The US government on Monday announced plans to tighten restrictions on the export of AI chips and technology, seeking to consolidate advanced computing capabilities within the country and its allies while intensifying efforts to curb China’s access. However, this decision may pose challenges to countries like India also, industry players said.

According to the Department of Commerce’s Bureau of Industry and Security (BIS), the new License Exception Artificial Intelligence Authorization (AIA) allows for the export, reexport, or transfer (in-country) of advanced computing chips, without authorisation, to a set of allies and partners. New License Exception Advanced Compute Manufacturing (ACM) allows for the export, reexport, or transfer (in-country) of advanced computing chips, without authorisation, for the development, production, and storage of these chips, except to arms-embargoed countries.

“The US has a national security responsibility to preserve and extend American AI leadership, and to ensure that American AI can benefit people globally. Today, we are announcing a rule that ensures frontier AI training infrastructure remains in the United States and closely allied countries, while facilitating the diffusion of American AI globally,” said National Security Advisor Jake Sullivan. 

“The rule both provides greater clarity to our international partners and industry and counters the serious circumvention and related national security risks posed by countries of concern and malicious actors who may seek to use the advanced American technologies against us.”

Ashok Chandak, President of the India Electronics and Semiconductor Association (IESA), shared that the export control framework for AI diffusion, introduced by the Biden administration, is expected to significantly affect global AI development and deployment. These restrictions extend beyond US-based companies, influencing nations like India, which now faces licensing requirements for importing advanced AI chips.

Challenges ahead

India’s AI sector could face several hurdles due to the restrictions, like restricted access to advanced AI chips slowing innovation and development and scaling up of installations. Licensing requirements could raise costs and introduce delays due to authorisations. Indian companies may rely heavily on global corporations for AI infrastructure, like data centres.

Large-scale AI data centres, requiring several hundred thousand GPUs, may be delayed or scaled-down, putting global companies at a competitive advantage over Indian enterprises. However, small-scale setups could still enable experimentation, innovation, and restricted model development.

“The export controls are set to take effect in 120 days, allowing the incoming administration under President-elect Trump to potentially amend them. It is a bit uncertain whether the Trump administration will make it easy or pass the rule as is. Amid growing concerns from technology industries, the global AI landscape may witness a shift, impacting both U.S. technological leadership and India’s growth trajectory in AI infrastructure,” Chandak said.

Though in the short-term India may not have a major impact, in the long run scaling up by any Indian conglomerate could face the hurdles of quantity cap, he added.

“The US imposing restrictions on the import of GPUs to India brings us back to the old licensing regime to haunt us again. China can follow with other technologies, and the rest of the West too. Imagine the export of semiconductor manufacturing machines being restricted tomorrow which will stop our semiconductor ambitions,” explained Ajai Chowdhry, Founder of HCL, and the Chairman of EPIC Foundation & MGB.

“This is reminiscent of the export controls on Space and Atomic energy faced in the past. India emerged out of that successfully with its engineers creating our own technologies. I am sure most of the design of Nvidia and AMD GPUs was done in India by our engineers. With the US and China vying for global dominance, India’s rise will resisted by both, he said.”