How Close is India to Developing Its Own DeepSeek Technology?
The Rise of AI in India: Opportunities and Challenges
Introduction
In recent months, the landscape of artificial intelligence (AI) has captured considerable attention, particularly as China introduced an advanced and cost-effective AI model from its startup, DeepSeek. With India’s burgeoning tech ecosystem, the question arises: How close is India to developing its own AI capabilities comparable to global giants like OpenAI or Anthropic at a reduced cost?
Insights from Industry Leaders
Kunal Bahl, an influential entrepreneur and co-founder of Titan Capital, shares his vision on the future of AI in India. He is also known for founding Snapdeal, a significant online marketplace. Bahl asserts that India’s growth in digital infrastructure sets a solid foundation for the emergence of domestic AI models, potentially within the next four to five years.
He emphasizes that collaborations between the private and public sectors will be crucial in developing large language models that boast worldwide appeal.
Advancements in Chip Manufacturing
The Push for Local Production
One critical area for India’s technological advancement is semiconductor manufacturing. Piyush Goyal, India’s Commerce Secretary, indicated that India plans to fabricate its first chip within two years, marking a monumental step in becoming self-sufficient in chip production. Moreover, Reliance Industries is working on what could become one of the largest data centers globally in Gujarat.
However, developing cutting-edge chips comes with its own set of challenges, as exemplified by Intel’s struggles in the U.S. Thankfully, India has several partnerships with U.S. semiconductor companies, such as Micron and AMD, to bolster its chip manufacturing sector. Notably, Nvidia CEO Jensen Huang recently announced a collaboration with Reliance on AI research and development, allowing access to advanced chips that can enrich India’s tech repertoire.
AI Ecosystem: The Role of Conglomerates
Contributions from Major Players
Bahl showcases the efforts of large Indian corporations like Reliance and Tata, which are actively developing their multimodal large language models aimed at specific industries. Key players such as Reliance Jio, Tata Electronics, and Infosys are quickly becoming central figures in India’s AI landscape.
As access to the Chinese market diminishes, U.S. companies are increasingly focusing on building India’s AI ecosystem. OpenAI’s CEO, Sam Altman, visited India to discuss potential collaborations aimed at fostering innovation in AI technologies. The Indian government is also taking steps to enhance its AI capabilities, with programs like the "India AI mission," which allocates ₹103 billion ($1.2 billion) over five years.
Challenges and Criticisms
Despite the optimism surrounding India’s AI potential, experts caution that funding for AI projects still lags significantly compared to the U.S. and China. Venugopal Garre, Head of India Research at Bernstein, points out that India’s reliance on foreign technology could leave it vulnerable in the AI race. He notes that developing indigenous technology wasn’t a priority for India during the internet evolution, unlike China, which cultivated domestic alternatives to foreign tech.
Economic Implications of AI
As AI tools become more prevalent in India, concerns over job displacement grow. Akhil Gupta, former head of Blackstone India, highlights the existing high unemployment rates and warns that integrating more AI could further strain the labor market.
While India has a youthful population that positions it uniquely for leadership in disruptive technologies, industry experts urge immediate action to invest resources and talent into local AI development, or risk falling behind as the market matures.
Current Developments in India
New Electronics Manufacturing Scheme: A ₹22,919 crore ($2.67 billion) initiative has been approved to build self-sufficiency in electronics manufacturing.
Open Market Operations: The Reserve Bank of India is undertaking large-scale purchase actions to bolster market liquidity amidst economic uncertainty.
Tariff Adjustments: From January, India has begun reducing tariffs on U.S. imports, which includes abolishing the Equalisation Levy that taxed digital services from non-resident companies.
- Growth in Luxury Sector: India’s luxury retail market, currently worth $8 billion, is projected to surge to $14 billion by 2032, driven by a growing number of high-net-worth individuals.
Market Reactions
Recently, the Indian stock market experienced downturns following U.S. tariffs imposed on Indian exports. The Nifty 50 and BSE Sensex indices showed a decline, though the overall impact on India’s economy from these tariffs is expected to be limited.
Upcoming Events
Investors are keeping an eye on key forthcoming events such as India’s expected interest rate decisions and consumer price indexes from the U.S. and China. These will provide insights into economic trends that could influence India’s global standing in technology and trade.
