Anthropic curbs ignite AI debate in India
Hello, I am Priyanka Salve, writing to you from Singapore.
Welcome to the latest edition “in india“ — your one-stop source for stories and developments from the world’s fastest-growing major economy.
While the US and China raced to develop a dominant AI stack, India was confident of making its mark by building its AI application layer on top of foreign foundational models. But now New Delhi is being pushed to rethink its strategy as Washington looks to restrict certain AI proposals.
Have an opinion on today’s newsletter? share them with the team.
big story
India’s AI strategy was simple: Become an AI innovation hub It leverages its extensive information technology capability to develop applications using foreign underlying models.
But the fragility of that ambition was revealed last week when Anthropic disabled foreign nationals’ access to its new models (Fable 5 and Mythos 5) in compliance with a US government export control directive.
“The fact that border access can disappear overnight at the behest of a foreign government is the whole problem,” Saket Dandotia, co-founder and chief executive of Onetab.ai, told CNBC.
Anthropic’s access suspension could have disrupted Dandotia’s business of making AI applications for companies had it not diversified across multiple models.
But “diversification buys time; it does not buy independence,” Dandotia said, adding that India needs sovereign AI so that startups like its “don’t lose their edge” with a single directive from a foreign government.
An ADP Research report released on Thursday found that 41% of Indian workers use AI almost every day; this rate is higher than 26% in China and 19% in the USA. But without a standalone AI stack, this adoption reflects the extent of India’s dependence on foreign technology.
Sovereign AI vulnerability
India is not yet producing cutting-edge chips domestically, nor does it yet have a borderline-scale base model on par with leading US or Chinese models. As data center capacity grows rapidly, so does lagging behind USA and China.
The government’s efforts are ongoing on all three fronts through India semiconductor mission, AI mission and tax breaks for global hyperscalers setting up data centers in the country.
The private sector is also starting to realize the need to invest in a domestic AI stack. On Monday, India’s Sarvam AI, which develops independent AI models, Raised $300 million from $1.5 billion Valuation by a group of investors, including HCL Technologies, India’s third largest software services company by market capitalization.
But the efforts may be too little and possibly too late, industry experts said, adding that the biggest challenge for India is access to computing power and lack of deep tech investment capital.
Manish Agarwal, co-founder of Humyn Labs, a physical AI data company, said India’s strength lies in its strong domestic market and deep tech talent pool, both on the consumer and enterprise front, but it lacks the capital available to independent AI companies in the US and China.
Indian Prime Minister Narendra Modi (C) takes a group photo with AI company leaders including OpenAI CEO Sam Altman (2nd L), Anthropik CEO Dario Amodei (L), Google CEO Sundar Pichai (2nd L) and Meta AI Director Alexandr Wang (L) at the AI Impact Summit in New Delhi on February 19, 2026.
Ludovic Marin | Afp | Getty Images
India last year Startups raised $10.5 billion It ranks third in the world in terms of financing, after the US and the UK, according to a December report by private market intelligence firm Tracxn. But most of these funds went not to deep tech companies, but to startups in the enterprise applications, retail and fintech sectors. – companies working on latest disruptive technologies.
Investments by venture capitalists in deep tech startups in India are quite small compared to billions of dollars invested abroad, experts told CNBC, adding that private investors are being more conservative when investing in deep tech ideas.
For example, HCL Tech’s investment The 14.27 billion rupees ($151 million) in Sarvam was less than 10% of what it paid out in dividends to shareholders in the fiscal year ending March 2026.
Therefore, calls are growing domestically for the government to invest more in the development of independent artificial intelligence.
Leading venture capitalist and angel investor Mohandas Pai appealed to Prime Minister Narendra Modi: starting an AI missionHe stated that current government programs are “too slow and too small to make a big impact.”
For a country the size of India, creating a basic artificial intelligence model that does not experience hallucinations will require several trillion parameters, experts said, adding that this requires a lot of capital and computing power. For example, India’s Sarvam’s flagship model, It has just over 100 billion parameters.
Currently, standalone AI models developed in India use Nvidia architecture, but if the US restricts access to Blackwell chips as China has, it would leave India helpless, Neil Shah, vice president of research at Counterpoint Research, told CNBC.
This is a risk that other influential voices in the Indian tech industry have also voiced.
Sridhar Vembu, co-founder of Indian tech multinational Zoho and who founded Arattai to rival WhatsApp in India, said in a post on
But to do this, the country needs capital and sovereign computing power, both of which are sorely lacking.
Humyn Labs’ Agarwal said that without a strong government push to address these issues, the conversation about building independent AI risks becoming “fading”.
you need to know
Telegram criticizes India for temporarily banning app over exam fraud concerns
Messaging platform Telegram has criticized the Indian government’s move to temporarily block access to the app to prevent exam fraud, stating that it penalizes 150 million ordinary users rather than those guilty of leaking test papers.
US becomes India’s largest gas supplier as Iran war cuts India off from Gulf
The United States became the largest supplier of liquefied natural gas and liquefied petroleum gas to India in May as shipments from Gulf countries dropped due to traffic disruptions in the Strait of Hormuz.
approaching
June 19: Annual general meeting of Reliance Industries.
June 23: HSBC’s Composite Flash PMI for June.
