IndiaAI Mission: Industry seeks clarity on 'restrictive' GPU tender, govt to extend deadline for submitting bids

The government has floated a tender for procuring 10,000 GPUs

In an jam-packed pre-bid meeting for procuring GPUs under IndiaAI mission, industry stakeholders sought a number of clarifications from the IT ministry, including requesting that the requirements in the tender be modified so that it encourages smaller players to participate in the empanelment process, three sources aware of the matter said..

On August 29, the Ministry of Electronics and Information Technology held the pre bid meeting on the RFE (request for empanelment) for procuring GPUs under the India AI Mission where over 60 industry members participated.

In the following days, the government will be posting its clarifications on the queries, and will also be extending the deadline for submission of bids, a senior government official said. The present deadline for the same is September 6.

On August 16, the IT ministry invited applications from to procure GPUs to provide access to AI services over cloud to academia, MSMEs, startups, governments, and other public sector agencies.

The government in March, approved the Rs 10,732 crore IndiaAI Mission with the aim of creating computing infrastructure for the country, AI centres for multi-modal LLMs, procuring 10,000 graphics processing units, and more.

10,000 GPUs, not 1,000 GPUs

There was confusion within the industry on the number of GPUs that were under the procurement process.  "The industry was confused whether the RFE was for 1,000 GPUs or 10,000," said the first source aware of the matter.

The meeting on August 29, started with MeitY clarifying that the tender was for 10,000 GPUs, with each bidder having to install 1,000 GPUs minimum, the source added.

"That is a clarification we have asked from the government and that needs to come in writing," said a second executive on the condition of anonymity.  "We expect the clarification to come in the coming days," they added.

Restrictive for smaller players?

With the government mandating that each bidder will have to commit to bidding for minimum 1,000 GPUs, it could translate to an expense of around Rs 250 crore for each bidder, a third source aware of the meeting explained.

"This will be very hard for newer players to cough up," the source said.

"It has been reiterated to the government that the RFE is not encouraging for startups, small and medium domestic players, for participation in the empanelment process.

"The financial requirements are stringent and ironic considering the AI hype is less than 2 years old," the source added.

The industry in unison has requested the government to take a re-look at this provision of mandating 1,000 GPUs minimum per bidder. "Whether there may be a change in that, we will have to wait and see," said the first executive.

The second executive who works with a major company said: "We were looking at a more level playing field. We were also trying to see how government can leverage this PPP model better. We were only directing towards what would be better from a collaboration standpoint."

Industry may look towards forming consortiums

Since the financial burden of installing a minimum 1,000 GPUs will be very expensive, the industry may explore the formation of consortiums to share this burden.

"While there were individual parties and players at the meeting, we'll all get into some form of consortium. Because this is not something that you can accomplish on your own," the second executive said.

The executive said that the government relayed their expectation from a consortium and its partners and how the prime bidder will align.

"Most of the terms and conditions of the RFE will apply to the consortium. But it is definitely the prime bidder who will be  responsible to fulfill it on behalf of the consortium," the second executive explained.

Other clarifications sought

The first executive aware of the meeting asked the government why the qualification criteria for companies in the RFE was based on revenues and not on profit. "Profit should be considered. If the business is not viable, it will tank," the executive said.

Another aspect that RFE did not consider, this executive opined, is the experience bidders have in working on AI.

"How many years since has one been running AI? Not all the data centers are same. So, the government should be considering people with experience in AI," the executive explained.