Introduction:
“Embedding green standards from the start offers a way to lead rather than follow”
Artificial intelligence (AI) is transforming how societies learn, create, and make decisions, replicating elements of human reasoning, creativity, and autonomy through machine systems. In India, this transformation is already underway. The government has begun building domestic AI capabilities by investing in indigenous research, attracting skilled talent, expanding private-sector partnerships, and strengthening the social and economic impact of AI technologies.
Central to this push is India’s semiconductor strategy. An initial investment of $9.1 billion under the Indian Semiconductor Mission (ISM) aims to position India as a global leader in chip manufacturing and innovation, an essential foundation for advanced AI systems, which rely on high-performance semiconductors to meet their immense computing demands. This public commitment has catalysed a further $11 billion in private investment from companies such as Tata Sons and Powerchip Semiconductor Manufacturing Corporation, signalling strong confidence in India’s ambitions.
Together, these investments are turning India into both a regional and international hub for semiconductor fabrication and display manufacturing, laying the groundwork for a robust and potentially sustainable AI ecosystem. New projects are now underway across 73 public and private institutions, spanning key technology corridors in Gujarat, Tamil Nadu, Karnataka, Bengaluru, the Chennai–Hyderabad corridor, and major cities including Noida, Delhi, and Mohali, marking the physical and economic footprint of India’s AI future.
Global projections estimate that the AI market will reach $1.81 trillion by 2030, alongside a semiconductor industry valued at approximately $1 trillion. India aims to secure a meaningful share of this growth, with its domestic semiconductor market projected to reach $110 billion by 2030. At present, global AI and semiconductor demand remains highly concentrated among a small group of economies, notably the United States, China, South Korea, and Taiwan. The United States alone accounts for over half (50.4%) of global semiconductor sales, followed by South Korea (21.1%), Taiwan (6.5%), and China (4.5%), underscoring both the competitive intensity of the sector and the strategic importance of India’s effort to establish itself within it.
However, what is particularly concerning within AI development is the large-scale infrastructure associated with building AI applications that require extensive amounts of ultra-pure water, energy, and critical minerals to function. Exemplified in 2023 when Taiwan spent 7.4% of its nominal GDP on energy imports—including oil, liquified natural gas (LNG), coal, and uranium, of which 97% was sourced from abroad. At the same time, electricity demand from the Taiwan Semiconductor (TSC) is projected to reach 236% of its 2021 level. Meanwhile, 41% of Americans are extremely or very concerned about AI’s negative environmental repercussions regarding coal, oil, and natural gas consumption, alongside the use of uranium for nuclear power generation.
Balancing Opportunity and Responsibility:
As India embraces the opportunities AI brings, it must simultaneously confront the environmental costs of AI infrastructure to secure its long-term domestic and international objectives. Raising the crucial question: how can India make its AI initiative as sustainable as possible?
AI to Develop India:
AI holds symbolic and strategic importance for Prime Minister Modi as a tool for enabling India’s public and private sectors to achieve the self-reliance required to become a global hub for electronics manufacturing and design. Yet, this ambition faces a critical challenge as semiconductor chip imports have risen by 92% over the last three fiscal years. This trend underlines the urgency of developing a sustainable, self-reliant Indian AI and semiconductor ecosystem that reduces socio-economic dependence on external suppliers while strengthening India’s long-term strategic autonomy.
How AI Can Unlock India:
With $10 billion in public and private Indian funding and construction led by the Tata Group and the government, the project has enabled three more semiconductor developments. These now supplement the ten Indian Semiconductor Mission projects approved across six states. The AI initiatives are set to generate 20,000 direct and indirect skilled jobs in Gujarat and 27,000 jobs in Assam. With 45,000 of this total figure currently being students enrolled across 100 institutions. These numbers open the door to developing semiconductor designs and EDA tools for Indian chips for at least the next ten years. Moreover, efforts to expand the AI workforce are enabling greater participation by smaller Indian firms and workers, strengthening the AI ecosystem while supporting economic growth and the development of skills, talent, and education.
Environmental Frailty:
A project on the scale of the India Semiconductor Mission is projected to require between 5 and 10 million gallons of ultra-pure water each day. India already faces significant water-security challenges, holding only 4% of the world’s freshwater resources. Nearly 600 million Indians face high to extreme water stress. These figures highlight a serious national water crisis, raising concerns about the sustainability of expanding AI and semiconductor infrastructure without parallel investments in water management and conservation.
Water is not the only scarce resource underpinning India’s AI ambitions. Critical minerals, electricity, energy, and rare elements are also essential yet increasingly constrained inputs for AI infrastructure. China currently dominates the global refining and processing of many critical minerals, accounting for around 60% of global capacity, making supply chains for AI hardware heavily dependent on Chinese production. Efforts by India to reduce this dependence risk are creating new environmental pressures, including unsustainable mining practices, rising greenhouse gas emissions, and growing volumes of electronic waste.
Solving a Path to India’s Sustainable AI Future:
The gains promised by AI are powerful enough to transform India’s future, but only if they are pursued wisely. As India accelerates its own AI expansion, it must learn from the mistakes and successes of countries that have gone before it, positioning itself not just as a fast adopter but as a responsible pioneer. Taiwan, for example, has shown how cleaner energy, more efficient manufacturing, emissions controls, and aggressive water and materials recycling can reduce the environmental footprint of advanced chip production.
India can also build on existing global frameworks, such as UNESCO’s AI guidelines, which emphasise environmental protection, ecosystem restoration, and sustainable development throughout the AI life cycle. Yet these frameworks, adopted by more than 190 countries, remain broad and underdeveloped when it comes to concrete environmental safeguards. This gives India a rare opportunity: not simply to follow global norms, but to improve them.
By embedding sustainability into its AI and semiconductor strategy from the outset, India could help define new global for environmentally responsible AI.
