Policy Update
Ashi Verma
Background
Gujarat has emerged as a pioneer in India’s artificial intelligence landscape with the establishment of its Centre of Excellence for Artificial Intelligence, Gandhinagar. Inaugurated on 27 January 2025 by Chief Minister Bhupendra Patel, the CoE reflects the state’s proactive vision to integrate emerging technologies into governance, industry, and skill development.
The Centre was conceptualized following a Memorandum of Understanding signed in June 2024 between the Department of Science and Technology, Government of Gujarat, Microsoft, and NASSCOM. Operationalized in a record time of six months across 10,000 square feet, it provides a collaborative platform equipped with advanced computing infrastructure, focusing on machine learning, cognitive services, and conversational AI.
To ensure sustained research and policy alignment, the Government established the Indian AI Research Organisation (IAIRO) as a Special Purpose Vehicle in February 2026, with a state contribution of up to Rs. 100 crore over five years. IAIRO functions as a think-tank for research, intellectual property management, and industry-academia collaboration. Aligned with the India AI Mission, Gujarat AI Action Plan, and IT/ITeS Policy 2022-27, the CoE aims to catalyze innovation in healthcare, education, agriculture, and financial services while promoting ethical and inclusive AI adoption.
Functioning
The Centre of Excellence for Artificial Intelligence in the City is designed not merely as a physical facility but as a dynamic operational ecosystem that bridges research, industry application, and governance. Its functioning is structured around four interlinked pillars that ensure technological accessibility, innovation, institutional sustainability, and human resource development.
1. Infrastructure and Technical Support : The Centre operates over a 10,000 sq ft facility in the City, equipped with high-speed and high-performance computing infrastructure provided in collaboration with Microsoft. It offers access to advanced tools for machine learning, cognitive services, bot services, and data analytics, enabling startups and researchers to develop and deploy AI models without heavy capital investment.
2. Collaborative Ecosystem and Innovation : Functioning as a convergence point for academia, industry, and government, the CoE in partnership with NASSCOM organizes AI Innovation Challenges and workshops. As of early 2026, four challenges covering 25 use cases have been launched, with 12 use cases contributed by the state government for applied governance solutions.
3. Institutional Mechanism through IAIRO : Its operations are institutionalized through the India AI Research Organisation (IAIRO), established as an SPV in February 2026. IAIRO manages scientific research, IP commercialization, and acts as an advisory body, with Rs. 100 crore state support over five years ensuring long-term sustainability.
4. Skill Development and Policy Alignment : The CoE also focuses on capacity building through the Upskilling Industry Ready Talent Program under IT/ITeS Policy 2022-27. Aligned with the Gujarat AI Action Plan, it promotes ethical AI, data privacy, and provides IP registration guidance with 33% relaxation for AI startups.
Performance
The performance of the Centre of Excellence for Artificial Intelligence at City since its inauguration on 27 January 2025 has been notable for its rapid operationalization and early ecosystem impact.
(a)Rapid Implementation and Infrastructure Utilization
Established within just six months of the tripartite MoU signed in June 2024 between the Government of Gujarat, Microsoft, and NASSCOM, the Centre demonstrates strong execution efficiency. The 10,000 sq ft facility has been fully equipped with high performance computing and is actively utilized by startups, researchers, and industry partners for developing AI solutions, reducing the need for independent capital-intensive infrastructure.
(b) Innovation Output and Stakeholder Engagement
In terms of innovation, the CoE has launched four AI Innovation Challenges encompassing 25 use cases by early 2026, of which 12 were problem statements provided directly by the state government departments. This indicates a demand driven model linking governance needs with technological solutions. Regular workshops on ethical AI, data privacy, and IPR have enhanced awareness and participation from academia and industry.
(c)Institutional Strengthening and Policy Impact
A key performance indicator is the establishment of the India AI Research Organisation (IAIRO) as an SPV in February 2026 with a committed state support of Rs. 100 crore over five years. IAIRO has begun facilitating IP registration and providing a 33% relaxation in eligibility criteria for AI startups under Gujarat’s IT/ITeS Policy 2022-27. The Centre’s alignment with the India AI Mission and the Gujarat AI Action Plan formulated by a dedicated AI Task Force positions it as a policy anchor, contributing to Gujarat’s ambition of becoming a national hub for ethical, inclusive, and application-oriented artificial intelligence.
Impact
The Centre of Excellence for Artificial Intelligence has created a transformative impact on Gujarat’s innovation and governance ecosystem. By providing state-of-the-art computing infrastructure and AI tools through its partnership with Microsoft and NASSCOM, it has democratized access to advanced technology for startups, MSMEs, and academic researchers who otherwise lacked such resources.
This has accelerated the development of AI solutions tailored to local challenges, particularly in sectors like healthcare, agriculture, education, and financial services. The launch of innovation challenges with 25 real-world use cases such as AI-based early disease diagnosis for Health & Family Welfare, smart crop advisory for Agriculture, automated document verification for Revenue, and AI-powered learning assistance for Education has bridged the gap between government departments and innovators, promoting a demand-driven model of problem solving.
Institutionally, the impact is further amplified through the creation of the India AI Research Organisation (IAIRO) as a Special Purpose Vehicle, which ensures long-term research governance, intellectual property management, and policy advisory support. Economically, the Centre strengthens City’s position as India’s first operational smart city and IFSC, attracting investments and positioning Gujarat as a leader under the India AI Mission. From a social perspective, its emphasis on ethical AI, data privacy, and skill development through the Upskilling Industry Ready Talent Program is building a future-ready workforce. With incentives like 33% relaxation for AI startups and alignment with the IT/ITeS Policy 2022-27, the CoE is fostering self-reliance, inclusive growth, and sustainable technological advancement in the state.
