India’s competition regulator Competition Commission of India (CCI) has warned that control over key resources like data, compute and foundation models could allow a few technology companies in India to dominate the emerging artificial intelligence (AI) economy, creating new barriers for startups and medium and small enterprises (MSMEs).
In its first market study on artificial intelligence and competition released on Monday, the CCI said, “Control of a few large firms across the AI stack may create barriers to entry for smaller players… Established entities own vast high-quality datasets, which may not be accessible to small firms. Furthermore, high training costs may favour well-funded incumbents. Removing these barriers is imperative to create a level playing field, encourage the entry of new players and stimulate competition in the AI marketplace.”
The report cited the ₹10,300 crore India AI Mission, launched by the Ministry of Electronics and Information Technology (MeitY) in 2024 to keep a check on this.
Under the mission, more than 38,000 GPUs have been made available at discounted rates, 12 startups and firms have been chosen to develop foundational AI models for India, and the AI Kosh platform has been populated with over 2,000 anonymised datasets for training purposes.
Reacting to the study, a startup supported under the India AI Mission said, “As a startup, we’re concerned about how big tech controls data, potential bias in algorithms, and unfair practices. Some of us worry that too much regulation could stifle innovation. Access to data is a big issue, and to level the playing field, the government could make a lot more anonymised data publicly available.”
{{/usCountry}}Reacting to the study, a startup supported under the India AI Mission said, “As a startup, we’re concerned about how big tech controls data, potential bias in algorithms, and unfair practices. Some of us worry that too much regulation could stifle innovation. Access to data is a big issue, and to level the playing field, the government could make a lot more anonymised data publicly available.”
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The global AI market increased from $93.24 billion in 2020 to $186.43 billion in 2024, while India’s AI market grew from $3.20 billion in 2020 to $6.05 billion in 2024, said the report, quoting figures from Statista.
The AI market in India is expected to grow rapidly, with a compound annual growth rate (CAGR) projected between 39% and 43% from 2025 to 2032, reflecting increasing adoption and investment across industry verticals, said the report.
One favourable factor CCI noted in its primary research involving 106 respondents was that open-source technologies dominate the AI landscape in the country. Around 76% of startups reported building their AI application solutions using open-source tools.
“This allows them to innovate rapidly without prohibitive costs. This demonstrates how the AI stack lowers entry barriers, enabling smaller firms to scale efficiently and compete effectively with larger players, thereby fostering a more inclusive and dynamic digital economy,” said Kazim Ruzvi, founding director of The Dialogue, a tech policy think-tank.
To address the competition risks, the CCI has proposed that AI companies carry out self-audits to ensure their systems do not unintentionally harm competition.
The report has attached a ‘Guidance Note on Self-Audit of AI Systems for Competition Compliance’ as part of an annexure for businesses to identify, assess, and mitigate these risks before they cause market harm.
The guidance suggests a six-pillar approach including governance and oversight, algorithm design, testing and validation, monitoring and control, transparency, and integration with compliance programs. Businesses are encouraged to document AI systems thoroughly, assess training data for bias, test algorithms under various scenarios, and implement safeguards to prevent anti-competitive outcomes. However, the note is guidance only, not legal advice.
CCI has said it will keep an eye on promoting a competitive AI ecosystem in India by doing several things such as organising a conference on “AI and Regulatory issues” with relevant stakeholders, conducting workshops on “AI and competition compliance”, setting up a think tank to draw upon expertise on matters related to digital markets with special focus on AI, and engaging with international competition authorities and multilateral competition platforms.