US chip export curbs raise concerns for India's AI growth, infrastructure

Indian industry leaders and associations have expressed concern over the US government's new regulations limiting the export of AI chips. Industry players fear the restrictions will hinder AI development in India by reducing access to GPUs and increasing procurement costs.

 

“Large-scale AI data centres requiring several hundred thousand GPUs may face delays or scaling down, placing global companies at a competitive advantage over Indian enterprises,” said Ashok Chandak, president of the India Electronics and Semiconductor Association (IESA).

 

India’s National AI Mission aims to build infrastructure with over 10,000 GPUs through public-private partnerships, supported by a Rs 10,000 crore investment over five years.

 

Ajai Chowdhry, founder of HCL and chairman of the EPIC Foundation and MGB National Quantum Mission of India, highlighted the importance of India designing and creating its own chips.

 

“In semiconductor chips, we have developed our own RISC-V technology at IITM, eliminating the need for licence fees. Using this, we should design our own chips in RISC-V to secure ourselves against future sanctions. This should be pursued in mission mode, with funds allocated under the India Semiconductor Mission’s (ISM) Design Linked Incentive (DLI) policy,” he said.

 

Chowdhry also suggested expanding the DLI to include Indian corporates, MSMEs, startups, and exporters. He proposed increasing funding from the current Rs 30 crore to between Rs 50 crore and Rs 150 crore. “Perhaps we can create our own NVIDIA or AMD in the next ten years,” he added.

 

The regulations, which take effect in 120 days, allow for amendments by the incoming administration under President-elect Trump.

 

“It is uncertain whether the Trump administration will ease these rules or pass them as is. Growing concerns from technology industries suggest the global AI landscape may shift, affecting both US technological leadership and India’s growth trajectory in AI infrastructure. While the short-term impact on India may be limited, long-term scaling by Indian conglomerates could face challenges due to quantity caps,” Chandak said.

 

Satya Nadella, chairman and CEO of Microsoft, recently announced a $3 billion investment in cloud and AI infrastructure in India over the next two years. Microsoft plans to expand its datacenter campuses, adding a fourth region by 2026. This investment aims to build a scalable AI computing ecosystem to meet the demands of India’s growing AI startups and research community.

 

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