Emerging Issues
Despite its promising start, the Centre faces several emerging challenges. Furthermore, while numerous innovation challenges have been launched, the commercialization of prototypes into viable market products is still slow due to funding and IP-related hurdles. Lastly, coordination between central, state, and IFSC level regulations may lead to policy overlaps and implementation delays.
- Data Privacy and Ethical Governance : With increased deployment of AI across governance and finance in the City, ensuring data privacy, algorithmic transparency, and ethical use remains a critical challenge. The absence of a comprehensive data protection framework at the state level may create risks of bias and misuse of sensitive public data.
- Talent Gap and Skill Sustainability : Although upskilling programs have been launched, there is a persistent gap between industry demand for advanced AI talent and available skilled professionals in Gujarat. Retaining high end researchers and preventing brain drain to global hubs is an emerging concern for long-term sustainability.
- Infrastructure Cost and Scalability: Maintaining high-performance computing infrastructure requires continuous investment. Dependence on private partners like Microsoft for technology may raise issues of cost escalation, vendor lock-in, and scalability to Tier-2 and Tier-3 cities beyond the City.
- Startup Viability and Commercialization : While 25 use cases have been identified, the conversion of prototypes into scalable, commercially viable products remains slow. AI startups face challenges in funding, IP protection, and market access despite the 33% relaxation in eligibility criteria.
- Policy Coordination and Regulatory Overlap : As the Centre aligns with both the India AI Mission and the state AI Action Plan, coordination between central and state policies, IAIRO’s advisory role, and City’s IFSC regulations may lead to jurisdictional overlaps and delays in decision-making.
Way Forward
To realize its full potential as a national leader in AI, the Centre of Excellence in the City must adopt a comprehensive and future-oriented roadmap. First, governance and ethics need to be strengthened by institutionalizing a robust ethical AI framework under IAIRO, fully aligned with the Digital Personal Data Protection Act, 2023. This should include guidelines for algorithmic transparency, bias auditing, and responsible data usage, especially as AI applications expand in finance and public service delivery within the IFSC ecosystem.
Second, addressing the talent gap is critical. The Centre should deepen its collaboration with leading academic institutions like IIT Gandhinagar and Gujarat Technological University to introduce specialized AI curricula, PhD fellowships, and industry-linked research projects. Retention incentives, competitive grants, and global exposure programs must be introduced to prevent brain drain and build a sustainable pool of AI researchers within the state.
Third, for financial and technological sustainability, the CoE must diversify its funding beyond the Rs. 100 crore state commitment by attracting private venture capital, CSR funding, and international grants. Reducing over dependence on a single technology partner by promoting open-source platforms and indigenous computing solutions will also mitigate vendor lock-in and control operational costs.
Finally, to ensure effective commercialization and scalability, a dedicated incubation, IP facilitation, and market linkage cell should be established to handhold startups from prototype to product. Simultaneously, a single window regulatory coordination mechanism involving the India AI Mission, Gujarat’s IT/ITeS Policy 2022-27, and the City IFSC Authority should be created to avoid policy overlaps. This integrated approach will not only strengthen the Centre’s current functioning but also enable replication of its successful model across other emerging tech hubs in Gujarat.
References
1.Department of Science and Technology, Government of Gujarat. (2024, June 29). Gujarat government signs MoUs with IBM, Microsoft and NASSCOM for AI development (Press release).
2.Financial Express. (2024, June 29). IBM, Microsoft, NASSCOM ink MoUs with Gujarat Govt to strengthen Deeptech Initiative Program https://www.financialexpress.com/business/industry-ibm-microsoft-nasscom-ink-mous-with-guj-gov-to-strengthen-the-deeptech-initiative-program-3537651/
3.Government of Gujarat. (2026, January 8). Notification for constitution of India AI Research Organisation (IAIRO) as SPV at City. Department of Science and Technology. https://enterpriseai.economictimes.indiatimes.com/news/artificial-intelligence/gujarat-launches-iairo-spv-for-ai-research-at-gift-city/118166123
4.Press Trust of India. (2025, December 30). Gujarat to set up an Indian AI Research Organisation at City under PPP model. https://www.theweek.in/wire-updates/national/2024/12/30/lst2-gujarat-ai-organisation.html
5.Press Trust of India. (2025, December 30). Gujarat CM approves Indian AI Research Organisation to boost AI R&D.
6.Gujarat Technological University (2025). Report on NASSCOM CoE in AI, Startup ecosystem and AI use cases.https://set.gtu.ac.in/CoE_AI_Report.pdf
7.Ministry of Electronics and Information Technology. (2024). India AI Mission – Vision and objectives aligned with state AI action plans. https://indiaai.gov.in/mission
About the Contributor
Ashi is pursuing B.A Program (History and Political Science) from Maitreyi College (NCWEB) South Campus Delhi University with a major in Political Science. She is passionate about governance, public policy, social issues and digital innovation, with a keen interest in research, academic writing, and data documentation. Through research and policy analysis, she aims to contribute to evidence based policymaking and create meaningful social impact.
Acknowledgement
I would like to express my sincere gratitude to IMPRI (Impact and Policy Research Institute) for giving me the opportunity to work as an intern and write on such an important topic. I would also like to acknowledge the official Department of Science and Technology, Government of Gujarat, Microsoft, NASSCOM and IAIRO for providing valuable information.
Disclaimer
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of IMPRI (Impact and Policy Research Institute) or any other affiliated organisation. The information presented in this article is based on publicly available government sources and is intended solely for academic and research purposes
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