India Pursues Sovereign AI After US Bans Anthropic Models

The Government of India has tasked Niti Aayog with reviewing the national AI ecosystem to reduce strategic dependence on foreign cloud providers and US-based firms. This urgency follows a US government export-control directive that forced Anthropic PBC to abruptly disable access to its Fable 5 and Mythos 5 models for all foreign nationals. The disruption affected major Indian IT firms, including Tata Consultancy Services and Infosys, as well as various startups.

In response, the government is considering expanding the IndiaAI Mission to build localized data centers and GPU clusters. Sarvam AI has been selected under this mission to develop indigenous foundation models. These steps aim to address critical gaps in compute capacity and research, as the Indian AI market is projected to grow from $7.84 billion in 2025 to $31.94 billion by 2031.

While Indian AI startups raised nearly $1.5 billion in the March quarter, they continue to face challenges at the foundation model layer. Consequently, some firms are increasingly seeking funding in San Francisco to scale infrastructure. Industry leaders argue that India can lead a deployment race by applying AI to agriculture, healthcare, and financial services, shifting the focus from being a supplier of AI to an applier of the technology.