India’s youth unemployment crisis has become one of the biggest vulnerabilities for Prime Minister Narendra Modi’s government, exposing the gap between the country’s economic ambitions and the reality facing millions of young graduates.

The frustration erupted into the open this month after a leaked paper forced a retest of India’s ultra-competitive medical entrance exam, prompting nationwide student protests led by a viral, social media-focused youth movement called the Cockroach Janta Party.

While the exam scandal was the immediate trigger, economists say the demonstrations reflected something much deeper: a generation struggling to find secure, well-paying jobs despite spending years competing for an education.

Seeing footage of police fire tear gas at student protesters in Delhi on July 20 struck a nerve with 27-year-old Mumbai professional Abheet Mohanty (whose name has been changed due to the sensitive nature of the topic). He said he wasn’t protesting because of one leaked exam paper, but because of what it represented.

The Gen Z students in the crowd were calling for accountability from the government after exam papers were leaked in May for a crucial medical entrance exam test, also known as the National Eligibility cum Entrance Test (NEET). While a retest took place in June, more than 20 students died by suicide in the aftermath of the leak.

“I felt for the students because I was a NEET student back in 2018,” Mohanty told CNBC, recalling the immense pressure he felt as his parents pushed him to take the test, which would help him land a secure job with good pay.

Mohanty didn’t pass the test and instead pursued a degree in communications. “It was very difficult to get a job,” he said. After waiting a year, he landed a job in Mumbai, but his parents insisted that he take the NEET again instead.

They said his monthly salary of 20,000 rupees ($208) was “unsustainable” in Mumbai. Mohanty joined the Gen Z protests in the city on July 23.

His experience is increasingly common. India has the world’s largest Gen Z population, but also faces one of its toughest employment challenges.

Graduate unemployment among 15-to 25-year-olds is close to 40%, according to the State of Working India 2026 report, while graduates accounted for two-thirds of the country’s unemployed in 2023.

As good jobs become harder to find, millions of young Indians are pinning their hopes on a handful of ultra-competitive entrance exams for medicine, engineering and government jobs that offer one of the few reliable paths to secure, well-paid jobs.

Unsurprisingly, the number of students applying for the NEET exam rose 50% to over 2.2 million between 2019 and 2026, according to data from the National Testing Agency.

And…

Big technology executives descend on India this week for an AI summit in New Delhi as the world’s largest companies aim to expand their presence in what is seen as a critical growth market.

India this week will host the AI Impact Summit, the latest in a series of government-hosted events focused on artificial intelligence that have taken place in the U.K., South Korea and France.

Among the key attendees are OpenAI CEO Sam Altman and Alphabet CEO Sundar Pichai. Anthropic boss Dario Amodei and Google DeepMind CEO Demis Hassabis are also slated to be there. Nvidia CEO Jensen Huang, who was earlier expected to attend, reportedly withdrew on Saturday due to “unforeseen circumstances.”

Indian Prime Minister Narendra Modi will roll out of the red carpet which tech CEOs will happily walk down as the country presents a lucrative market of young, tech-forward consumers and a huge pool of talent which could be key to continued development of AI.

“The summit … is a huge validation of the potential of the market. Everyone’s coming in because they realize that this is the place to be in and India just cannot be ignored,” Lalit Ahuja, CEO of ANSR, a company that helps businesses run offshore teams in India.

The AI Impact Summit also comes amid a reset in relations between India and the U.S. as the two nations push toward a trade deal.

Modi’s government has made its intentions clear in the last few years — it wants India to be one of the world’s tech superpowers. India has approved $18 billion worth of semiconductor projects as it looks to build a domestic supply chain.

The government has pushed major companies, including Apple, to manufacture more of its goods in India.

Venture capital investors are betting on India’s startups while the country’s stock exchanges are seeing a surge in initial public offerings.

Neil Shah, partner at Counterpoint Research said government support for tech “is a red carpet for multinational companies to set up, expand and diversify their global operations.”

And with the door open, major firms are likely to announce big investments this week in India, while New Delhi will talk up the opportunities in the country.

AI, unsurprisingly, is going to be a big focus from three angles: infrastructure, users and talent.

There is likely to be big infrastructure investment deals announced around AI data centers as demand continues to rise and tech companies thirst for more computing power. In December, Amazon, Microsoft and Intel made commitments to building AI infrastructure and chips in India.

India is one of OpenAI’s top markets for ChatGPT and alongside rivals like Perplexity are offering their products for free in a race to gain…

This report is from this week’s CNBC’s “Inside India” newsletter which brings you timely, insightful news and market commentary on the emerging powerhouse. Subscribe here.

New Delhi-based tech startup founder Ashita Gupta loves her cars. With prospects of luxury European cars becoming cheaper, Gupta, who drives an Audi A6, is considering buying another high-end vehicle.

It “doesn’t make sense” to spend so much money on a second car, but if an Audi R8 or Audi RS4 were to become “affordable” it would be worth purchasing, she says.

On Tuesday, India and the European Union announced the “mother of all deals,” that includes New Delhi slashing import duty on European cars gradually to 10% from 70%-110% at present. This would apply to a quota of 250,000 vehicles per year, and on cars priced above 15,000 euros ($17,952).

India has long shielded its auto market, the world’s third largest, by using prohibitive levels of tariffs on imports to safeguard domestic auto companies, while pushing global firms to build local manufacturing plants.

U.S. President Donald Trump, in fact, has often criticized India for protecting its local auto industry from imports and has demanded lower tariffs on American car companies, calling them “very unfair.” 

Now, Brussels has edged out Washington in getting New Delhi to drop its hard stance on auto tariffs, securing a lucrative deal for European auto majors.

“EU brands now have a premium pass to the world’s third largest car market, while US companies are currently facing a huge levy,” Diwaker Murugan, auto analyst at Omdia, told CNBC. Omdia estimates India’s car market to touch 6 million by 2030, fueled by a young population with higher disposable incomes.