Amidst the artificial intelligence (AI) frenzy, the market capitalizations of Taiwan’s and South Korea’s stock markets have successively outstripped that of India’s. The market at large holds the view that India’s stock market has failed to capitalize on the AI dividend. Nevertheless, a more in-depth examination of the Indian stock market’s structure uncovers that a substantial number of small- and medium-sized enterprises have not reaped the benefits of the global AI capacity surge. Instead, they are grappling with challenges stemming from AI’s influence. Since reaching its zenith in September 2024, the market capitalization of the Indian stock market has shrunk by over $924 billion. Foreign capital has been withdrawing at an accelerated pace, with shareholdings plummeting to a 14-year nadir. India’s IT services sector, a cornerstone of its economy, has been dealt a severe blow by generative AI. The Nifty IT index has plummeted by over 26% year-to-date, and the industry is bracing for potential future revenue slumps. India is devoid of indigenous AI hardware and foundational model enterprises. Moreover, its traditional ‘labor arbitrage’ model has been dismantled by AI agents, resulting in a collapse in market confidence.