The no-cost party has begun in India with major tech giants aggressively vying for a market share.
Millions of Indians gained free access to OpenAI’s cost-effective “Go” AI chatbot for a year earlier this month. This initiative followed similar moves by Google and Perplexity AI, who have partnered with major Indian telecom providers to offer free or discounted access to their AI tools.
While Google has collaborated with Reliance Jio, India’s largest telecom operator, to integrate AI tools into monthly data plans, Perplexity has teamed up with Airtel, the country’s second-largest mobile network, to provide over a year of free access to its AI platform.
The race is to understand how AI behaves across one of the most complex and high-volume digital ecosystems. This apart, the global companies are poised to gain from this ‘first-mover advantage’ in a price-sensitive market with Indian startups inching closer to releasing competitive local alternatives.
This isn’t just altruism
The free or low-cost access is a classic “get them hooked” approach by building dependency. It is also a long game to capture loyalty in a market too big to ignore.
The premium services for free will familiarise the young internet users, belonging to a generation that lives, works and socialises online using smartphones, with generative AI. Further, it will build their interest, integrating tools like ChatGPT, Gemini, or NotebookLM into their daily lives—uploading files, generating images, or conducting research. They are building habits before the competitors can even enter.
This mirrors streaming platforms’ strategy, leading to FOMO (fear of missing out), Thus, nudging users to pay later as switching back to a basic version would then feel like a downgrade.
India is OpenAI’s second-largest market after the US, with ChatGPT downloaded 29 million times in just three months this year. However, those 29 million downloads only generated USD 3.6 million in revenue, highlighting a challenge in converting Indian users to paid subscriptions. It is free but only in India, where it is already facing aggressive competition. The reason: Massive potential with 700 million smartphone users and over a billion online.
The strategy behind those telecom deals is also clever as it allows Google and Perplexity access to Jio’s 500 million and Airtel’s 360 million verified, active users, making payment tied to existing phone plans seamless.
Reliance Industries chairman, Mukesh Ambani has candidly stated that his conglomerate is on a long-term mission to democratise intelligence, accelerate innovation and make AI accessible to all 1.45 billion Indians. The same goal has already been echoed by Google’s Sundar Pichai, who emphasised putting Google’s AI tools into the hands of Indian consumers, businesses, and developers.
Eligible Jio users will receive an AI Pro plan at no extra cost for 18 months, including Gemini 2.5 Pro, 2TB of storage along with latest AI creation tools. Perplexity AI, on the other hand, offers Airtel customers in India 12 months of complimentary access to Perplexity Pro—a Rs 17000 value (USD 200 USD) —at no cost.
The playbook
This flurry of free AI offerings underscores India’s growing importance as a digital market, with over 1.4 billion people and a rapidly expanding 5G infrastructure, making it a critical battleground for tech companies aiming to shape the future of AI adoption.
India will have more than 900 million internet users in 2025, with a majority coming from rural areas. This is driven by growing use of Indic languages for digital content, according to a report by the Internet and Mobile Association of India (IAMAI) and research firm Kantar.
India’s high data consumption and youthful, smartphone-savvy population along with some of the world’s cheapest data rates, makes India an ideal market for scaling AI adoption. This is further spurred by its open and competitive digital market, which offers global players a unique opportunity to gather first-hand data, enhancing their generative AI systems. More users mean more unique, first-hand data, better localisation and a stronger product.
This is in contrast to China, where data and cybersecurity regulations pose significant challenges for foreign investors.
Many free AI tools collect, save, and utilise your inputs to retrain their models. Each time you enter text, upload files, or interact, you’re contributing to their model improvement at no cost. As an analyst has rightly put it: The tech giants are willing to pay (in free subscriptions) for this diverse data to refine their models and later scale across other emerging markets.
The free subscriptions are thus nothing but user acquisition costs in a price-sensitive market.
Interestingly, what began as a race for innovation has transformed into a struggle for power, data, and global dominance.
From Excitement to Scepticism
A win-win for AI companies, these free offerings, however, raise questions regarding implications on data privacy as many users may unknowingly trade personal information for free services for convenience, especially in a country without a comprehensive data protection law until recently.
The global technology firms offering ‘free’ AI tools are actively harvesting massive amounts of Indian user data to train their proprietary AI models. Furthermore, free access to foreign AI services through major telecom operators Reliance Jio and Bharti Airtel, sparking concerns about data sovereignty.
Without AI self-reliance, India’s data could be exploited to build AI services controlled by foreign companies and resold to us. It also brings in the potential inference risks as well as amplifies the danger of data colonialism.
Impact on India’s AI Ecosystem
The adoption of AI technologies in India is rapidly accelerating across various user sectors, transforming market dynamics and business approaches. Industries like BFSI, healthcare, retail, e-commerce, logistics, and marketing are leveraging AI for applications such as dynamic pricing, personalised recommendations, demand forecasting, and automated decision-making.
India’s failure to develop a competitive foundational AI model, comparable to Western or Chinese counterparts, has left a strategic gap that global firms are keen to exploit. The international AI companies view this as a unique chance to secure market leadership.
