Startups shortlisted under India’s $1.2-billion AI Mission could soon be offering equity in return for access to subsidised graphics processing unit (GPU) resources. The Ministry of Electronics and Information Technology (MeitY) is reportedly considering taking a 2-4 per cent equity stake in startups availing GPU grants.
Four startups, including, Bengaluru-based Sarvam and Gnani.ai, Gurugram’s Soket AI Labs, and Noida’s Gan AI have been shortlisted for access to government-licensed GPUs under this initiative. While some founders view the potential equity arrangement as a show of government commitment to the artificial intelligence (AI) ecosystem, investors have flagged possible concerns around conflict of interest.
Further, MeitY is currently evaluating implementation models, with a final structure expected to be announced in the coming months.
Under the AI Mission, the government aims to address the prohibitive cost of GPU infrastructure, Nvidia’s high-end chips can cost up to $60,000, by enabling startups to access computing power at one-fourth the market rate. This has been facilitated through partnerships with data centre operators like Yotta Data Services and Tata Communications, offering GPU access at as low as $0.8 per hour.
Some investors worry that the government’s approach could lead to conflicts with both private investors and taxpayers. Others, however, see the move to gain access to otherwise unaffordable GPUs rather than safeguard equity stakes.
Soket AI Labs is open to offering a stake to the government in exchange for access to 2,000 GPUs needed to train its 120-billion-parameter large language model (LLM). However, this may steer the startup’s focus towards public service applications rather than pursuing a commercial path in the short term.
For many startups, the prospect of accessing sufficient capital makes the idea of giving equity to the government more acceptable. According to industry estimates, securing 2,000 GPUs for a year could cost between $2.5 million and $10 million, depending on usage, even with MeitY’s subsidised pricing. Except for Sarvam, the other shortlisted startups have yet to raise funds of that scale.
Further, industry experts also point out that for the government’s equity participation to be seen as a justified use of taxpayer money, the AI solutions developed must deliver tangible value to the public.
