India’s AI Model Is Coming but it Needs 40% Subsidy to Stay in the Game!

India is officially stepping into the AI battleground with a serious mission. Under the IndiaAI Mission, the government is preparing to launch its own large language model (LLM) in just ten months, making a bold move against global players like OpenAI and DeepSeek.

India’s AI Mission

The plan is ambitious—India is setting up a common compute facility equipped with 18,693 high-end GPUs, including NVIDIA’s H100 and H200 chips, to build and train the model. With 15,000 GPUs dedicated solely to training, this model could stand strong against its competitors. DeepSeek AI, which runs on just 2,500 GPUs, has already managed to outperform ChatGPT, proving that AI doesn’t always need sky-high budgets to be effective. On the other hand, ChatGPT operates on a massive 25,000 GPUs, setting an industry benchmark. India’s AI effort falls somewhere in between, giving it a fighting chance in the global AI race.

However, despite the grand scale of investment, there’s a major catch. India’s AI project relies heavily on government subsidies, and without a 40% subsidy, it might not even stand a chance. Affordability is a major selling point, but without financial backing, the entire initiative could struggle to compete with more efficient and cost-effective models.

AI Without Breaking the Bank – India’s ₹100 Per Hour Model

One of India’s biggest draws in this AI venture is its focus on cost efficiency. The government has announced that access to its AI model will cost less than ₹100 per hour, making it significantly more affordable for businesses, researchers, and startups compared to global AI services. This pricing strategy aligns with India’s broader goal of democratizing AI access and preventing tech monopolies from keeping advanced AI tools out of reach for smaller players.

But cost efficiency alone won’t be enough to ensure success. DeepSeek AI has already demonstrated that AI models can be powerful and efficient without relying on a billion-dollar infrastructure. The recent launch of DeepSeek’s R1 model, which managed to outperform OpenAI’s ChatGPT, shows that innovation and optimization can sometimes be more important than raw computing power. India’s AI model, while promising affordability through government subsidies, may still need to prove its algorithmic efficiency to truly stand out. If the 40% government subsidy is removed, India’s AI could quickly lose its price advantage, making it harder to compete against DeepSeek’s zero-cost model and other global AI platforms that are continuously optimizing their efficiency.

The ‘Indian’ AI—Culturally Aware and Bias-Free?

Beyond affordability, India’s AI initiative brings something unique to the table—cultural awareness and inclusivity. According to IT Minister Ashwini Vaishnaw, the model is being designed to reflect India’s diverse linguistic and cultural landscape, ensuring that it understands and interacts with Indian languages, contexts, and nuances without bias. This is a significant move, considering most AI models today, including ChatGPT, DeepSeek, and Google’s Gemini, are primarily trained on Western-centric data, often leading to misinterpretations of regional languages, historical contexts, and cultural nuances.

By working closely with startups, researchers, and universities, the Indian government aims to create a model that understands India better than any foreign alternative. This effort could help address long-standing issues related to AI bias and misrepresentation, making the model more reliable and relevant for Indian users. However, the challenge will be ensuring that this localized training does not come at the cost of global competitiveness, as a model too narrowly trained on Indian data may struggle in broader international applications.

The Compute Power Play – Building an AI Infrastructure

Building a competitive AI model isn’t just about algorithms—it’s about raw computing power. That’s why India is establishing a common compute facility, where startups and researchers can access high-performance computing resources to build and experiment with AI models. To make this happen, the Centre has partnered with ten major companies, including Jio Platforms, Tata Communications, Yotta, and E2E Networks, to supply the necessary GPUs and infrastructure. This facility is expected to go live within the next few days, opening up opportunities for Indian AI startups to experiment and innovate without needing to invest in expensive computational hardware themselves.

This strategy could play a crucial role in leveling the playing field, allowing smaller firms to compete with tech giants who already have vast AI resources. However, it also raises questions about long-term sustainability. Will this facility be enough to keep up with the relentless pace of AI development worldwide? And more importantly, will Indian developers be able to optimize their models quickly enough to stay competitive against OpenAI and DeepSeek?

Will India’s AI Gamble Pay Off?

The big question remains—can India truly compete in the global AI race, or is this just another government-backed experiment that may struggle to scale? While India’s AI vision is bold and necessary, staying competitive will require more than just hardware investments and subsidies. DeepSeek has already disrupted the AI market with a low-cost, highly efficient model, proving that a well-optimized AI can outperform even the biggest players. Meanwhile, OpenAI continues to refine and enhance its models, maintaining its dominance.

India’s strategy of combining affordability, cultural relevance, and infrastructure development is promising, but success will ultimately depend on execution. If the 40% subsidy is the only thing keeping it competitive, then the model’s long-term sustainability remains uncertain. However, if India can crack the code on algorithmic efficiency and smart resource management, it could emerge as a real challenger in the global AI arena. The next few months will be critical in determining whether this ambitious project is a game-changer or just another AI experiment waiting to be overshadowed.