There is a Swadeshi movement underway, India must be self-reliant in tech and trade on equal terms: Zoho’s Sridhar Vembu

Zoho’s Chief Scientist Sridhar Vembu emphasizes India's push for self-reliance in technology through initiatives like Arattai, aligning with the Swadeshi movement. He highlights challenges in balancing innovation, privacy, and infrastructure costs, while advocating for stronger IP laws and sustainable data centers. Vembu stresses national spirit, domestic tech development, and fair trade symmetry. Zoho focuses on AI, small language models, and energy-efficient solutions, rejecting IPOs to prioritize tech. The vision integrates global success with local empowerment.

Zoho's messaging app Arattai has recently gained attention, fueled by the Indian government’s renewed focus on promoting homegrown apps. In an in-depth discussion, Zoho’s Chief Scientist and founder Sridhar Vembu delves into the rising Swadeshi movement—a drive for self-reliance in technology and trade amid a globally weaponized tech landscape. He outlines his vision for resilient, indigenous tech like Arattai, addressing innovation challenges, infrastructure costs, and the pivotal role of national spirit in shaping India’s tech future. Vembu also advocates for stronger IP laws for GCCs operating in India, sustainable data center development, and draws lessons from China and Korea on nation-building.

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How has your work life changed after stepping down as CEO and becoming Chief Scientist of Zoho? What are you able to do now that you couldn’t before, and vice versa?

The big change is that I now spend a lot more time in code, about 70% of my time. I review code every day and file many patents. I enjoy it; I feel I’m meant to do this. I also get to work with our rural teams more often, visiting rural centres and spending time with young engineers there. What hasn’t changed is Zoho’s work culture. It remains informal, and we still feel like a much smaller company than we are. I hope that never changes.

Zoho and Arattai have been in the spotlight recently. Arattai was launched in 2021, but it seems to have gotten a new lease of life thanks to the Govt’s Swadeshi tech push. What’s driving this, and is it sustainable?

There’s a big Swadeshi movement happening, and our Prime Minister has highlighted it. I’ve personally been involved in Swadeshi Jagaran Manch with Shri Sundaramji for several years. For us, it’s a matter of conviction: India must be self-reliant in technology and able to trade on equal terms. What we don’t build we should be able to buy. Products are sold to us without being weaponised against us. That’s an unfortunate reality where countries don’t just sell us technology, they also dictate terms on what you can and cannot do. It shouldn’t be acceptable to any sovereign nation, including India.

Technology has become pervasive in the last 25 years and is increasingly used as weapons in geopolitics. Whether we like it or not. All these truthless organisations like World Trade Organisations, no one talks about. That’s why it’s important to build domestic capability. This conviction has been with us for a long time, and I’m glad the awakening is happening now.

The reality of self-reliance is sinking in. It’s durable because the awareness is spreading, not just in government, but also among citizens and business leaders, that India must have self-reliance in critical technologies while continuing to engage in fair global trade.

Some compare Arattai’s surge to Koo’s early momentum. What lessons have you drawn from that, and what edge does Arattai have to succeed?

Nobody can predict six months or a year ahead. Some may predict it won’t take off, and they could be right, but that doesn’t matter to us. We’ll continue building the technology and product.

Even if this moment passes, a future moment will arise where this technology is needed, and we’ll be ready. That is what we have been doing all along. The technology is versatile and pervasive, and we want to ensure it’s not weaponised against us. Recognition is nice, but I promise to all of our users and to the government that even without all the attention we get now, we’ll continue building this and that is more important to us.

How does Zoho ensure Arattai sustains as a private firm without raising external funding?

The technology behind Aratai is already used in Zoho’s Cliq product, which competes with Slack and Microsoft Teams and has been performing well. We do think that there is a way to monetise it independent of the consumer alone. We also have other Zoho technologies, like payments, that can integrate with Arattai for business use cases. We’re deeply immersed in code, updating the app weekly, new updates are rolling out, in fact one is coming this week, we are testing with focus groups. We are also testing with non-tech users, users like my mother and getting their feedback and refining the user experience.

This process strengthens our B2B software as well. We can fund Arattai through these linkages, learning from it and applying the insights to our commercial offerings.

How is Arattai handling privacy concerns, like end-to-end encryption for textNIC ? How is the app usage now?

