NASSCOM, representing over 3,500 Indian IT and AI companies, has recommended that the Indian government revamp its AI public procurement processes to prioritize homegrown AI models and counter pricing disadvantages posed by global giants like Google and Meta.
- NASSCOM urges preferential treatment for domestic AI models in government tenders.
- Lowest-bidder procurement rules disadvantage Indian startups competing against Big Tech.
- China’s protected AI market cited as a successful model to emulate.
What happened
The National Association of Software and Service Companies (NASSCOM) submitted recommendations to the Indian government urging a review of its public procurement processes for AI technologies. They emphasized that current tender rules, which prioritize the lowest bidder, hamper the adoption of domestic AI models developed by Indian companies.
This call for reform was highlighted in the 17th report of the Parliamentary Committee on External Affairs released in September 2026. NASSCOM represents a broad coalition of IT and AI firms, including major players and startups such as Tata Consultancy Services, Cognizant, Accenture India, and emerging foundational AI developers like Sarvam AI.
Why it matters
NASSCOM warns that relying solely on price-driven procurement disproportionately favors global AI juggernauts like Google and Meta, which have significantly greater financial resources. This dynamic threatens to undermine India’s growing AI startup ecosystem and the government’s investments in domestic AI innovation.
The industry body points to China’s strategy of fostering a protected home market for AI as a successful example. That approach has enabled Chinese AI companies and the broader technology ecosystem to scale and directly compete with multinational firms, creating a level playing field and reinforcing national technological sovereignty.
What to watch next
The Parliamentary Committee has acknowledged the structural challenges in India’s AI ecosystem but has not yet explicitly recommended changes to procurement rules like the General Financial Rules or the lowest-bidder tender system. Future policy decisions on this will be critical in determining the pace and direction of India’s AI sector growth.
Meanwhile, government initiatives such as the IndiaAI Mission, which received over Rs 10,000 crore in funding since 2024, aim to build partnerships and capacity across sectors. Upcoming procurement tenders, including demands for large-scale AI computing capacity, could reveal how much influence NASSCOM’s recommendations have on evolving public sector AI acquisition strategies.