Synopsis
Akshat Shrivastava warns that Indian stock markets may face challenges due to India’s limited role in the global AI race. He argues that India lacks the advantages of cost-effectiveness or a premium consumer base, hindering its participation in the AI-driven economic transformation. This innovation gap, according to Shrivastava, will negatively impact India’s relative economic standing and stock market performance.
AgenciesFinance educator and content creator Akshat Shrivastava has said that Indian stock markets could face a challenging next decade, arguing that India does not have a meaningful role in the global artificial intelligence (AI) race. Shrivastava linked India’s future economic and market performance to its relative position in global technological innovation.
Shrivastava began by stating that economies are shaped by innovation cycles. From Dutch shipbuilding and the UK’s Industrial Revolution to US-led factory automation, he said each major economic shift has been led by disruptive technology. “Wealth does not appear out of thin air. It is systematically build on the back of technological innovation,” he said.
According to him, AI is now becoming that next core innovation shaping the global economy—comparable to the internet boom of the late 1990s. AI is driving transformations in energy, manufacturing, learning, and computing, he said, adding that with tools like large language models (LLMs), “anyone can technically reap the benefits of coding, without being a coder.”
India’s missed opportunity in the ‘hub and spoke’ model
Explaining the global innovation structure, Shrivastava referenced the “hub and spoke” model, where a few countries act as innovation hubs while others operate as peripheral beneficiaries. In the past, India benefited from this structure by becoming a spoke in the US-led IT outsourcing boom.
— Akshat_World (@Akshat_World)
However, Shrivastava suggested India is missing out in the current wave. “China and US: are in a AI race. China has already built massive energy reserves (US is catching up). US has already built massive tech reserves (and one could argue China is catching up). This is the new arms race,” he wrote.
No major role for India in AI value chain, says Shrivastava
Shrivastava raised a direct question: “Why is India needed in this AI race?” He dismissed three possible advantages—data harvesting, cost-effective infrastructure, and a large consumer market—as either already exhausted or ineffective in India’s case.
“Can we lower the cost for AI infrastructure? (we have very high cost of energy and poor leakages in infra; so we can’t). We can’t build giga-factories. This is the reason why our manufacturing sucks,” he wrote. On the demand side, he pointed out that “getting users to pay 20$/month is a challenge for LLMs right now.”
‘We are nowhere close to becoming a hub of innovation’
According to Shrivastava, India lacks both a cost advantage like China and a premium-paying consumer base like the US. “So where does India fit in the AI race?” he asked, answering that the country may see isolated economic success stories but will fall behind in global comparison.
“Now of course: as the world becomes more productive. India will benefit too. That’s obvious. Standard of living will improve. But, ‘compared’ to other countries, it will fall,” he said. He blamed “decades of regressive economic policies, unnecessary pride and inability to look at things rationally” for the current state.
Implications for stock markets
Shrivastava concluded that this innovation gap will reflect in the markets. “All this will reflect into the stock market. There is a reason why since 2020: FIIs have been consistently existing our markets,” he said, referring to foreign institutional investors reducing their positions in India.
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