End-to-end encryption is coming. It’s currently being tested internally and will roll out in the next couple of weeks. We had planned it for mid-November, but we’re accelerating the timeline. Now coming to the sustaining, we see day-to-day fluctuations but we are seeing very good traction in terms of daily momentum. I do expect ups and downs, I don’t expect this to be smooth all the way, it never is like that.

We also have to have a lot of integrations like government services and banking services in order to make it a reliable, daily companion to user. That’s how we are imaging Arattai. So we are working on all those things. Something where we got off-guard is that we planned all this in mid-November and it now accelerated so we will catch up on all these.

NIC migrated to Zoho’s email client a while ago. What other government work is Zoho currently powering, and how are you ensuring security?

National Informatics Centre (NIC) adopted Zoho after extensive audits, around 15 to 20, covering our code, data centres, and security practices. Only after that NIC selected Zoho. More than 1.5 million users are on board. This is not something new that has come up. What is new is the broader push for Swadeshi software. Zoho’s adoption in government and private sectors is based on merit.

Educational institutions, both government and private, are also increasingly adopting Zoho products. But, the push is not just in Government, we are also seeing it in the private sector and other educational institutions.

Will Zoho revisit the semiconductor plan that was shelved?

Not in the near term. For at least the next six months, our focus is on Arattai, AI, and integrating AI into the Zoho suite. We don’t have bandwidth for the semiconductor plan right now.

What AI models and technologies is Zoho currently building?

Our labs team is working on multiple models: a 7 billion parameter model and a 70 million parameter model, tuned for specific tasks.

We’re following a multi-model approach, using the right model for the right task. Smaller models are more cost-effective and energy-efficient, allowing us to boost productivity without imposing heavy costs on customers. Sustainability is also a priority given the energy footprint of AI.

With global AI companies investing heavily in India, are you concerned that India will become just a daily average user (DAU) farm for Big Tech firms?

AI requires a multi-pronged approach. We need to build domestic technology, but GPUs are expensive and restricted, which is a risk. That is the weaponisation I spoke about. An Indian company or even any Indian organisation trying to buy GPUs is subject to a quota. The government could do something useful. If something is based in India, they have to make sure that they comply with the Indian law and the law should require that IP generated in India be registered in India and taxed locally.

I’m all for trade and global competition, but I also want to ensure that they pay their fair share for all. This ensures that Indian talent and national development benefit from the technology, rather than being extracted.

How does India balance the energy needs of AI and data centres with cost of power and water usage?

This is a challenge even in the U.S., where electricity bills are rising. There are trillions of dollars being poured on this, but what benefit has it done for the broader economy? There are already people complaining about electricity rates going up. In India, we cannot afford such costs.

If our power bills go up that much, it's a very hot political issue too. So we cannot afford the power bill to increase that much as they're increasing in many parts of the U.S. right now.

So which means that we have to take a much more sensible approach to this.That's why we talked about the small language models, all of that. We believe that's a sweet spot where we can get all of the benefits of this without spending all of the power and the money for it. For example, edge intelligence. Intelligence pushed to your device. You always have your phone. And it costs very little to charge that phone. So the AI residing on that, it's also a privacy benefit. So those kinds of models are, in my opinion, better, long-term.

How do you retain talent in India amid global opportunities and geopolitical tensions?

It’s twofold. One, there is, of course, the push and pull. Why is talent going out in the first place, and how do you make it attractive for them to stay? But underneath all of this, I want to make a fundamental point.

We need, particularly among our educated elite, a sense that we belong to this nation. That patriotic spirit is essential. If you look at China, Japan, or Korea, they developed because they had that spirit. Without it, all these discussions become meaningless.

If my location is merely a choice, like deciding which color shirt to wear, I can be here or there, it doesn’t matter, then that mindset is not conducive to development here. We must have that spirit as a nation, among our citizens: “I want our nation to succeed. I want our people to do well.” That is important. That is true nationalistic spirit , the spirit of Swaraj, our independence.

In the last 20–30 years, we saw this theme of globalization, and we mistook it for “nobody has to care about their country, it’s one globalized world anyway.” Not true. It’s really not true. We have to care deeply about our nation. That’s the first sense we must reclaim. Everything else, the push and pull factors I mentioned, stands on that foundation.

