India Needs to be a Hub of Knowledge Creation
STORIES, ANALYSES, EXPERT VIEWS
Earlier this month, Tata Consultancy Services (TCS), India’s largest IT services firm, confirmed it will lay off 12,000 employees. While the era of labour arbitrage is drawing to a close, Chirantan Chatterjee (Professor of Development Economics, Innovation and Global Health at the University of Sussex) writes “the age of artificial intelligence (AI) is rewriting the rules of economic competitiveness.
“Generative AI, machine learning, and automation are fast replacing the very tasks that once gave India its edge: coding, data entry, support services, and even parts of analytics. The decline in headcount is not a blip; India’s core export, white-collar digital labour, is being disrupted……”
Manufacturing-led catch-up route is narrowing
Simultaneously, the manufacturing-led catch-up route is narrowing…. The dream of becoming the ‘next China’ in manufacturing is now largely unrealistic. India’s manufacturing sector contributes just 14-16% of the GDP — a figure that has barely budged in a decade. More worryingly, global manufacturing is undergoing its own AI-led transformation: smart factories, predictive maintenance, and robotic assembly lines are shrinking the need for cheap labour. Competing on cost is now a losing battle.”
The way forward: innovation, science
The answer for sustained economic relevance, according to Chatterjee, lies “in innovation, discovery science, and a smart, coordinated science, technology, and innovation (STI) policy. If India wants to be a rule-maker rather than a rule-taker in the AI-driven global economy, it must invest urgently in becoming a hub of knowledge creation, not just knowledge processing.
“This will only be achievable with a new national compact that starts from STEM but goes above and beyond embracing STEPS — an integration of STEM with policy and society. This means building a generation of technologists who understand not just how to build systems, but how those systems affect entrepreneurship, business model and scaling, ethics, governance, and inclusion. It also means reforming curricula to include data governance, AI ethics, climate-tech, innovation economics, and intellectual property policy. Finally, it also means urgent, mission mode requirement of an integrated, State-agnostic approach where we will see not just southern India having a head start in STEM and STEPS.”
If India does not invest in science, technology, and evidence-based policy today, “it will face economic stagnation, rising inequality, and geopolitical irrelevance tomorrow….The good news is that India has the ingredients: a young demographic, a robust start-up ecosystem, and scientific institutions with proven excellence….”
