Govt eyeing vouchers, subsidies to make AI GPUs affordable for educational institutions, innovators

NVIDIA GPUs are in demand

The Indian government is considering offering vouchers or cross subsidies to allow India’s educational institutions, researchers and innovators to access premium Graphics Processing Units (GPUs) under its AI mission, according to sources with direct knowledge of the matter.

Under the voucher route, the government wants to provide vouchers to special institutions/innovators, which can be redeemed and a discount availed of while purchasing GPUs.

Cross-subsidies are the second route under consideration, wherein GPU sellers will sell the units for educational and research purposes at a subsidised cost. The government will allow the companies to sell the GPUs at premium prices in certain categories so they can recover the subsidy costs. In both the routes, the government is willing to foot the costs by providing cash incentives to the companies, the people cited above added.

The sources said both proposals have been presented to global chip behemoth Nvidia, which is currently in talks with the Indian government to provide GPUs under this special programme. They added that the government will also talk to other major global players in the ecosystem.

“The discussions are still ongoing at various levels as to which route to pick. There are also consultations going on with Nvidia on the same.” the person cited above said. “Since the potential demand for such GPUs in India is huge, the government is also considering talks with other global players under the mission.”

Last month, the Cabinet had given its nod to an ambitious Rs 10,372 crore AI programme. The Economic Times had reported on April 17 that the Indian government may strike a deal with Nvidia for sourcing GPUs.

“Any potential customer may acquire our GPUs from the NVIDIA Partner Network. The NPN is comprised of OEMs, Distributors and Resellers. We have no further comment,” Nvidia India spokesperson said, responding to queries sent by Moneycontrol.

GPUs are processing units that are essential for running super computing tasks involving AI and Large Language Models (LLMs). These units are very expensive, especially for educational institutions who may have to buy dozens of them. In the open market, one GPU unit for AI computing purposes costs anywhere between $30k-40k (Rs 25 lakh to Rs 30 lakh at the current foreign exchange rates).

It is still not known what the criteria would be for someone to qualify as innovator under the project. Market participants say there could be a special window like Start-up India that was created by the Commerce Ministry to provide special dispensation to a select number of start-ups.

Industry welcomes government involvement

Market participants are welcoming this government initiative since India is a big market for AI and AI-based solutions and applications. Given its talent pool and the amount of dynamic activity in the innovation space, India is also a huge consumer of supporting technology or the enabler of technologies and chipsets in the AI era.

From that point of view, India remains an extremely critical market for companies like Nvidia, a huge chunk of whose business is now moving to AI-based chipsets or chipsets that they provide for AI solutions and training of Large Language Models(LLMs) and foundational models.

Global scenario

Jayanth Kolla, Founder and Partner at Convergence Catalyst who is an expert in AI, told Moneycontrol that the government calling the shots for the industry in India is fairly new. However, he added that such involvement have been happening in other social capitalist European markets like Italy, Germany, France, Greece and the entire Mediterranean region, where the government regularly gets involved in their various industries.

“The government getting involved from the Indian industry’s perspective is also a good thing as it would help companies and other players get ahead in the queue or get better priority since there are as many chips that NVIDIA can supply globally and they are in high demand. The Indian government has a strong say in the access to the market, and the way a company would operate here. It's a negotiating chip, and it's a power that the government has which is access to the market, which is a good thing,” Kolla said.