Charting India’s AI Future: A Pro-Competition Policy Blueprint

The past few years have seen Artificial Intelligence (AI) move from one of the emerging technologies to having the potential to being one of the cornerstones of India’s economic growth and ambitions. With the technology having multi-fold growth, it has now developed the ability to assist with decision making and affect how product design is effectuated, effectively re-molding how firms compete and how competition within the market evolves.

Recognising this shift, the Competition Commission of India (CCI) announced in April 2024 a market study to examine the competition dynamics of the AI ecosystem, spanning the development, deployment and use of AI systems. The study, released on October 6, 2025, arrives at a pivotal moment with the AI industry being on the cusp of exponential growth, and this assessment provides the first systematic attempt to understand how competition policy can both nurture innovation and preserve fairness across the AI ecosystem.

AI’s Expanding Role in the Economy

AI tools have permeated across many diverse sectors such as healthcare, banking, logistics, and retail. Companies now use these tools to forecast demand, detect fraud, automate decisions, and personalise user experiences. Globally, the AI market was valued at around USD 186 billion in 2024 and is projected to exceed USD 1 trillion by 2031.

This global trend is mirrored by India’s growth, rising from USD 3.2 billion in 2020 to USD 6 billion in 2024, with estimates suggesting it could touch USD 32 billion by 2031. These projections reflect beyond increased adoption, they indicate domestic innovation and skill development. The Stanford AI Index Report 2025 has placed India among the top nations for AI skill penetration, affirming its strong human capital foundation.

Even with these trends as a background, the CCI in their market study has drawn attention to some trends outlining structural imbalance. The market study has underlined certain dominance issues in upstream and downstream layers of AI, applications and deployment. The study’s recognition of potential anti-competitive behaviours across the AI stack will shift the debate to building strong infrastructures for building robust AI startups in India.

AI as a Force for Market Equality

CCI has taken a balanced and pragmatic approach in their research. The market study has identified AI not as a threat but as a tool to democratise innovation. Nearly 76% of surveyed Indian AI startups rely on open-source technologies, showing how AI can level the playing field. When deployed responsibly, AI can lower entry barriers, enhance efficiency, and allow smaller enterprises to compete with established firms. For instance, micro and small businesses that once lacked resources for advanced analytics can now use accessible AI tools for credit scoring, demand estimation, and customer management. This framing is critical: it positions AI not as a driver of concentration but as a lever for inclusion, provided the ecosystem remains open and contestable

Towards a Competitive AI Ecosystem

The study has taken an interesting approach recommending a flexible and forward-looking roadmap for building a fair and innovation-driven AI market in India. The study recommends a self-audit for companies developing AI systems to detect and address risks that may contravene competition principles. Further, the CCI has laid emphasis on the importance of transparency frameworks for AI decision-making, on capacity building within the CCI and on lowering entry barriers by improving access to open-source tools, affordable computing, data resources, and skills.

Altogether, these recommendations reflect an adaptive model of regulation by the CCI that relies primarily on dialogue, learning, and co-regulation rather than rigid enforcement. The CCI’s emphasis on ‘soft law’ instruments signals a maturing understanding that static rules are ill-suited to fast-evolving digital markets.

Building Institutional Capacity

One of the most significant recommendations to come out from the market study is strengthening institutional capacity within the CCI. This would result in the CCI enhancing its technical capabilities and infrastructure by developing expertise in AI, machine learning and self-learning models. Further, the study has recommended plans to set-up a think tank which would provide research and analytical insights into the evolving contours of technology, markets, and competition policy. The proposed capacity building will not merely have an administrative effect but will ensure that the CCI can effectively interpret novel market behaviours as they intersect with AI and apply competition principles to them if necessary.

This emphasis aligns with the recommendations of the Report of the Committee on Digital Competition Law (CDCL) as well, which similarly underscored the need for the CCI to develop technical expertise, digital market monitoring tools, and analytical capabilities. Strengthening these internal competencies will be vital as AI-driven markets evolve and as the CCI faces increasingly complex questions of algorithmic collusion, data access, and network effects.

Charting Steps for the Future

The release of the market study is only a starting point. The next phase must focus on operationalising its recommendations through coordinated action by the CCI, the Ministry of Corporate Affairs, MeitY and industry stakeholders. Establishing evidence-backed theories of harm for anti-competitive practices specific to AI-related practices will help ensure that enforcement remains predictable and proportionate. Equally important will be fostering international cooperation. As AI supply chains and digital markets transcend borders, India’s competition policy must engage with global debates on fair access to compute, data, and foundational models.

Conclusion

The market study marks a forward-looking step in India’s competition law regulation journey. It actively advocates that the goal is not to restrict innovations in the AI industry but to build a climate and infrastructure for sustainable and fair innovation. By prioritising institutional capacity, encouraging transparency, and aligning competition policy with the realities of the market, India can position itself as a leader in responsible AI growth and governance.

As AI becomes central to the global economy, India’s challenge will be to maintain openness while safeguarding competition. Implementing the market study’s recommendations and advancing the frameworks for assessing harm will be essential to ensure that AI remains a tool of empowerment rather than concentration. The study therefore, is not an endpoint but a preliminary blueprint for India’s next phase of digital competition policy, one that places fairness, innovation, and resilience at its core.

The article is authored by Kazim Rizvi, Founding Directorand Bhoomika Agarwal, Programme Manager—The Dialogue