In 2014, Prime Minister Narendra Modi outlined India’s updated Act East Policy (AEP), expanding the strategic focus of ties to incorporate defense and security with its Southeast and East Asian partners. However, the policy was not originally conceptualized around security. Its predecessor, the Look East Policy (LEP), began in the early 1990s to strengthen economic relations, but transitioned into the AEP as New Delhi recognized the strategic imperative of developing defense ties with its extended eastern neighborhood.
While the policy’s first decade successfully deepened regional defense ties – including BrahMos deals with Indonesia, the Philippines, and Vietnam – India has again reached a moment when it is looking at the rise of critical and emerging technologies like artificial intelligence (AI), and the increasing prospect of partnering with its Asian partners on the same.
This reality places AI diplomacy at the very core of India’s AEP. It has become apparent that India seeks to achieve AI sovereignty across five layers of the AI stack — application, model, semiconductor, infrastructure, and energy. For this vision to succeed, its talent, researchers, and startups urgently require strategic value chain diversification beyond traditional partners in Western Europe and Northern America region. Escalating visa constraints, technology export controls, and the heavy economic toll of one-way talent mobility indicate the structural limits of this dependence.
AEP and Tech Diplomacy: AI at the Forefront
India’s technological cooperation, especially in the cyberspace domain, is already underway with ASEAN and with countries such as Japan, Taiwan, South Korea, and Singapore, underscoring the existing avenues for technological partnership. However, with growing AI adoption and integration, the demand has quickly shifted toward exploring strategic partnership for AI cooperation and collaboration.
India’s bilateral digital partnership agenda identifies AI as an important pillar and emphasizes the exploration of specific AI projects. For instance, the 2026-2030 Plan of Action to implement the ASEAN-India Comprehensive Strategic Partnership explicitly tasks India and ASEAN member states with advancing joint capacity building and knowledge sharing in the field of information and communication technologies. Similarly, India is exploring partnerships across the full spectrum of the AI stack with Japan. However, for this ambition to turn into reality, India will have to move beyond joint statements and identify specific projects and initiatives for co-creation, collaboration, and co-development of AI solutions.
The strategic logic for technological partnership has never been more critical. The recent episode of the United States enforcing AI-related export controls and restrictions is a case in point. While on this front, some developments have already taken place, they are too little and too insignificant considering the challenge at hand.
Strategic Partnership on AI: Co-Creation and Investment
On April 21, 2026, the First India-Japan AI Strategic Dialogue took place, which operationalized the Japan-India AI Cooperation Initiative (JAI) launched during Modi’s visit to Japan in August 2025. While India-Japan economic cooperation dates back a long way, a revitalized interest among Japanese media giants, fast-moving consumer goods (FMCG) companies, and even some technology and engineering labs and MSMEs in the Indian market clearly indicates their need to pivot their market expansion strategies and diversify their reliance on the U.S. and Chinese markets.
This eastward momentum is further reinforced by the launch of the India-Korea Digital Bridge in April 2026, designed to drive deep bilateral cooperation across AI, semiconductors, and the broader electronics and IT sector. Similarly, under the 2026-2030 Plan of Action, India and ASEAN governments are exploring areas for collaboration to develop studies on AI governance, standards, and tools. It therefore remains crucial for AEP to pursue an AI Diplomacy pillar, which focuses on strategic research cooperation first and foremost.
Research cooperation and co-creation remain fundamental and delicate issues for Indian start-ups and talent ecosystems to achieve sustained growth. It is noteworthy that AI start-ups and technical talent pools are not exclusively composed of individuals exceptionally skilled in STEM and core or applied AI. Due to the expanded possibilities for data aggregation workflows and custom solutions engineering in AI, start-ups and talent ecosystems are shifting from traditional Software-as-a-Service (SaaS) and BPO-like AI delivery models toward the intersection of AI-enabled engineering. Rather than doubling down on the compute-heavy limits of current generative systems, strategic research cooperation can allow Indian innovators and their East Asian partners to pioneer alternative AI evolution trajectories.
The second important focus should be attracting AI investment from major technology companies in India, particularly in chip manufacturing, packaging, and talent development segments. South Korean, Taiwanese, and Japanese companies are well positioned in this area and can help develop a robust memory-chip industrial ecosystem in India. The success of the India Semiconductor Mission (ISM) 1.0 has sent a positive message to the conglomerates operating in the AI space. ISM 2.0 can be leveraged to attract investments from the East Asian tigers who are looking to de-risk from the Chinese market. For this, New Delhi will have to start by reaching out to these big companies, as it did in the shipbuilding sector.
Building Quality-first Talent Flows
In October 2025, Japan’s ASEAN-Japan Co-Creation Initiative for AI had emphasized human resource development and the actual co-creation of AI solutions. It drives joint research and development in smart manufacturing, robotics, and green technologies, while building culturally attuned AI models through structured industry-academia-government collaboration. India should adopt this model for its AI Diplomacy pillar under the AEP as it moves forward.
Bilateral programs with countries like Japan, and Singapore and tech-forward ASEAN partners like Vietnam, Malaysia, and Thailand must combine talent mobility with genuine technology co-creation. Indian engineers and domain specialists should get placed in Japanese industrial labs, Singaporean research institutes, and regional tech hubs to jointly develop precision AI systems for manufacturing, supply chain optimization and robotics. The knowledge and intellectual property gained must return with them to strengthen India’s domestic ecosystems.
Rekindling the Future of Supply Chain Integration
India, with its Asian partners, can rekindle deeper supply chain integration by tackling barriers to doing business through targeted regulatory and legal reforms and bilateral fast-track mechanisms. Persistent challenges such as regulatory complexity, land acquisition delays, high logistics costs, and compliance burdens have historically slowed FDI despite India’s emergence as an attractive destination. These impediments force these companies to explore other destinations, such as Vietnam and Thailand.
Additionally, for AI diplomacy to succeed, India will have to make the space more inclusive by including domestic startups working in the space, across domains and connecting them with their counterparts. The creation of a Technology Council along the lines of the Business Council can be explored. Such a mechanism will enable diplomacy to trickle down, creating natural and sustainable ways for the mechanism to operate independently.
Boldly building on open standards and open-source-friendly architectures creates transparent, interoperable foundations for AI-driven digital twins in smart manufacturing and urban infrastructure. This reduces vendor lock-in, accelerates co-creation, and enables faster knowledge as well as IP diffusion across bilateral projects.
Considering the evolving nature of the modern economy and its intersection with advanced technologies such as AI, it would be prudent for India to include AI diplomacy in its economic security dialogue with like-minded countries. We have already seen this in the case of India-Japan and India-South Korea ties. While India’s AI development will take time domestically, building strategic partnerships on the AI stack needs to become an important part of its diplomacy and foreign policy, and the best way to start is with the AEP.
