In a significant development, India's IT minister, Ashwini Vaishnaw, has praised the progress of Chinese AI lab DeepSeek and announced plans to host the company's large language models on domestic servers. This move marks a rare opening for Chinese technology in India, which has been cautious in its approach towards Chinese tech firms due to national security concerns.

DeepSeek has gained attention for its impressive AI model, R1, which was built on a relatively modest budget of $5.5 million. The model has sent shockwaves through the tech industry, sparking debates around copyright issues, U.S. export controls, and the need for increased investment in AI efforts. Vaishnaw's praise for DeepSeek's progress comes amidst criticism that India has invested less in AI compared to other countries.

The approval to host DeepSeek's language models on Indian servers is contingent upon the company storing and processing all Indian users' data domestically, in line with India's strict data localization requirements. Vaishnaw emphasized that data privacy issues regarding DeepSeek can be addressed by hosting open-source models on Indian servers.

To support the hosting of DeepSeek's models, India has established an AI Compute Facility, which has secured 18,693 graphics processing units (GPUs). The facility is scheduled to begin operations "in the coming days" and will offer computing services at steep discounts to firms in India. Standard AI computing will be offered at a 42% discount to market rates, while high-precision computing will be discounted by 47%.

The development comes at a time when DeepSeek's eponymous app was taken off Apple's and Google's app stores in Italy, following concerns raised by the country's data protection regulator about how the Chinese firm was using and storing Italians' personal data. Despite this setback, Vaishnaw's announcement signals a significant opening for Chinese AI firms in India.

Beyond hosting foreign AI models, India is also driving the development of AI models and related technology on its own turf. Vaishnaw revealed that major chip designers are willing to work with India to develop indigenous GPUs. The country is expected to see investment of $30 billion in hyperscalers and data centers over the next two to three years, with Reliance planning to build what could become the world's largest data center in Jamnagar.

The computing facility will also support India's broader AI initiatives, with 18 AI-driven applications focusing on agriculture, climate change, and learning disabilities selected for initial funding. To oversee the development of these AI initiatives, India will establish a regulatory body using a "hub-and-spoke model," allowing multiple institutions to collaborate on safety frameworks.

Vaishnaw emphasized that India will keep its models open and application-focused, highlighting the country's commitment to driving innovation in the AI sector. As India continues to navigate its approach towards Chinese tech firms, this development marks a significant step towards fostering collaboration and driving growth in the AI industry.