How Modi’s India climbed the technology stack

From UPI to AI: How Prime Minister Modi’s 12 years changed India’s tech story

In 2005, American journalist Thomas Friedman published The World Is Flat, a book that captured the optimism of an age when globalisation appeared unstoppable. Technology was dissolving borders, supply chains, and talent could move through digitally. India emerged as one of the great beneficiaries of that world. That could be seen for example Bangalore’s technology parks.

For much of the next two decades, that was India’s technological identity. We supplied services but owned a few platforms. We assembled products but imported the critical components. We participated in the digital economy, but largely on terms set elsewhere.

Today, however, the world that Friedman described no longer exists.

Technology is becoming more strategic, more vertically integrated, and more geopolitical. Semiconductors, artificial intelligence, cloud infrastructure, digital payments, satellite networks, and data centers are increasingly treated not merely as commercial products but as instruments of national power. Nations are not only competing for market share; they are competing for control over the technological stacks that underpin economic and military influence. The central technology story of Prime Minister Narendra Modi’s twelve years in office is India’s attempt to move from participating in global technology systems to building them.

The COVID-19 pandemic exposed the fragility of global supply chains. The intensifying rivalry between the United States and China changed technology into a geopolitical battleground. Governments and corporations alike began searching for alternatives to concentrated manufacturing networks and single-country dependencies. Suddenly, resilience mattered as much as efficiency.

India found itself presented with a rare strategic opening. Rather than positioning itself solely as a large consumer market, New Delhi increasingly sought to establish India as a trusted technology partner and manufacturing destination. The objective was technological relevance in a world where infrastructure and geopolitics had become inseparable.

Perhaps nowhere is this clearer than in India’s Digital Public Infrastructure.

While many Western economies allowed digital identity and payment systems to evolve primarily through competing private firms, India chose a different path. The result was an ecosystem built around Aadhaar, digital verification systems, and most importantly, the Unified Payments Interface (UPI).

UPI has fundamentally altered how India transacts. Digital payments that once required multiple intermediaries now occur almost instantly. From a roadside tea vendor to a small manufacturer in Coimbatore, millions of Indians now participate in a common digital financial ecosystem. More importantly, UPI demonstrated that digital infrastructure could function as a public utility, like roads or railways. By reducing conflict and lowering barriers to participation, it accelerated formalisation and digital adoption at an extraordinary scale.

Encouraged by this success, policymakers are now attempting to apply similar principles elsewhere through initiatives such as the Open Network for Digital Commerce (ONDC), which seeks to create open and interoperable digital marketplaces rather than closed platforms.

Yet success also brings new questions. The sustainability of the UPI model remains under debate, particularly under a zero-MDR framework that limits monetisation opportunities for payment providers. More broadly, as Governments assume greater responsibility for building digital rails, policymakers must ensure that public infrastructure remains a platform for innovation rather than a substitute for it. The challenge for India is not merely building digital infrastructure but preserving the entrepreneurial dynamism that makes such infrastructure valuable in the first place. If Digital Public Infrastructure represents one layer of Atmanirbharta, manufacturing represents another. For decades, India’s greatest technological weakness was its inability to translate engineering talent into industrial capacity. The country excelled at services but struggled in mass-scale manufacturing.

The Production Linked Incentive (PLI) scheme represented an effort to change that equation. By incentivising companies to manufacture within India, the Government sought to change the country from a market for electronics into a producer of them.

The results have been visible. Smartphone manufacturing has expanded significantly, with major firms increasing production and exports from Indian facilities.

Electronics have emerged as one of India’s fastest — growing export categories, marking a change from the situation that existed barely a decade ago.

Yet manufacturing smartphones, important as it is, represents only part of the challenge. The true center of gravity in modern technology lies inside the semiconductor.

Semiconductors have become the strategic resource of the twenty-first century. They power smartphones, cloud servers, fighter aircraft, autonomous systems, telecommunications networks, and artificial intelligence models. Control over semiconductor production increasingly determines which nation's capacity in technological frontier.

Recognising this reality, the Modi Government launched the India Semiconductor Mission, seeking to establish a domestic ecosystem capable of supporting advanced electronics manufacturing.

The strategic logic is undeniable. The practical challenges are high. Semiconductor fabrication is arguably the most sophisticated industrial process humanity has ever developed. It requires extraordinary precision, uninterrupted power, ultra-pure water, specialised supply chains, and highly skilled engineering talent built over decades. India has made meaningful progress, particularly in packaging, assembly, and semiconductor ecosystem development. Investments are now underway. Yet there remains a difference between participating in semiconductor supply chains and competing with global leaders such as Taiwan, South Korea, or the US in fabrication.

This distinction matters because technological sovereignty is not achieved through announcements. It is achieved through capabilities. The same reality applies to AI. If data defined the previous decade, compute is defining this one. AI has introduced a new hierarchy of power based not simply on software expertise but on access to computational infrastructure. Training AI systems requires enormous quantities of specialised hardware, energy, and capital. Recognising this challenge, the Government launched the India AI Mission, seeking to expand access to computing resources for startups, researchers, and developers.

This is an important step. But it would be premature to conclude that India has solved the problem of AI sovereignty. The country remains heavily dependent on imported GPUs and foreign semiconductor supply chains. Most frontier AI development continues to be concentrated among a small number of firms with access to enormous computational resources. India has made progress in democratising access to AI tools, but it has yet to produce a globally influential frontier model ecosystem comparable to the industry’s leading players.

We are democratising access to the tools. We do not yet own the forge. That distinction may ultimately define the next decade of technology policy. The same pattern can be observed beyond Earth’s atmosphere.

For much of independent India’s history, space was synonymous with ISRO. Yet the future space economy is unlikely to be driven by Governments alone.

Recognising this, policymakers opened the sector to greater private participation through institutional reforms and the establishment of IN-SPACe. The result has been the emergence of a new generation of Indian space startups seeking to build launch systems, satellite technologies, and commercial space services. Taken together, these developments reveal the logic behind India’s technology strategy over the last twelve years. This is more than a story of digitisation or Government programs. It is the story of a nation attempting to move upward through the technology stack.

From digital payments to semiconductor manufacturing, from AI infrastructure to commercial space, India is trying to build capabilities that were once assumed to belong exclusively to a handful of advanced economies. The project remains unfinished. India’s semiconductor ambitions face formidable obstacles. Its AI ecosystem remains dependent on foreign hardware, and its digital infrastructure must confront questions of sustainability, competition, and governance. Yet history is often defined less by achievements than by direction. For much of the globalisation era, India supplied the talent that helped build the technological systems of others. The ambition of the Modi years has been more consequential: to ensure that India owns part of the infrastructure on which the next technological age will run.

Whether that ambition succeeds remains uncertain. What is no longer uncertain is that India’s technological aspirations have changed. The world may no longer be flat. The question now is whether India can help build the terrain.

The writer is a physicist at the University of North Carolina at Chapel Hill and a columnist on AI, infrastructure and global systems; Views presented are personal.