Despite being a global "cradle" of top-tier technology talent and supplying countless elite engineers to Silicon Valley, India has failed to nurture cutting-edge technology companies like NVIDIA or China's DeepSeek on its home soil. Analysts suggest this predicament stems not simply from "brain drain," but from a complex interplay of innovation ecosystems, industrial structures, and institutional environments.

**Innovation Trapped in a Dilemma**

India is never short of top-tier talent in the eyes of the outside world. Indian engineers make up a significant proportion of NVIDIA's teams developing cutting-edge chips, with many graduating from prestigious institutions like MIT, Carnegie Mellon University, and the Indian Institutes of Technology. However, these elites' creativity rarely bears fruit on home soil.

"There's a dangerous pattern in Indian industry: we excel at trade distribution and brand building, but we hand over innovation to others," noted Venugopal Garre, an analyst at Bernstein Research.

Compared to original innovation, Indian companies seem more enthusiastic about imitation. Nearly 70% of raw materials for local pharmaceutical companies rely on imports from China, with most "innovations" merely waiting for European and American patents to expire before copying. This pattern exists across defense, solar energy, electronics manufacturing, and automotive industries.

India's Commerce Minister Piyush Goyal once criticized: "Our successful startups are all making premium cookies and ice cream brands, while China is conquering chips and new energy!"

Additionally, Indian society faces challenges from oligopolistic monopolies and a lack of quality entrepreneurs.

**Brain Drain and Educational Problems**

The scarcity of cutting-edge enterprises also stems from India's continuous brain drain. Nilkanth Mishra, a computer science graduate from IIT and currently a member of Prime Minister Modi's Economic Advisory Council and Chief Economist at private bank Axis Bank, revealed that of the 30 top graduates in his class 20 years ago, 26 have become U.S. citizens. This means they are essentially unlikely to return to serve their home country, perhaps only considering returning after retirement.

India's "cream-skimming" brain drain allows Silicon Valley to reap the benefits, rather than Bangalore or Hyderabad in India.

The relative lag in India's education system further exacerbates this predicament. First, American universities profit by selling research results to the private sector through technology transfer offices, while India's top universities still lag in commercializing and industrializing research outcomes. Professor Anil Gupta from the Indian Institute of Management once admitted: "Our research is like isolated islands, completely disconnected from industry needs."

Second, Indian universities' curricula still focus on traditional programming rather than AI research, lacking cutting-edge AI research laboratories and supercomputing resources. This leads to a weak domestic AI doctoral training system, prompting Indian talent to relocate abroad.

**Capital and Policy Dual Predicament**

Indian startups commonly complain that domestic venture capital prefers "quickly monetizable" consumer technology. Although India added 5 unicorn companies in 2024, they were concentrated in e-commerce and payment sectors.

Unlike the United States, China, and the European Union's heavy investment in deep AI research, India has long concentrated resources on IT services and product development, prioritizing software services.

The disparity in data is particularly striking. According to statistics, India's R&D spending accounts for only 0.6% of GDP, far below the United States' 3.4% and China's 2.4%. India's private sector R&D investment accounts for only 36%, while both the U.S. and China exceed 70%.

Some entrepreneurs point out that the real problem lies with the government itself, as it doesn't provide substantial financial support to startups.

Policy contradictions also exist. Although Modi's government launched the "Make in India" initiative, sectors like defense remain monopolized by conglomerates. A former Tata Group executive noted that new startups find it difficult to secure defense contracts, with this protectionism actually stifling competition.

**Signs of Change**

However, India is not without opportunities for turnaround. Analysts point out that Trump's return to the White House and implementation of immigration policies, along with research funding cuts targeting universities, are weakening Indian students' desire to study in the U.S., potentially providing a window to alleviate India's brain drain pressure.

Positive signals are also emerging in the capital sphere. Research by Bain & Company shows that India's venture capital funding rebounded in 2024, with investment amounts growing from $9.6 billion to $13.7 billion, consolidating India's position as the second-largest venture capital market in the Asia-Pacific region.

Consumer technology remains the most concentrated area for venture capital, but growth has also appeared in software and services sectors, including generative AI.

More broadly, aerospace is also an area of Indian advantage.