In the late 1960s, the US restricted wheat imports to India. At the time, India was heavily dependent on the US for its massive food shortage, and this crunch was a wake-up call, which eventually led to self sufficiency through the Green Revolution.

Sixty years later, India is again on the brink of facing such a situation. This time, however, it’s GPUs – which not only power gaming PCs, but also new-age data centres running the AI revolution. But instead of the US, this time around, India may be compelled to look at China for an answer and the Chinese AI project DeepSeek.

The events of this past week around DeepSeek disprove that large language models depend on high-end hardware, and this is where Indian startups could find a ray of hope, particularly given the ongoing geopolitical battle for AI and language models.

The clearest indicator of DeepSeek’s impact is on the stock price for GPU giant Nvidia, which has been on a tear for the past two years, but suffered a big crash this week, as DeepSeek’s capabilities were widely published.

DeepSeek Outhypes OpenAI

A lot of the hype around the Chinese competitor for ChatGPT and OpenAI comes from the fact that it has managed to surpass existing closed source models without relying on high-performance GPUs.

In fact, DeepSeek’s usage of just 2,000 Nvidia H800 GPUs compared to OpenAI’s model which relies on 100,000 GPUs (the more advanced H100). In fact, the H800 GPUs were specifically designed by Nvidia for the Chinese market, and are said to be less powerful than the H100 GPUs on which they are based.

Plus, DeepSeek’s training cost was around $6 Mn, compared to the $100 Mn spent by OpenAI for training its models. As a result, DeepSeek APIs are up to 95% cheaper than OpenAI’s latest models, and this has sent the global AI investors into a tizzy.

Nvidia and Broadcom stocks fell 17%, while Alphabet dropped 4% and Microsoft 2% in the aftermath of the spotlight on DeepSeek’s rise on the app stores.

“This is AI’s Sputnik moment,” OpenAI investor Marc Andreessen was quoted as saying.

And then, DeepSeek released an updated model on Monday night to target AI-generated images, which threaten to disrupt OpenAI’s Dall-E model. This is expected to set off another dip in US AI stocks, particularly Nvidia.

But the big question for Indian startups and tech companies is whether DeepSeek can lay the foundation for an India-specific large language model, a hot debate in the industry today.

How The US Is Looking To Control The AI Race

When ex-US president Joe Biden signed one of his last official orders, it put India among the list of countries requiring explicit licences for high-end GPU imports. It’s in this context that the DeepSeek progress is seen as a positive sign for India.

The embargo on exports of GPUs is problematic and will only come into effect from May 2025. While some of the restrictions might be lifted in the meanwhile, it has already set some alarm bells ringing in India.

To be clear, this largely concerns GPUs used by data centres to provide cloud computing services for AI applications and services.

Such high-performance GPUs are essential for training AI models, as the hardware excels at performing parallel and multithread processing. This makes them ideal for calculating repetitive matrix multiplications required in deep learning algorithms.

After the breakthrough in generative AI in the past four years, the demand for such high-end GPUs, which could help in AI model training, has gone up exponentially.

Under the guidelines, India can import up to 1,700 NVIDIA H100 GPUs without needing any license and........

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