a major AI power. If it can master how to work with the United States to adapt, iterate, and scale both open-source and proprietary models to local needs and new applications, its massive pool of STEM talent—the only country in the same league as China—has the opportunity to establish itself at the forefront of AI deployment. This will ensure that, in collaboration with the United States, the free world stays ahead.
There are considerable challenges to overcome. Aside from patching up the largest rupture in a quarter century in US-India relations, more arcane barriers exist: data localization restrictions, unclear tax codes on data center services, unclear copyright regimes for AI, and telecom licensing complications could all threaten to scuttle progress. The United States, too, must work with India to overcome its historically-inflected concerns about “data colonialism” and fears of losing “AI sovereignty”—working to ensure that meaningful commercial partnerships with American firms genuinely empower India to pioneer its own form of AI leadership.
But all of this potential hinges on a single, indispensable prerequisite today: establishing strong government support to adopt the computing infrastructure, AI applications, and services that India needs from American companies. India’s AI prospects will rise or fall on successfully building the computing power needed to support a serious AI ecosystem. At present, India has acquired only 38,000 GPUs through its IndiaAI Mission. This pales in comparison to what’s needed to even run AI applications at scale, let alone iterate on new ones. For comparison, OpenAI alone expects to have “well over” a million GPUs by the end of this year.
The United States, whose companies make up approximately 70 percent of the global cloud computing market through companies like AWS, Microsoft Azure, and Google Cloud, is uniquely positioned to fill that gap. Momentum is building. OpenAI, Google, and Microsoft all recently announced multi-billion-dollar investments in India, with a heavy focus on data centers in the lead-up to India’s hosting of the Impact AI Summit in early 2026. These are promising first steps—but only first steps.
Both New Delhi and Washington must understand that deals like these are much more than just good business: The world’s two largest democracies’ ability to find common ground on AI could anchor a revitalized partnership and determine whether democratic values will shape the century’s most transformative technology. The alternative—a world where Chinese AI predominates—is one neither can afford.