Artificial Intelligence (AI) is no longer a futuristic concept; it is a present-day reality rapidly transforming industries and societies worldwide. The global AI ecosystem is a dynamic landscape, with different regions adopting and innovating at varying paces, driven by unique strengths, regulatory approaches, and economic priorities. While the U.S. leads in foundational AI model development and investment, and China excels in large-scale deployment, a closer look reveals interesting trends in the EU and, more significantly, in the burgeoning markets of India and Southeast Asia.
The notion that the U.S. is “winning” the AI race in terms of widespread adoption might be a common perception, but the reality tells a different story. While the U.S. undoubtedly dominates AI investment and foundational model creation (responsible for 61% of global output and 73% of global AI compute), its national AI adoption rate stands at a modest 25%. In contrast, China (58%) and India (57%) are quietly leading in deploying AI at scale, leveraging it to revolutionize healthcare, manufacturing, and government services.
The U.S. sees high AI adoption in sectors like finance (61%), technology (85%), and retail (68%). Its strength lies in private investment, a robust tech ecosystem, and a significant number of AI-based medical device approvals (over 520 by the FDA).
Europe (EU), while holding 15% of the global AI market, is projected to influence a substantial 43% of global AI governance through its regulatory leadership, notably with the comprehensive AI Act. However, despite aiming for 75% AI adoption by 2030, only 11% of EU companies currently adopt AI. This slow pace is attributed to factors like fragmented development environments and less access to hyperscale marketplaces compared to the U.S. The EU’s focus is on striking a balance between fostering innovation and ensuring ethical and responsible AI development.
Asia, particularly China and India, has shown remarkable momentum in AI adoption. China’s AI ecosystem is characterized by strong government planning and significant adoption in areas like hospitals (76%) and e-commerce (92%). Singapore also stands out with a high AI readiness score.
India is emerging as a serious global player in the AI economy, with AI projected to drive 15.7% of its GDP ($1.3 trillion) by 2030. What makes India’s approach unique is its focus on AI autonomy through homegrown solutions closely linked to its development goals, rather than solely for economic dominance or national security. This philosophy is embedded in the “India AI” mission and its National Strategy for AI. Therefore, AI solutions are to address critical development challenges in healthcare, agriculture, and education through government-led initiatives. Unlike the West, where proprietary technologies dominate, India is making significant progress in promoting open-source AI development. This democratizes AI, enabling rapid and cost-effective adoption across diverse sectors, as seen with initiatives like Bhashini, which leverages open-source language models.
India’s AI start-up ecosystem is strongly and rapidly growing. NASSCOM reported over 1,600 AI-focused start-ups in India in 2023, showcasing a vibrant innovation landscape. With such a depth of populations, India boasts a highly skilled workforce, including nearly five million programmers and a high generative AI adoption rate among knowledge workers (92%).
Despite these strengths, India faces challenges such as lack of patents, long-term capital and fewer high-quality data sets, especially for native languages. Experts emphasize the need for a broader, longer-term plan, including optimizing computational power and semiconductor manufacturing, to truly compete globally in foundational AI model development. DeepSeek’s success in developing powerful AI models on low-cost chips could be a blueprint for Indian start-ups, allowing them to leverage the existing technical talent and evolving start-up ecosystem without requiring massive infrastructure.
Southeast Asia (SEA) also presents immense opportunities along with strong development in India for AI development and adoption, driven by their large, digitally native populations, growing digital economies, and a pragmatic, customer-first approach to innovation.
SEA is emerging breeding ground for vertical AI start-ups that focus on developing targeted solutions for specific industries, activities, and issues prevalent in the region. The “customer-first methodology” is proving highly successful, especially as the region’s tech talent can develop innovative AI models, even if large-scale foundational model development akin to OpenAI is less prevalent due to funding constraints. AI can significantly advance key sectors such as manufacturing, retail, financial services, and healthcare. Examples include AI-powered customer service chatbots, personalized product recommendations in e-commerce, enhanced customer satisfaction in travel, and accelerated game development.
SEA’s digital economy is experiencing rapid growth, with AI emerging as a key driver. Companies that strategically adopt generative AI, invest in talent development, and build robust AI infrastructure are poised for significant profitability. Supportive Policy Environment in SEA Governments are actively creating conducive AI environments, balancing innovation with trust and safety; enterprise AI subsidies (Singapore), industry-specific AI pilots (Indonesia), and public-private partnerships (Malaysia, Philippines) are driving AI adoption and development.
As Western AI models may not directly apply to SEA markets, there is a strong need for developing ground-up solutions that address the region’s specific realities and business needs. This fosters local innovation and creates unique competitive advantages.
The global AI ecosystem is characterized by diverse approaches and priorities. While the U.S. and China continue their fierce competition for AI supremacy, the EU is carving out a niche as a regulatory powerhouse, and India and SEA are demonstrating impressive momentum in practical, high-impact AI adoption. For India, the focus on autonomy and open-source development, coupled with its vast talent pool, positions it for significant growth. In SEA, the rise of vertical AI start-ups and government support for localized solutions are driving rapid transformation. The key to success in all these regions lies in a continued commitment to fostering innovation, investing in talent, building robust infrastructure, and establishing balanced regulatory frameworks that promote both progress and responsibility.
References:
- moderndiplomacy.eu
- “The 2025 Global AI Adoption Report,” at AllAboutAI.com
- 2025 Global Survey on AI, McKinsey
- 2024 Government AI Readiness Index, the Oxford Insights
- U.S. leading in AI investment (109.1Bin2024)
- the “Brussels effect” of the EU AI Act, the Carnegie Endowment for International Peace
- CBI (Center for the Promotion of Imports, Netherlands Enterprise Agency) report (June 2023)
- The Insight Partners
- “Why AI for India 2030 is a blueprint for inclusive growth,” the World Economic Forum (WEF) article
- TICE News
- the iTIC Incubator’s “the Indian tech start-up landscape report 2023” (citing NASSCOM)
- “Indian AI Startup Tracker,” Inc42
- “Turning Vision into Impact: The Potential of AI Data Cities in India,” the Access Partnership report
- “How much productivity can GenAI unlock in India? The AIdea of India: 2025,” EY India report
- “Turning Vision into Impact: The Potential of AI Data Cities in India,” the Access Partnership report