India lauds Chinese AI lab DeepSeek, plans to host its models on local servers

India’s IT minister on Thursday praised DeepSeek‘s progress and said the country will host the Chinese AI lab’s large language models on domestic servers, in a rare opening for Chinese technology in India.

“You have seen what DeepSeek has done — $5.5 million and a very very powerful model,” IT Minister Ashwini Vaishnaw said on Thursday, responding to criticism New Delhi has received for its own investment in AI, which has been much less than many other countries.

Since 2020, India has banned more than 300 apps and services linked to China, including TikTok and WeChat, citing national security concerns. The approval to allow DeepSeek to be hosted in India appears contingent on the platform storing and processing all Indian users’ data domestically, in line with India’s strict data localization requirements.

“Data privacy issues regarding DeepSeek can be addressed by hosting open-source models on Indian servers,” Vaishnaw said at an industry conference.

DeepSeek’s models will likely be hosted on India’s new AI Compute Facility. The facility is powered by 18,693 graphics processing units (GPUs), nearly double its initial target — almost 13,000 of those are Nvidia H100 GPUs, and about 1,500 are Nvidia H200 GPUs. Around 10,000 GPUs are ready to be deployed, and the facility is scheduled to begin operations “in the coming days,” according to the minister.

The facility will also offer computing services at steep discounts to firms in India. Vaishnaw said standard AI computing would be offered at a 42% discount to market rates, and high-precision computing would be discounted by 47%.

The minister’s remarks come a day after DeepSeek’s eponymous app was taken off Apple’s and Google’s app stores in Italy, after that country’s data protection regulator said it was asking how the Chinese firm was using and storing Italians’ personal data.

The release of DeepSeek’s R1 “reasoning” model, built on a purportedly modest budget, sent shockwaves through the tech industry this week, causing chip giant Nvidia’s market cap to decline by $600 billion. The model has quickly come under intense scrutiny, and has sparked heated debates around copyright issues, U.S. export controls, and how even more money needs to be poured into AI efforts.

Beyond hosting foreign AI models, India is also trying to drive development of AI models and related technology on its own turf. “Major chip designers are willing to work with India to develop indigenous GPUs,” Vaishnaw said.

Vaishnaw estimated that India would see investment of $30 billion in hyperscalers and data centres over the next two to three years. One of the country’s biggest conglomerates, Reliance, is planning to build what could become the world’s largest data center in the city of Jamnagar, with a capacity of 3 gigawatts, Bloomberg reported last week. 

“We believe there are at least six major developers who can develop AI models in six to eight months on the outer limit, and four to six months on a more optimistic estimate. A common compute facility is the most important component for creating a robust AI ecosystem,” Vaishnaw said.

The computing facility will also support India’s broader AI initiatives. Vaishnaw said 18 AI-driven applications focusing on agriculture, climate change, and learning disabilities have been selected for initial funding.

To oversee development of these AI initiatives, India will establish a regulatory body using what Vaishnaw described as a “hub-and-spoke model,” allowing multiple institutions to collaborate on safety frameworks. “We will be keeping our models open and application-focused,” he said.