In 2014, Prime Minister Narendra Modi introduced India’s updated Act East Policy (AEP), broadening the strategic focus of ties to integrate defense and security with its Southeast and East Asian partners. However, this policy was not originally designed around security. Its predecessor, the Look East Policy (LEP), began in the early 1990s to strengthen economic relations, but became the AEP when New Delhi recognized the strategic imperative to develop defense ties with its extended eastern neighborhood.
While the first decade of this policy saw deepening regional defense ties – including the BrahMos agreements with Indonesia, the Philippines and Vietnam – India has again reached a moment where it is interested in the rise of critical and emerging technologies like artificial intelligence (AI), and the growing prospect of partnerships with its Asian partners in this area.
This reality places AI diplomacy at the very heart of India’s PEA. It has become evident that India is seeking to achieve AI sovereignty across five levels of the AI stack: application, model, semiconductors, infrastructure and energy. For this vision to succeed, its talents, researchers and startups urgently need strategic diversification of the value chain beyond traditional partners in the Western Europe and North America region. Growing visa constraints, technology export controls, and the heavy economic toll of unidirectional talent mobility indicate the structural limits of this dependence.
AEP and technological diplomacy: AI at the forefront
India’s technological cooperation, particularly in the area of cyberspace, is already underway with ASEAN and with countries like JapanTaiwan, South KoreaAnd Singaporehighlighting existing avenues for technological partnership. However, with the increasing adoption and integration of AI, the demand has rapidly shifted towards exploring strategic partnerships for AI cooperation and collaboration.
India’s bilateral digital partnership program identifies AI as an important pillar and places emphasis on exploring specific AI projects. For example, the Action Plan 2026-2030 to implement the ASEAN-India Comprehensive Strategic Partnership explicitly mandates India and ASEAN member states to promote joint capacity building and knowledge sharing in the area of information and communications technology. Similarly, India is exploring partnerships with Japan across the AI spectrum. However, for this ambition to become a reality, India will have to go beyond joint declarations and identify specific projects and initiatives for co-creation, collaboration and co-development of AI solutions.
The strategic logic of technology partnership has never been more critical. The recent episode where the United States imposed AI-related export controls and restrictions is a good example. Although on this front some developments have already taken place, they are too limited and too insignificant given the challenge at hand.
Strategic partnership on AI: co-creation and investment
On April 21, 2026, the First India-Japan strategic dialogue on AI took place, which operationalized the Japan-India AI Cooperation Initiative (JAI) launched during Modi’s visit to Japan in August 2025. Although economic cooperation between India and Japan goes back a long way, a renewed 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 dependence on the US and Chinese markets.
This momentum towards the East is further reinforced by the launch of India-Korea Digital Bridge in April 2026, designed to foster in-depth bilateral cooperation in the areas of AI, semiconductors and the broader electronics and IT sector. Similarly, under the Action Plan 2026-2030, the governments of India and ASEAN are exploring areas of collaboration to develop studies on AI governance, standards and tools. It therefore remains crucial for the AEP to pursue a pillar of AI diplomacy, which focuses first and foremost on strategic research cooperation.
Research cooperation and co-creation remain fundamental and challenging issues for Indian start-ups and talent ecosystems to achieve sustainable growth. It is worth noting that AI start-ups and technical talent pools are not exclusively composed of individuals exceptionally skilled in STEM and basic or applied AI. Due to the expanded opportunities for data aggregation workflows and custom solution engineering in AI, startups and talent ecosystems are moving from traditional Software-as-a-Service (SaaS) and BPO AI delivery models toward the intersection of AI-driven engineering. Rather than doubling down on the computational limitations of current generative systems, strategic research cooperation can enable Indian innovators and their East Asian partners to pave the way for alternative trajectories of AI evolution.
The second important objective should be to attract AI investments from large technology companies in India, especially in the chip manufacturing, packaging and talent development segments. South Korean, Taiwanese and Japanese companies are well positioned in this area and can contribute to the development of a strong memory chip industrial ecosystem in India. The success of the India Semiconductor Mission (ISM) 1.0 has sent a positive message to conglomerates operating in the AI space. ISM2.0 can be leveraged to attract investment from East Asian tigers looking to de-risk the Chinese market. For this, New Delhi will have to start by reaching out to these large companies, as it has done in the shipbuilding sector.
Create quality-driven talent flows
In October 2025, the ASEAN-Japan AI Co-Creation Initiative had focused on human resource development and actual co-creation of AI solutions. It drives joint research and development in smart manufacturing, robotics and green technologies, while creating culturally relevant AI models through structured collaboration between industry, academia and government. India should adopt this model for its AI diplomacy pillar under the EPA as it moves forward.
Bilateral programs with countries like Japan and Singapore and advanced ASEAN technology partners like Vietnam, Malaysia and Thailand must combine talent mobility with genuine technology co-creation. Indian engineers and specialists are expected to be placed in Japanese industrial laboratories, Singaporean research institutes and regional technology hubs to jointly develop precision AI systems for manufacturing, supply chain optimization and robotics. The knowledge and intellectual property acquired must come back with them to strengthen India’s national ecosystems.
Reviving the Future of Supply Chain Integration
India, with its Asian partners, can revive deeper supply chain integration by removing barriers to doing business through targeted regulatory and legal reforms and accelerated bilateral mechanisms. Persistent challenges such as regulatory complexity, delays in land acquisition, high logistics costs and compliance constraints have always slowed down FDI despite India’s emergence as an attractive destination. These obstacles force these companies to explore other destinations, such as Vietnam and Thailand.
Additionally, for AI diplomacy to succeed, India will need 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 on the model of the Business Council can be studied. Such a mechanism will allow diplomacy to trickle down, creating natural and sustainable ways for the mechanism to operate independently.
Boldly leveraging open standards and open source architectures creates transparent and interoperable foundations for AI-driven digital twins in smart manufacturing and urban infrastructure. This reduces vendor dependency, accelerates co-creation and enables faster dissemination of knowledge as well as intellectual property between bilateral projects.
Given 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 relations between India and Japan and between India and South Korea. Although India’s AI development will take time domestically, building strategic partnerships in AI must become an important part of its diplomacy and foreign policy, and the best way to start is with the AEP.