Why India Isn’t Building The Next ChatGPT

By Govindraj Ethiraj

Why isn’t India producing a homegrown rival to ChatGPT, minting a chipmaking giant like Nvidia, or designing airborne electric vehicles? 

For a nation boasting some of the world’s premier engineering talent, the absence of bleeding-edge, deep-tech innovation is a glaring puzzle. 

The usual suspect is a lack of R&D spending, which languishes at a mere 0.8% of GDP. 

But an insightful discussion I had last week led me to frame the problem differently.

A Broken Supply Side

During an investor meet organised by SBI Mutual Fund and Amundi, the French asset management giant,I sat down with the founders of three leading consumer internet companies: Urban Company, Ixigo, and Meesho. 

I asked Abhiraj Singh Bhal, the founder of Urban Company, what drove him to start his business.

He told me about moving back from Singapore in 2014, freshly married and settling into his first home after a stint at Boston Consulting Group. 

His wife gave him a simple task: hire a carpenter to hang some paintings. 

The first carpenter he tracked down via an online directory ghosted him. The second never showed up. 

The third arrived empty-handed, claiming he was only there to "survey" the job and would return the next day.

What struck Abhiraj, he told me, was the profound market failure staring him in the face. 

He had dollars to spend, but unlike other industries where products aggressively compete for your wallet, the local supply side was structurally broken. 

That frustration birthed Urban Company, earlier Urban Clap, a digital bridge connecting consumers with a reliable supply of home services.

I realised this story repeats itself across the subcontinent's digital economy. 

Why Brilliant Minds Go Local

Aloke Bajpai pivoted his expertise from the European travel-tech giant Amadeus to found Ixigo in 2006, bringing order to India’s chaotic travel-booking market. 

Meesho, launched in 2014, organised a highly fragmented supply chain to become an e-commerce behemoth. 

Its CFO, Dhiresh Bansal, told me that the platform now accounts for roughly 40% of all e-commerce shipments in the country.

What do these ventures have to do with deep-tech innovation? 

Actually everything. 

The founders driving these platforms are the innovation agents of our era. 

Almost universally, my panelists and their extended top deck held degrees from the elite Indian Institutes of Technology (IITs).

Skeptics often sneer at this allocation of human capital. 

Why, they ask, are elite engineers optimising the 20-minute delivery of hot idli-vada while Silicon Valley builds world-conquering LLMs?

The answer is that the smartest minds often gravitate toward the most immediate, glaring inefficiencies in their environment. 

Our brightest engineers are effectively compensating for the failures of the Indian state. 

They are forced to build complex software including some of the most sophisticated payment systems in the world merely to bypass decaying urban infrastructure, unreliable supply chains, and a profound deficit of trust in basic services.

Governance Before Gigabytes

If you ask me what India should fix to spur innovation, I would point to our daily realities. 

While many engineers are now undeniably building space tech, drone tech and AI tools, even others are still solving for existence, like in payments.

Obviously there is no venture capital waiting to fund some of these challenges, though garbage and climate are seeing investments, in some lateral ways.

But it is tough to dream up the next generation of artificial intelligence when your daily reality involves navigating unbreathable air, garbage-strewn and potholed ridden streets, broken pavements and the labyrinthine, often-abused challenge of simply doing business.

Yet, rather than addressing these foundational deficits, the government is increasingly tempted to play venture capitalist, deploying taxpayer money to subsidise risky startups. 

While there may be strategic logic in funding certain sectors, it is largely a misdirection of focus. 

It is less about a lack of funds and more about a lack of mindspace.

It has long been my case that India cannot become a developed, AI-driven superpower if its citizens are still battling 20th-century urban squalor. 

We have the smart capital and the smart brains. 

We have to fix the physical environment and the basics of daily life. 

Once the state clears the path of everyday friction, our entrepreneurs will naturally raise their gaze to the future.

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Rs 3.65 trillion

That’s how much the combined market valuation of nine of India’s top-10 most valued firms surged last week, led by Tata Consultancy Services (TCS), Bharti Airtel and Infosys, amid a broad rally in equities. The BSE Sensex rose 2,256.94 points, or 3.11%, while the NSE Nifty gained 625.7 points, or 2.77%.

