The launch of DeepSeek, a Chinese AI model, has once again brought artificial intelligence into the global spotlight, including in India. This low-cost AI model has not only surprised OpenAI, the parent company of ChatGPT, and AI giant NVIDIA but has also impacted the Indian stock market, particularly IT stocks.
Following this, India has announced its plans to enter the global AI race by developing its own indigenous AI model. The government’s focus will go beyond just creating an AI model — it aims to make AI more accessible and affordable compared to global competitors.
In this article, we will explore recent developments, India’s AI mission, the country’s readiness to build its own AI model, and how investors can benefit from this emerging opportunity.
What’s Happening?
Before DeepSeek, OpenAI’s ChatGPT dominated the AI landscape, enjoying a monopoly as users worldwide relied on it for various purposes. However, the arrival of DeepSeek, a Chinese AI model, has disrupted the market significantly.
In a short span, this Chinese AI tool has received an overwhelming response from users and quickly became one of the most downloaded apps on the Apple Store.
Where does India stand in this race? The Ministry of Electronics & IT has announced that India will soon launch its own safe and secure AI model at a highly affordable price. Compared to global AI models costing $2.5–$3 per hour, India’s AI model will cost less than Rs 100 per hour after a 40% government subsidy, with attractive half-yearly and annual plans for further affordability.
India’s Union IT Minister, Ashwini Vaishnaw, announced that leading semiconductor companies are considering collaborations with India to develop indigenous GPUs. The government is also actively fostering partnerships to co-develop AI infrastructure and enhance the nation’s chip design ecosystem.
Interestingly, three firms — NxtGen Datacenter, E2E Networks, and Jio Platforms — have applied and been selected as the lowest bidders for supplying GPUs under the IndiaAI mission, according to The Financial Express.
China’s DeepSeek Ban – An Opportunity for India?
Amid rising security and privacy concerns, several countries, including Italy and Taiwan, as well as India to some extent, have banned China’s DeepSeek AI.
In India, the central government has banned its employees from using AI tools and applications like DeepSeek and ChatGPT on office computers and devices, citing concerns over the confidentiality of government data and documents, according to The Times of India.
However, Union IT Minister Ashwini Vaishnaw announced on Thursday, January 30, that India will soon host DeepSeek on local servers to address concerns about cross-border data privacy.
By leveraging this opportunity, India has a strong chance of developing an AI model that is not only cost-effective but also widely accepted globally. If India capitalises on this potential, it could take the AI race to the next level.
India’s AI Mission
In March 2024, the government announced Rs 10,372 crore for the IndiaAI Mission, marking a key milestone in strengthening India’s AI ecosystem. The initiative aims to democratise computing access, enhance data quality, develop indigenous AI, attract talent, support start-ups, and foster ethical, inclusive AI growth through public-private partnerships.
According to the expenditure budget documents, the IndiaAI Mission was initially allocated Rs 551.75 crore in the Union Budget 2024-25. However, due to underutilisation, the revised estimate reduced it to Rs 173 crore. For 2025-26, the scheme has been allocated Rs 2,000 crore.
Centres of Excellence – A Key Initiative by the Government
To strengthen India’s AI ecosystem, Finance Minister Nirmala Sitharaman, in Budget 2025, announced three AI Centres of Excellence (CoEs) for education with a Rs 500 crore outlay. These CoEs will focus on AI research, learning tools, and industry-academia collaboration to equip students with future-ready skills.
Many Indian engineers, tech professionals, and graduates have left India to work in the U.S. This shows that India does not lack talent — the missing factor was government support for AI development, which is now taking shape.
Wrapping Up
The government’s focus on developing an indigenous AI model will provide a strong boost to the AI sector, accelerating growth and innovation. With the increasing budget allocation, companies operating in this segment stand to gain significantly.
Key initiatives such as subsidised GPU access and funding for AI research will open up new investment opportunities, particularly in AI start-ups. As India intensifies its AI push, the IT sector is expected to see increased investment, especially in companies involved in AI infrastructure, semiconductor manufacturing, and GPU design.
*The companies mentioned in the article are for information purposes only. This is not an investment advice.
*Disclaimer: Teji Mandi Disclaimer
