'Large IT firms have been big disappointments': CIO blasts India's tech giants for ignoring R&D

India's IT giants, often seen as pillars of the economy, are now under fire for their lack of innovation. Mihir Vora, Chief Investment Officer at TRUST Mutual Fund, expressed his disappointment bluntly: “Big disappointments have been our large IT companies. Making loads of cash flow and profits. Investing minuscule amounts in fundamental R&D and innovation. Risk-averse. Content being service providers.”

 Vora's remarks came after Nilesh Jasani, Founder of GenInnov Funds, pointed out striking advancements in AI in China. Recently, a Chinese company unveiled a language model brimming with innovations, making it 15-20 times cheaper than some of the best models globally, yet offering comparable capabilities, Jasani wrote in Mint. Within days, another Chinese firm announced a model capable of handling inputs 20-32 times larger than any current global counterpart, equivalent to processing a 16,000-page PDF.  

In contrast, India’s generative AI landscape remains, as Jasani described, “largely derivative.” While Indian firms fine-tune open-source models for local languages and applications, foundational breakthroughs akin to GPT-4 or Claude are absent. This leaves India perpetually dependent on foreign intellectual property, incurring costs through cloud fees, licensing expenses, and reliance on foreign hardware.  

Vora noted a contrasting approach in the pharmaceutical industry, stating, “I guess that our pharmaceutical companies have taken bigger bets as a percentage of their profit pools—challenging MNC patents (not hugely innovative but entails taking risk), investing in new molecule research, new drug delivery mechanisms, etc.”  

This stagnation in IT innovation raises significant concerns about India’s position in the global tech race. As foreign alternatives offer cheaper and more capable technologies at scale, India risks falling behind. Jasani warned that without visionary leaders willing to invest in unknown frontiers, India’s reliance on imported technology will deepen, limiting its global competitiveness.  

Reacting to Jasani, Anand Ramachandran, a global investment professional, said that Chinese are building cheap advanced models with their hands tied behind their back, the US keeps leapfrogging version to version, "why is India not in the game despite an army of tech talent and engineers?"