Overview: TCS recorded the biggest gain, adding Rs 1.09 trillion to its market capitalisation to reach Rs 8.91 trillion. Bharti Airtel gained Rs 61,406.53 crore, taking its valuation to Rs 11.89 trillion, while Infosys added Rs 55,893.05 crore to reach Rs 4.71 trillion. Reliance Industries remained India’s most valued firm at Rs 16.37 trillion.

Setting: The rally was driven primarily by a sharp rebound in information technology stocks following encouraging September-quarter earnings, alongside renewed buying interest in heavyweight stocks, said Ponmudi R, CEO of Enrich Money.

What’s Next? Larsen & Toubro was the only laggard among the top 10, with its market valuation declining Rs 9,232.26 crore to Rs 4.997 trillion, even as the broader market extended its recovery.

FSSAI Flags Nestle, HUL Over Supplement Claims

India’s food regulator has issued notices to Nestle India Ltd. and Hindustan Unilever Ltd. over alleged misleading claims on nutrition supplements, widening its nationwide crackdown on food safety and labelling violations, Bloomberg reported.

Background: The Food Safety and Standards Authority of India (FSSAI) said Nestle’s Resource Renal Vanilla Flavour Powder, intended to manage a medical condition, lacked prior approval and did not carry a label identifying it as vegetarian or non-vegetarian.

The regulator also flagged Hindustan Unilever’s Horlicks Mother’s Plus Kesar for claims relating to “happy birth weight”, while its Horlicks Women’s Plus products listed benefits including improved bone health, healthy muscles and no added sugar. FSSAI said both companies had contravened its rules and sought their responses.

Hindustan Unilever said its products comply with applicable requirements and that it would share scientific and regulatory evidence with the authorities.

Pivot: The action follows increased scrutiny of food manufacturers, restaurants, hotels and e-commerce platforms over misleading labels, inappropriate marketing and food safety lapses.

FSSAI has also directed food business operators to transport perishable items such as paneer, khoa, meat and fish under controlled temperatures, warning that violations could compromise food safety and public health, Business Standard reported.

The regulator has asked state food safety officers to maintain strict vigilance and initiate action, including seizure and destruction of food items, in cases of non-compliance.

Services Trade Surplus Faces Pressure

India’s services trade surplus is facing pressure as imports outpace exports, potentially weakening a key cushion against the country’s merchandise trade deficit, according to an ICICI Bank research report, Businessline reported.

Background: Net services exports fell 10% year-on-year to $16.9 billion in September 2026, as gross exports declined 0.9% to around $36 billion while imports rose 8.9% to approximately $19 billion.

However, cumulative net services exports grew 4% to $103 billion during April-September 2026, indicating continued support from the sector.

Pivot: Sustaining this cushion will depend on export earnings keeping pace with rising services imports, with subsequent data expected to clarify whether September’s decline signals a broader slowdown.

No Sugar For Ethanol

State-run oil marketing companies will no longer buy ethanol made from sugarcane juice, sugar syrup or B-heavy molasses for the 2026-27 supply year, as the government moves to protect domestic sugar supplies.

Catch Up Quick: The tender, issued on October 16 by Bharat Petroleum Corporation Ltd on behalf of the companies, seeks about 11 billion litres of ethanol for the November 2026 to October 2027 period to sustain 20% blending in petrol.

“The Government of India has issued directions that sugar diversion for ethanol be reduced to zero,” the document states. Bids are open for ethanol from maize, broken rice, surplus FCI rice and C-heavy molasses.

Pivot: The decision follows poor rainfall in Maharashtra and Karnataka, which has raised fears of lower sugar output and higher prices.

Setting: India is the world’s largest sugar consumer and has been using ethanol blending to cut its dependence on imported crude oil. But using sugarcane and sugar to make fuel can reduce the sugar available for food, especially when production is low. India has made petrol with up to 20% ethanol, called E20, the national standard.

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