Onset of AI revolution: Sri Lanka must join Indian bandwagon

Call for global cooperation for AI governance

Addressing the AI Impact Summit 2026 in New Delhi, Sri Lanka’s President Anura Kumara Dissanayake, popularly called AKD, drew the attention of world leaders and others who were present to an important, if not alarming, issue emerging from the onset of the Artificial Intelligence (AI) AI revolution today [1]. 

Calling for urgent global cooperation to ensure that AI moves forward in delivering equity, cultural alignment, and universal accessibility, AKD noted that there is a new digital divide between AI-empowered nations and those who are not. What he referred to here is the latest divide which the experts on the evolution of the global economy have created for us. It seems that the previous divides concerning the rich and the poor or the global north and the global south are no longer material for global equity and the smooth development of nations. 

Further elaborating his point, he said that countries lagging in the AI race may face even greater vulnerabilities because the new trend will threaten shared aspirations for inclusive, equitable, and sustainable development, the common goals of the world’s nations today. He also noted that Sri Lanka, like many other emerging economies, is yet to develop its AI infrastructure to harness its full potential as a driver of the economy. What is needed, according to him, is decisive action by these nations to follow a principled, confident, and forward-looking strategy. Drawing attention to the need for cultural alignment when AI is adopted worldwide, he said that if AI is dominated by a few languages and ideologies, the cultural diversity presently existent in the world will be eroded. 

Leaders and laggards in AI

In the AI race today, there are two countries leading the world, USA and China, belonging to the global north and the global south, respectively. This is a favourable development since both groups of countries are now represented in the AI race. However, the potential risk which AKD ascribed to is that these two countries can get together and dominate the whole world in AI technology. It is a kind of a duopoly formed by these two leaders with their massive financial, intellectual, and technological resources. Though there are no signs that they would work together for this goal, it would inevitably push the rest of the nations to be laggards playing the game according to the terms dictated by them. 

Sri Lanka is specifically vulnerable because it does not have the necessary infrastructure in place to join the AI race. In this game, India which is now branded as a ‘rising star’, is placed third globally in AI competitiveness and vibrancy by Stanford University’s AI Index 2025, while it is ranked midway in the IMF’s AI Preparedness Index and Oxford University’s Government AI Readiness Index for 2025 

Sri Lanka is specifically vulnerable because it does not have the necessary infrastructure in place to join the AI race. In this game, India which is now branded as a ‘rising star’ is placed third globally in AI competitiveness and vibrancy by Stanford University’s AI Index 2025, while it is ranked midway in the IMF’s AI Preparedness Index and Oxford University’s Government AI Readiness Index for 2025 [2]. But its ability to effectively challenge the two rising leaders is questionable. Hence, all laggards should have a unique strategy to harness the benefits from the emerging developments in technology. What this means is that these countries should change from users of technologies developed by others to creators of technologies themselves. 

Sri Lanka’s poor AI infrastructure

This is an impossible task for a country like Sri Lanka which does not have the necessary technological infrastructure at the ground level. As I noted in a previous article in this series, Sri Lanka should do a lot to gain this capability since the websites being used by Sri Lankan banks and others are still in the Web 1.0 level in which there is only a one-way communication between the web provider and the web user [3]. These websites, which do not offer facilities for web-users to interact with the web providers online in real time, are like Sri Lanka Government Gazettes or print-form newspapers. I categorised them as dead Aristotle-type websites following a clue given by the co-creator of the Apple empire, Steve Jobs, in a public address before the international designers’ conference in 1983 in Aspen [4]. 

What Singapore did at the turn of the millennium was to force local universities and technical institutions to go for ‘future technology developments’ so that when advanced countries came up with the same, Singapore is in a position to collaborate with them as a useful partner rather than as a user of technology. The objective of this policy was for Singapore to jump the bandwagon of each emerging technological phase by developing local capacity

Singapore’s example

The way out is clear as shown by Singapore at the turn of the new millennium. It followed a National Innovation System or NIS to link the country to the rest of the world from deployment of science and technology to production of science and technology [5]. 

