Bank of America: India has become the world's most active AI large model market, with its large young population turning into Silicon Valley's "testing ground"

With low data costs and a large young population dividend, India has surpassed other countries to become the market with the highest penetration rate of large language models (LLMs) globally. An analysis report released by Bank of America on Wednesday pointed out that India is not only the most active AI consumer market currently but has also become a key frontier for global tech giants to test next-generation artificial intelligence technologies.

According to Bank of America's latest analysis, India currently leads the world in the number of users of popular AI applications such as ChatGPT, Gemini, and Perplexity, with this advantage reflected in both monthly active users (MAUs) and daily active users (DAUs). Domestic telecom giants like Bharti Airtel and Jio, a subsidiary of Reliance Industries, are accelerating this trend by offering users free subscriptions to premium AI applications, further consolidating market penetration.

Bank of America noted in the report that Bharti Airtel and Jio are potential market winners in this trend, as such collaborations not only enhance user stickiness but also allow them to benefit in the medium term from the scaling of AI. However, Bank of America also warned that as global AI companies enter the market in large numbers, local startups in India may face more severe pressure, and their survival space may be further compressed.

The report emphasized that India's extremely large and diverse user base makes it an ideal "testing ground" for so-called "Agentic AI"—AI applications capable of independent reasoning, planning, and executing tasks. Before being promoted globally, these emerging technologies will undergo high-intensity stress testing in India's real-world environment.

Economies of Scale and Demographic Dividend

Bank of America believes that India's rapid rise as a key AI market is driven by scale, affordability, and demographic structure. India has the second-largest online population in the world, with mobile internet users exceeding 700 million to 750 million. Extremely low data tariffs have lowered the entry barrier for AI, allowing users to spend about $2 to obtain 20 to 30GB of data per month.

In addition, the demographic structure is another core advantage. Over 60% of Indian internet users are under the age of 35, a group that is not only largely proficient in English but also quick to adopt new technologies. This unique digital ecosystem allows mainstream AI models based on English to rapidly penetrate a wide user base.

Telecom operators have played a key role as drivers in the wave of AI adoption in India. Bank of America pointed out that operators like Jio and Bharti Airtel have created a win-win situation for users, AI companies, and telecom operators by offering free subscriptions to paid versions of AI applications like Gemini and Perplexity.

This strategy not only reduces the previously high costs of using advanced AI tools, creating a fair competitive environment for consumers, but also helps improve learning outcomes and significantly enhances productivity. Meanwhile, the availability of multilingual AI models is helping to eliminate language barriers and bridge the digital divide

The Global "Testing Ground" for Next-Generation AI

The report specifically mentions that India may become the testing ground for the next phase of AI technology—namely, "agent AI." Given the scale and diversity of India's user base, Bank of America believes the country is well-suited for real-world stress testing of these AI applications that can perform tasks independently before their global rollout.

Additionally, Bank of America suggests that global AI companies could follow the model of U.S. AI agents collaborating with travel platforms like Booking and Expedia, establishing partnerships with local Indian companies to provide service fulfillment. This deep market integration means that India is not only a consumer market but also an important experimental base for Silicon Valley tech giants to refine their products and business models