Taking note of the AI-driven pricing tactics, the Competition Commission of India (CCI) recently cautioned that free subscription or discounted costs could undermine fair competition and disadvantage smaller Indian developers.
If users can get GPT-4-level performance for free, they’ll be reluctant to experiment with local models that require further improvement. This could stifle innovation at home, limiting the ability of local startups to scale and relegating Indian developers to the role of consumers rather than creators of AI technology. Thus, allowing a foreign tech giant to gain disproportionate influence over India’s emerging AI economy.
Entry Barriers
The AI market in India is expected to grow four-fold by 2031 to USD 31.94 billion. However, India’s share in the global AI market will be just three per cent as control of a few large firms across the AI stack may create entry barriers – limited access to data, talent, computing resources, and high cloud service costs – for smaller players, according to CCI.
These start-ups are mostly building their application solutions using open-source technologies, and could also face challenges when those platforms change their terms, impose restrictions, or introduce paid tiers, disrupting their business models.
Pricing Hurdle
A small Indian AI startup providing chatbot solutions for local businesses may find it challenging to defend its pricing when free options like Grok 3 or open-source models are widely accessible. This would force startups to either reduce prices to unsustainable levels or shift to specialised markets, which may not always be practical.
Additionally, dominance by a few major firms in the AI ecosystem could hinder smaller companies’ ability to compete as steep costs of AI training favour global giants with deep pockets.
OpenAI, which has raised around USD 40 billion in total funding, is burning USD 1-2 billion each month to attract users by giving services at zero cost.
Addressing these obstacles is crucial to fostering a fair environment, promoting new entrants, and boosting competition in the AI market.
Sovereign AI rush
Though a latecomer in Artificial Intelligence, India has been scaling up its computing infrastructure rapidly with the deployment of 38,000 GPUs (graphics processing units) against the target of 10,000 units, aiming for indigenous models and inclusive platforms by 2026.
The IndiaAI Mission, backed by over Rs 10,300 crore, is working on a comprehensive ecosystem that fosters AI innovation by democratising computing access, enhancing data quality. The mission also prioritises developing homegrown AI models, exemplified by Sarvam AI’s 120-billion-parameter multilingual Large Language Model.
Meanwhile, the Ministry of Electronics and Information Technology (MeitY) has launched AIKosha, a secured platform that provides a repository of datasets, models and use cases that balances privacy and innovation. It has also unveiled governance guidelines for Artificial Intelligence (AI), which could serve as a blueprint for how India regulates the technology, balancing innovation with accountability and growth with safety.
Through strategic investments in AI infrastructure, cloud computing, and responsible data policies, India can emerge as the world’s trusted AI partner, aided by its linguistic diversity, a fast-digitising economy, ambitious infrastructure, and strong technical talent.
This long-term national endeavour also calls for continuous collaboration among government, academia, and industry – each reinforcing the other through policy, research, and product innovation.
Will India build with this or only consume it?
Most AI models are trained on Western-focused datasets, designed for English interactions, and tailored to contexts that don’t reflect the realities of the Global South. Beyond language, India’s diverse socioeconomic landscape requires AI to address varying digital literacy, unreliable internet, cultural differences, and unique use cases.
Local models can leverage India’s specific needs and data residency requirements, which will make them highly suitable for serving government institutions, which often handle critical and confidential information, as well as corporate enterprises that require secure, scalable, and tailored AI solutions. Additionally, local models can be fine-tuned to incorporate India-specific cultural, linguistic, and contextual nuances, enhancing their relevance and effectiveness for both public and private sector applications.
India’s linguistic diversity is a strength, not a barrier. The Bhashini platform, with over one million downloads and 350 models supporting 20 Indian languages, has enhanced digital access, as seen in its railway translation tools. Besides vernacular language processing, several other Indian AI developers have focussed on creating solutions tailored to local needs, such as agriculture-specific AI, healthcare diagnostics for rural populations and even education, where AI is likely to be introduced by 2026-27.
However, India has to promote data localisation by storing sensitive data within its boundaries to ensure a competitive, inclusive, and innovation-driven AI landscape. The models trained on financial, healthcare, or citizen datasets embody the collective intelligence of a country’s economy. Protecting that intelligence while unlocking its potential is the essence of Sovereign AI.
This is also essential for attracting significant private investment in computing infrastructure.
Furthermore, it should ensure that companies secure clear user consent prior to utilising data for model training.
Initiatives like the recent All India Council for Technical Education (AICTE) programme providing free licenses from foreign model providers to students and educators should be stopped to prevent sensitive data being transferred abroad, enabling profiling of Indian citizens and enhancing foreign models while stifling fair competition through predatory pricing.
Last but not the least, India requires a national programme to attract and retain top AI talent, fostering a virtuous cycle of data and computing power to advance AI capabilities and achieve a leading position in the field.
With prompt and robust measures under the Digital Personal Data Protection (DPDP) Act, the IndiaAI Mission, and vigilant oversight by the CCI, India can ensure the AI revolution is not merely an event it experiences, but one it actively shapes for its benefit.