India’s IT Minister Backs DeepSeek’s AI Expansion Amid Growing Domestic AI Investment

India’s IT Minister, Ashwini Vaishnaw, made headlines on Thursday by acknowledging DeepSeek’s advancements and announcing that the country will host the Chinese AI lab’s large language models on domestic servers. This move marks a rare acceptance of Chinese technology in India, a country that has banned over 300 Chinese apps and services, including TikTok and WeChat, due to national security concerns.

By hosting DeepSeek’s AI models domestically, India aims to address data privacy issues while strengthening its artificial intelligence infrastructure. The approval appears to be contingent upon DeepSeek complying with India’s strict data localization laws, ensuring that all Indian users' data is stored and processed within the country.

DeepSeek’s Influence on AI and India’s Hosting Strategy

DeepSeek, an emerging powerhouse in AI, recently made waves by developing a high-performing model with a budget of just $5.5 million. The success of this project has ignited global discussions about cost-effective AI development and the impact of open-source models. Responding to criticism about India’s relatively lower investment in AI compared to other countries, Vaishnaw stated:

“You have seen what DeepSeek has done—$5.5 million and a very, very powerful model.”

India’s decision to host DeepSeek’s AI models aligns with its goal of becoming a hub for AI development. DeepSeek’s models are expected to be hosted on the newly established AI Compute Facility, a government-backed initiative designed to boost AI research and adoption in India.

India’s AI Compute Facility: A Game Changer for AI Development

The AI Compute Facility, powered by 18,693 graphics processing units (GPUs), is set to play a pivotal role in India’s AI ambitions. Nearly 13,000 of these GPUs are Nvidia H100 models, while approximately 1,500 are Nvidia H200 GPUs. The facility already has 10,000 GPUs ready for deployment and is set to begin operations in the coming days.

In addition to supporting AI model hosting, the facility will offer computing resources at heavily discounted rates to Indian firms. Vaishnaw announced that standard AI computing services will be available at a 42% discount, while high-precision AI computing will receive a 47% discount—an initiative aimed at fostering domestic AI innovation.

Challenges and Global Scrutiny on DeepSeek

India’s announcement comes at a time when DeepSeek is facing global scrutiny. Just a day before Vaishnaw’s statement, the DeepSeek R1 app was removed from Apple’s and Google’s app stores in Italy. The Italian data protection regulator has raised concerns about how DeepSeek is using and storing personal data of Italian citizens.

Meanwhile, DeepSeek’s latest AI model release sent shockwaves through the tech industry. The launch of the DeepSeek R1 "reasoning" model triggered a $600 billion market cap decline for chipmaker Nvidia, underscoring the growing competitiveness of AI models developed on modest budgets.

India’s Ambitious AI Development Plans

Beyond hosting foreign AI models, India is aggressively pushing for domestic AI innovation. Vaishnaw stated that leading chip designers are collaborating with India to develop indigenous GPUs, which would help reduce the country’s reliance on foreign AI technology.

“Major chip designers are willing to work with India to develop indigenous GPUs.”

India is also gearing up for a $30 billion investment in hyperscalers and data centers over the next two to three years. A major contributor to this expansion is Reliance Industries, which is planning to build what could become the world’s largest data center in Jamnagar, with an unprecedented 3-gigawatt capacity, according to a Bloomberg report.

The Role of AI in India’s Key Sectors

India’s AI push is not limited to infrastructure. The government is actively encouraging AI-driven innovations across various sectors. Eighteen AI-driven applications focusing on agriculture, climate change, and learning disabilities have been selected for initial government funding. These applications highlight India’s commitment to leveraging AI for solving real-world challenges.

Speeding Up AI Model Development

Vaishnaw emphasized that India has the capacity to develop AI models within six to eight months on the higher end, or four to six months under ideal conditions. To streamline development, the government is establishing a common AI compute facility, which will be a critical component in building a sustainable AI ecosystem.

“We believe there are at least six major developers who can develop AI models in six to eight months on the outer limit, and four to six months on a more optimistic estimate.”

Regulating AI Development: India’s Hub-and-Spoke Model

To ensure responsible AI development, India is setting up a regulatory body that follows a hub-and-spoke model. This framework will allow multiple institutions to collaborate on AI safety, governance, and ethical frameworks.

“We will be keeping our models open and application-focused,” Vaishnaw emphasized.

This approach signals India’s commitment to open AI development, ensuring that innovation is balanced with ethical considerations and regulatory oversight.

India’s AI Strategy Gains Momentum

India’s decision to host DeepSeek’s AI models while simultaneously accelerating domestic AI development represents a strategic shift in the country’s AI landscape. With the AI Compute Facility, massive GPU investments, and a commitment to indigenous GPU development, India is positioning itself as a significant player in the global AI race.

The push toward open AI models, infrastructure development, and regulatory oversight underscores India’s intent to be a leader in AI research and applications. While challenges remain—particularly around data privacy and foreign AI partnerships—India’s strategic investments signal a bold future for AI development in the country.