India 'considering deal' with Nvidia to get GPUs for national AI mission

Powerful chips will be provided to local startups, researchers, academic institutions other users at a subsidised rate: Report

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India is considering striking a deal with Nvidia to procure graphics processing units (GPUs) from the American manufacturer. The GPUs could then be provided to local startups, researchers, academic institutions, and other users at a subsidised rate as part of a Rs 10,000 crore programme to set up artificial intelligence (AI) infrastructure in the country, Economic Times (ET) reported.

GPU is a specialised chip that renders graphics and images by performing rapid mathematical calculations that are needed in processing AI.

A government official told ET that the plan for Nvidia is at a "very early stage” and a decision will likely be made after the Lok Sabha elections. Given Nvidia's significant market share in the GPU sector, it would be the natural preference for the Indian government, said the official.

The ET report stated that establishing AI computing infrastructure has evolved into a strategic concern for nations. They are investing billions of dollars to secure computing capacity, both for their domestic companies and for meeting national security requirements. China and the United States have started acquiring Nvidia's range of GPUs, which includes H100 chips.

India is considering two potential methods to furnish AI computing infrastructure to its companies. While one is a "rent-and-sublet" model, wherein the Ministry of Electronics and Information Technology directly procures GPUs from Nvidia. The alternative model adopts a marketplace approach, wherein the government incentivises companies to negotiate renting or subletting agreements with the supplier themselves. These companies can then benefit from incentives, such as those offered under production-linked incentive (PLI) schemes, ET reported.

"These incentives will be based on incremental productivity achieved through these GPUs," another government official said.

The ET report stated that the government intervention becomes necessary as GPUs, such as Nvidia's latest offering Blackwell, can cost up to $40,000 per unit. In March this year, the Centre approved the Rs 10,372-crore India AI Mission, under which the government will deploy 10,000 GPUs under public-private partnerships.

In the rent-and-sublet model, the Centre will provide GPUs to startups, and researchers on a concession basis. An official told ET, "For the second option, some kind of marketplace will have to be thought of where performance can be objectively measured and thus the incentives be distributed. Or we will need a PLI-sort of compensation formula where the company which has worked out a GPU deal can show credible results to obtain the necessary benefits."

A spokesperson for Nvidia said that "private or public buyers are able to acquire our GPUs through the Nvidia Partner Network". Nvidia is one of the few companies manufacturing GPUs, and the substantial demand for these chips has propelled its market value to $2.16 trillion, positioning it as the third most valuable company after Microsoft and Apple. Indian entities such as the Reliance Group, the Tata Group, and Yotta Infrastructure have already entered agreements with Nvidia to provide GPUs to local companies, according to the ET report.

In an earlier report, ET had stated that Yotta would import 24,000 GPUs, including Nvidia H100s and L40S, in a phased manner. The first tranche of these started arriving at the country's shores in March this year.