And I’ll submit this to you: if you look at rural India, or our smaller towns, that sense of belonging to the nation is very much alive. Unfortunately, it’s gone missing a bit among our hyper-educated elite. Because of our exposure, we tend to think, “I’m a global citizen. I don’t necessarily belong here. I’ll live wherever.” That attitude must change. It’s definitely not the case in China or Japan.

That’s also why I promote our own languages. Within Tamil Nadu, I speak Tamil as much as possible. I tell people, if you move to Bengaluru, learn Kannada. If you move to Mumbai, learn Marathi. It’s important. All our languages matter. Each of our languages has a population larger than many European countries. They are viable. Kerala is viable. Malayalam is a beautiful language, spoken by 35–40 million people, that’s larger than many nations with their own languages. So, we can do this, and we must make that commitment.

All of this is important, and this point might sound tangential to technology, but it’s not. The reason Zoho exists is not because I’m any kind of special genius. It’s because our average employee feels that national spirit, that we have to build for this nation, and in this nation. That spirit is why Zoho is still clicking.

I hope we can rekindle that spirit across our country, particularly among our educated citizens.

What should India do to navigate this new phase in geopolitics?

We must aim for more symmetry in the technologies we trade. That’s where we’re heading over the next five to ten years. But it will require sacrifices—hard work to build critical technologies so we can trade on equal terms. We must invest deeply so that nothing can be weaponized against us. And when we buy something, we must also sell something equally valuable.

Unfortunately, India has often received poor economic advice, especially from economists trained in the West—from places like Columbia, Chicago, or Harvard. They told us to focus only on services and import everything else. That advice was misguided. They don’t truly understand trade symmetry, the strategic nature of technology, or its national security implications.

In reality, the only real money in the global system is gold—and we can see what’s happening with gold now. This shows how fragile the current trading system is. Tensions will keep building until balance is restored.

India can play a vital role in restoring that balance by developing and owning key technologies. As our Prime Minister rightly said, when India has these technologies, we’ll share them—like we’ve done with UPI, not weaponize them. That’s the kind of new global order we must aspire to.

Zoho is one of India’s most profitable SaaS companies but you rely heavily on clients in North America. How do you reconcile that with your push for self-reliance?

Yes, we sell them very happily. We provide outstanding value. We provide great software and we are winning in the global open markets. And we will continue to do so. Just like Indians are buying Apple computers or use all this, Americans use our software. So, I'm very happy with that.

But at the same time, we must ensure that we are able to trade on equal terms. That I repeat again and again and again, not these asymmetrical terms we have, we are forced to live with today. That's why we have to build up our capabilities. And in this, I also want to mention the GCCs, the Global Capability Centers. It's very important, as I made this point earlier, that the IP we registered in India and the profits from IP also the Indian government, the Indian public see the benefit of those taxes. Because those taxes are important. Because we are talking about truly massive amounts of profits here. Taxes must be paid here too. So, these are all very important.

Will Zoho ever reconsider an IPO?

That’s not my decision now, I’m not the CEO. But personally, I enjoy being private. It allows me to focus entirely on technology without worrying about stock prices.

Do you think AI is entering bubble territory?

Definitely, there is. Some people are arguing it's not because the multi-trillions will be justified by the productivity gains. But why aren't they there already? That's the question, right? For all the investments already made, we must be seeing dramatic gains in at least knowledge work. We are seeing some, but that's not enough to commensurate with the amount of investment going in.

Take actually one area that I'm familiar with, AI-based coding. I'm actually a fan of it. I use a lot of it for this. But I wouldn't say it replaces a really good programmer. It augments them. In many cases, it's getting this what we call the boilerplate code well. But that's also a reflection of the poor state of languages and tooling, rather than only AI doing this dramatically.

If the languages and tooling were better, we would not have so much boilerplate, which means AI does not have an easy picking to optimize away the boilerplate. I mean, I can give you in content, if most of the essay you write is boilerplate, AI can generate it. But if you are going to say something very original, you better say it yourself. AI can help you come up with those thoughts, maybe refine your thinking, but you still have to write it. So that's the same thing with programming too.

What will your focus be for the next few months, apart from Arattai and AI initiatives?

Well, code and more code. I'm waking up to code and I'm going to sleep to code.