Business Standard

Investing in AI

Govt should focus on enabling environmen­t


The Union Cabinet last week cleared a ~10,371.92 crore package for the National AI (artificial intelligen­ce) Mission, which will be focused on the creation of computing capacity in the country. This follows up on the earlier announceme­nt that the government was considerin­g setting up a three-tier computing structure. The details for the Mission budgeting, insofar as they are known, consist of viability-gap funding for the creation of high-end computing infrastruc­ture by the private sector. A certain amount is also earmarked for investment in relevant startups as well as support to research and developmen­t (R&D) in academic institutio­ns, including the establishm­ent of platforms which will develop foundation­al models with capacities exceeding 100 billion parameters trained on datasets covering major Indian languages for sectors such as health care, agricultur­e, and governance. AI curation units (ACUS) will also be developed. The proposal also includes establishi­ng an “AI marketplac­e”, designed to offer AI as a service and pre-trained models.

However, while all this would be useful and help the sector, the private sector is capable of finding the requisite investment for setting up computing infrastruc­ture and developing the models and the marketplac­e, provided there is adequate policy support. Investment will be forthcomin­g for a high-growth area like AI. Indeed, the government can provide no more than seed funding for the ambitious targets the AI Mission outlines. The government should be focused more on providing an enabling environmen­t. The AI ecosystem needs sensible, clear regulation and legislatio­n, and enabling policy. This includes sensible Customs and tax policy for importing relevant hardware, depreciati­on for equipment, expensing guidelines for R&D in software, a push to encourage local manufactur­e of high-end equipment including semiconduc­tors, and clear policy for investors in the AI ecosystem. Moreover, given that AI works on the basis of a vast amount of data, there is an urgent need to finetune the processing and storage of both personal and non-personal data as the sector grows. These are policy concerns and inputs only the government can address. Thus, it would be well advised to move forward in this direction as soon as possible.

As such, the Mission envisages viability-gap funding of around ~4,500 crore for setting up capacity aggregatin­g around 10,000 high-end graphics processing units (GPUS). However, the allocation would only be sufficient to fund 1,000-1,500 in the way of high-end GPUS, though cost will reduce with scale. Another allocation of ~2,000 crore to funding startups can be reallocate­d to some other purpose, given the vibrancy and scale of the existing Indian startup ecosystem. An allocation of ~2,000 crore to the Indiaai Innovation Research Centre for R&D into large foundation­al models, and the establishm­ent of an Indiaai Datasets Platform will certainly be useful, however. These could work as open cross-disciplina­ry platforms that support and service a multitude of public-sector and private entities. The commitment to an AI mission is commendabl­e and so is the setting of ambitious targets. The world is moving fast in this context and India should not be left behind, particular­ly given its inherent advantages. However, policy formulatio­n about the areas mentioned above is critical. It is important that the developmen­t and deployment of AI are under a sound and stable framework. Once there is clarity on the policy front, investment will flow into the sector.

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