How is the next wave of AI impacting the Indian cloud scene?

Gartner has predicted that 2026 will see a 10.6% increase in India’s total IT spend from 2025 (2025: USD 159 billion vs 2026: USD 176.3 billion), with data centres, cloud infrastructure, and AI-enabled technologies driving this growth. This isn’t just a budget increase; it’s a fundamental shift in where innovation happens, who owns the infrastructure, and how we translate AI potential into scalable impact.

“Data center systems spending is primarily driven by substantial AI infrastructure investments and multiple government programs aimed at strengthening the local AI ecosystem… India has one of the largest consumer bases for AI services globally, attracting international investment in local infrastructure to support this expanding user base. Evolving data privacy and sovereign cloud requirements are expected to drive growth in this segment through 2026.” - Naresh Singh, Senior Director Analyst at Gartner

At Civo Navigate India 2025, our panel of AI experts explored the battle between open and closed source, the reality of the job market, and what it means for India’s sovereignty. What follows are the key insights from that conversation, grounded in the perspectives of those shaping the next wave of AI in the Indian cloud ecosystem.

Open source vs closed source models

The debate over open vs closed source isn’t just for developers; it’s a question of who controls the future of AI. In India, the tide is turning toward open standards.

“In the Indian market, we are starting to see the parity between open and closed source. As a whole, I am really excited for the whole wave of models coming out of India and India's role in open source. The impact of this will be similar to how Linux came to disrupt the way we build infrastructure. I think these open source models will do something in a very similar way.” - Josh Mesout, Chief Innovation Officer at Civo

Open source isn’t just a free alternative; it’s a foundation for local innovation. While closed-source models still have their place for specific enterprise needs, the future belongs to platforms that offer transparency and control.

“Where open source is going to take over from closed source is a debatable topic. I think, given the context and the training data limitation, we will eventually see parity between open source and closed source. Open source is definitely the future, but in my opinion, that doesn't mean that closed source is going to get completely wiped out.” - Chirotpal Das, Founder of SarthiAI

Will AI take over the job market (or redefine it)?

As AI moves into everyday workflows, the question remains: is it a threat or a tool? The panel took a pragmatic view, framing AI as the next great productivity shift, not the end of human work. Instead of a replacement, they saw a massive opportunity for India to lead in an embodied intelligence.

“I think that the next big revolution is where these AI models will take a physical form and start to serve humanity. What I think is interesting, particularly in India, is that there is a huge hardware industry, a huge robotics industry, and that will be the next frontier to unlock these use cases (such as having an AI to cook food for you). And actually, that will open the next lot of opportunities with value within the economy because you could have robots building robots.” - Josh Mesout, Chief Innovation Officer at Civo

This perspective shifts the focus to robotics, edge AI, and the physical applications of intelligence. India’s strong manufacturing base and growing semiconductor ecosystem place it in a unique position to lead this transition, moving AI beyond cloud inference into the real world.

“Is AI going to help us? The simple answer is yes. I don’t think anyone has to be concerned about this [robots taking over the job market]. The way we are seeing the world evolving from the time of the industrial revolution, fear has always been there. The only thing you need to do is skill up - make sure you are on the multi-tech or multi-task levels so that no one can replace you. We know the mundane jobs will be done by AI or robots, but decision-making can’t be replaced in the near future.” - Murthy Chitlur, VP at SimplyFl Innovations

This reflects a growing consensus: AI is here to absorb the repetitive, rules-based tasks, but human judgment, accountability, and strategic thinking remain irreplaceable. As organizations deploy AI at scale, the demand for hybrid skill sets, technical fluency combined with domain expertise, is expected to grow.

“I think everyone who is working in generative AI knows the concept of human in the loop… I believe in robotics; they can do monotonous repetitive tasks, but when it comes to making decisions, humans will always be required. They can keep doing something that is to be done every day, every hour, but to take a decision to bring in innovation, humans will always be there.” - Anjali Batra, Director of AI at OpsMx

The benefit of AI for the Indian cloud market

India’s rapid adoption of AI is doing more than just launching new apps; it’s rewriting the rules of the cloud. As enterprises move to production-grade AI workloads, the focus is shifting. It’s no longer about whether to use AI, but where that intelligence lives, who owns it, and how it is delivered at scale.

Unlike earlier phases of cloud adoption, which were largely dictated by global hyperscalers, AI offers India a strategic rest. Compute-intensive workloads and data residency laws are pushing organizations to rethink infrastructure ownership. India finally has the potential to build an AI ecosystem that is both locally hosted and locally controlled.

“I think there’s an amazing opportunity that is unique to India where you could have data centers that you own and operate, and build. You could have models that you won and operate, and build. You could actually serve them across. There is an opportunity here for an entire supply chain that comes through. You need to make sure that international investment lands in the right places, and the way you do that is you listen to the Indian market and listen to what it needs and make sure that you’re responding to those needs.” - Josh Mesout, Chief Innovation Officer at Civo

This isn’t just about cloud consumption; it’s an economic strategy. By developing infrastructure platforms domestically, India creates downstream value across hardware manufacturing, data centre operations, software development, and managed services.

“See, the Indian market is a very competitive market, and the world sees that, and that’s why you see a lot of companies investing in India. This is because they see the market to be so large. When we talk about investment and in terms of cloud in India and cloud sovereignty, it is important that people are providing performance as well as sovereignty.” - Chirotpal Das, Founder of SarthiAI

The implication is clear: the next phase of growth in India’s cloud market will favour platforms that can combine local presence, high-performance infrastructure, and AI-native services.

What is next for India?

India isn’t just adapting to the next wave of AI and cloud transformation; it’s shaping it. The convergence of open-source innovation, enterprise adoption, and sovereign infrastructure suggests that India’s technology landscape is moving from the periphery to the center of the global narrative.

At Civo, we recognized the opportunity to not only enter India but to invest in its digital future. With our INR 200 crore commitment, we are expanding our footprint to empower Indian developers, startups, and enterprises alike. This investment supports our Mumbai region, enabling us to deliver low-latency, high-performance cloud infrastructure tailored to the needs of Indian businesses.