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DeepSeek has made Indian companies rethink AI model development, shifting focus from just applications to potential foundational models.
DeepSeek has earned recognition from major tech companies, and even US President Donald Trump described China’s achievement as a “positive” development and a wake-up call for the American AI industry.
“The biggest thing it has done is just change the belief that foundational models are only for large tech companies. DeepSeek has shattered that feeling,” said Sandeep Dutta, Chief Practice Officer–Asia-Pacific & Middle East region, Fractal.
- Also read: What has DeepSeek done that wasn’t possible for OpenAI or Meta? Prof Ravindran of IIT-M explains
In a related development, Union IT Minister Ashwini Vaishnaw said on Thursday that the government has created a framework calling for proposals to develop the country’s own foundational AI model. He also stated that at least six developers, startups, and teams would be building a foundational model within 4-10 months.
LLM race
Experts are debating whether India needs its own large language model (LLM), given that China has firmly entered the global AI race and is challenging the dominant US players.
Indian startups like Sarvam and Krutrim are making significant strides in the development of LLMs tailored to the local market and diverse languages.
AI startup Sarvam, which raised around $41 million in 2023, focuses on building language models that can understand and generate in multiple Indian languages.
Bhavish Aggarwal-led Krutrim is working on region-specific AI models that can enable businesses to interact with customers in their native language, integrating contextual and cultural understanding.
Tailored applications
“The DeepSeek moment is a reminder that accepting the status quo is a wrong strategy,” said Narendra Bhandari, General Partner, Seafund. He emphasised that AI should be seen as a solution rather than just software, and that India’s investment in massive Nvidia GPU purchases is a necessary first step.
Bruce Keith, Co-Founder and CEO of InvestorAi, said that innovations like DeepSeek are shifting the focus from processing power to data and application-specific models. “DeepSeek has proven that game-changing innovations don’t need billion-dollar investments. This democratises AI and offers countries like India an opportunity to leap ahead without extensive infrastructure,” Keith explained.
Dutta pointed out that India’s strength lies in creating applications suited to local needs, such as in agriculture, healthcare, and finance. “Instead of focusing on a single, large foundational model, India can develop smaller, domain-specific models tailored for key sectors,” he said. This approach could make India a global leader in AI applications.
“India’s strength is not necessarily in building foundational models but in creating applications. People don’t buy models, they buy applications,” said Jaspreet Bindra, managing director of Tech Whisperer.
Startup ecosystem
Referring to how DeepSeek’s lower cost of building models offers startups in India a unique advantage, Anil Kumar, CTO of Exotel, said, “We’re at a critical moment. The AI landscape is shifting, and models are becoming cheaper to build and run. Now, the value is in building real-world applications rather than just focusing on hardware.” This shift is giving rise to a new wave of AI application-first startups, he added.
On the ahead , Bindra pointed to the lack of patient capital in India’s venture capital ecosystem, which traditionally expects quick returns. “AI models require long-term investments. In India, we need to rethink our funding strategies to foster innovation.”
He noted that India would have to focus on research as well as foster an ecosystem for deeptech startups, including funding for the sector.
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