In the first stage, both governmental and private sector institutions adopt technologies developed elsewhere to improve efficiency, reduce costs, and make public life more comfortable. While this is happening, research and development, R&D, should be promoted within the economic system engaging both private and public sector institutions simultaneously in the new effort. The development of science and technology through innovation creates advanced ‘hardware’ embodied in machines, and intellectual property embodied in patents, copyrights, and trademarks. At the same time, it creates advanced ‘humanware’ embodied in people in the form of skills, tacit knowledge, and creativity. Humans at all levels in society – in schools, universities, and workplaces – should start thinking anew, shedding old ideas and embracing new ones. In other words, they should be trained to de-think and re-think. This should be the goal of human skills development programs which are narrowly defined as educational reforms. 

Skill development in an innovative economy goes through three phases, skilling, upskilling, and reskilling. In Singapore, this skills development program took place not only in formal educational and training institutions, but also in workplaces by facilitating learning by using new technology and learning by doing by creating new technology. Thus, society should learn to balance ‘using ideas’ and ‘producing ideas’ properly. This is because an economy cannot progress if it is only a user of ideas. But it cannot produce ideas unless it has the capability for using ideas developed by others first. As such, all the second-generation developed countries like Japan, South Korea, Taiwan, and Hong Kong were first copycats before embarking on their own R&D programs. China today is also doing the same. 

Hardware v humanware

In my view, for a country like Sri Lanka which is far behind in the AI race, the development of both hardware and humanware cannot be attained in isolation. Sri Lanka’s case is complex because it should build multiple linkages in this development process. Within the economy, there should be proper linkage between public and the private sector institutions. If hardware and humanware are developed in the private sector and not in the public sector, the inefficiency of the public sector will rub-off on the private sector. 

Sri Lanka has but one option: it should jump onto the bandwagon of a fast mover. Since it is unlikely that Sri Lanka can do so with the two leaders in the AI race, USA and China, the choice available is its neighbour to the north, India, the rising star. India has a high strategic edge with AI on many counts

Another linkage within the economy is the one between research and humanware development institutions like universities and training colleges, on one side, and industry and commerce, on the other. Sri Lanka had sought to attain this goal by converting an abandoned coconut estate in Pitipana, Western Province into a techno city about a decade ago [6]. Though it was inaugurated with much fanfare in 2016, the plan was abandoned by successive Governments like the abandoned coconut estate on which it was to be setup. To develop the industry-university link, the Faculty of Technology of the University of Sri Jayewardenepura was established in this land. The initial plan had envisaged for the University of Colombo too to setup its Faculty of Technology on this land to further strengthen the university-industry linkages. Of the much-promised leading private sector firms, only the pharma manufacturing arm of the Hemas Group has so far been setup there. Without firms in industry and commerce, the Techno City at Pitipana has not progressed beyond the planning stage. Without a firm policy strategy to prepare the local economy to harness the fruits of AI revolution, a small economy like Sri Lanka cannot think of being a useful partner in the AI race.

International linkages

Another link which Sri Lanka should develop is the international technological linkage between the local economy and the global economy. In the rest of the world, countries and firms have embarked on adopting innovation systems through high expenditure on R&D. In this respect, Sri Lanka is a backward nation since, according to the World Bank, Sri Lanka’s expenditure on R&D as a share of GDP had been continuously falling in the last three decades. In 1996, it amounted to 0.18% and in 2022, it had fallen to 0.11% [7]. This has posed two challenges to Sri Lanka’s economic policymakers: No internal development of ideas and no global market access to its business firms. This has been further complicated by the small size of Sri Lanka’s economy – its middle class, which has the buying power, is just 4 million people. Hence, no firm can realise economies of scale to sustain any industry. Therefore, it is essential for Sri Lanka to integrate into global markets if it desires to deliver prosperity to its people. This much needed market access can be enhanced by developing linkages with countries and firms in the rest of the world. 

Intra-firm linkages

There are two ways to build such linkages. One relates to intra-firm relationships between a parent company in a foreign country and its associate in Sri Lanka. The other is the inter-firm relationship between two unrelated firms, one in Sri Lanka and the other in a foreign country where the two firms concerned gat connected via a trade transaction. In the first case, there will be technology transfer, training of staff – development of humanware – and market access for products that are produced by the firm in Sri Lanka. In the second case, whether it is a one-time transaction or continued agency transaction, the firm in Sri Lanka is able to use new technology. 

Singapore’s readiness for AI

What Singapore did at the turn of the millennium was to force local universities and technical institutions to go for ‘future technology developments’ so that when advanced countries came up with the same, Singapore is in a position to collaborate with them as a useful partner rather than as a user of technology. These future technologies at that time included information and communication technology including artificial intelligence, nanotechnology, genetic engineering and tech-driven entertainment. To attain this goal, R&D budgets of the two local universities were boosted so that they can engage in conducting basic research like universities in the US or the UK, attract Nobel laureates to help local students to do collaborative research and attract doctoral and post-doctoral researchers by affording them with handsome research budgets. The objective of this policy was for Singapore to jump the bandwagon of each emerging technological phase by developing local capacity. 

India: the rising star

Sri Lanka has but one option: it should jump onto the bandwagon of a fast mover. Since it is unlikely that Sri Lanka can do so with the two leaders in the AI race, USA and China, the choice available is its neighbour to the north, India, the rising star. India has a high strategic edge with AI on many counts [8]. Demography-wise, it has a young population of about a two-thirds falling under 35 years. That is a high potential humanware stock. With respect to digital infrastructure, it has an enviable recent catchup. Its cloud storage capacity is about 100 petabytes or PBs and numerous data centres are equipped with more than 38000 Graphics Processing Units or GPUs. This is a massive advancement since a single petabyte can store about 500 billion pages of standard text or over 200,000 high-definition movies. GPUs, originally designed for graphics, are today used for heavy computation, video editing, and machine learning. Due to their ability to handle intensive data tasks, GPUs are critical for training large AI models. On top of these plus points, India is now entrepreneurship-driven with the proliferation of about 200,000 startups. It also has a large 5G subscriber base of more than 400 million users. 

For a country like Sri Lanka which is far behind in the AI race, the development of both hardware and humanware cannot be attained in isolation. Sri Lanka’s case is complex because it should build multiple linkages in development process. Within the economy, there should be proper linkage between public and the private sector institutions. If hardware and humanware are developed in the private sector and not in the public sector, the inefficiency of the public sector will rub-off on the private sector

Thus, India is moving fast in AI development and, most likely, will become part of a three-member oligopoly that will dominate the world. In this game, Sri Lanka has no choice but to jump onto the Indian bandwagon to harness the best results for its citizens.  

(The writer, a former Deputy Governor of the Central Bank of Sri Lanka, can be reached at [email protected] )

End notes:

1https://english.newsfirst.lk/2026/02/19/no-nation-can-build-an-ai%E2%80%91ready-future-alone-says-sri-lanka-president-in-delhi 

2https://www.pib.gov.in/PressNoteDetails.aspx?id=157310&NoteId=157310&ModuleId=3&reg=46&lang=1 

3 https://www.ft.lk/columns/Digital-banking-hype-More-to-be-done-to-make-it-inclusive/4-788375 

4 https://www.youtube.com/watch?v=t9HmOz8H0qI&t=12s 

5 See, for details: Wong, Poh Kam, 2002, “From Using to Creating Technology: The Evolution of Singapore’s National Innovation System and the Changing Role of Public Policy” in Lall, S and Urata, S (eds.) Competitiveness, FDI and Technological Activity in East Asia, Elgar, pp 191-238.

6 See, for details: https://www.ft.lk/columns/techno-city-is-the-first-step-in-the-right-direction-but-there-is-much-more-to-be-done-to-attain-the/4-569655 

7 https://data.worldbank.org/indicator/GB.XPD.RSDV.GD.ZS?locations=LK 

8See,fordetails:https://www.pib.gov.in/PressNoteDetails.aspx?id=157310&NoteId=157310&ModuleId=3&reg=46&lang=1