India is an incredibly important market for AI in general, and for OpenAI in particular: Sam Altman While India is actively developing its AI ecosystem, OpenAI has shown interest in collaborating with the country during the fireside chat with the Minister of Electronics and Information Technology, Ashwini Vaishnaw

OpenAI CEO Sam Altman recently visited India, drawing attention to the country's expanding presence in the artificial intelligence (AI) sector. India is a major consumer market, and AI is no exception. During a fireside chat with the Minister of Electronics and Information Technology, Ashwini Vaishnaw, Altman mentioned that India is OpenAI's second-largest market and that its user base in the country has tripled over the past year.

"India is an incredibly important market for AI in general, and for OpenAI in particular. It's our second-biggest market. We've tripled our users here in the last year, but mostly, we are seeing what people in India are building with AI at all levels of the stack—chips, models, and all of the incredible applications," Altman said.

DeepSeek AI Hit

Altman's visit coincided with increasing competition from Chinese AI startup DeepSeek, which has introduced cost-effective AI models that are gaining popularity. DeepSeek's R1 model, developed for under USD 6 million, has surpassed OpenAI's ChatGPT as the top-ranked free AI app on Apple's App Store.

India alone accounts for 15.6 per cent of DeepSeek's total downloads, according to Appfigures. Within 18 days of its launch, DeepSeek recorded 16 million downloads—nearly double the number of initial ChatGPT downloads. The impact of this shift has also been observed in the AI hardware industry, with Nvidia losing USD 590 billion in market value in a single day—the largest single-day loss for any company in history.

Challenges and opportunities for OpenAI in India

OpenAI is also dealing with legal issues in India, including lawsuits related to copyright concerns. The company has defended its practices, stating that it only uses publicly available data and has questioned whether Indian courts have jurisdiction over these matters.

While India is actively developing its AI ecosystem, OpenAI has shown interest in collaborating with the country. Minister Vaishnaw confirmed after the discussion that Altman expressed a willingness to engage with India across various AI sectors.

IT Minister on India's indigenous AI model

India recently announced plans to develop its own foundational AI model as part of its broader AI strategy. The government is setting up an "affordable" common compute facility with over 18,000 GPUs to support startups and researchers in developing AI applications and algorithms.

"India is building foundational AI models using 18,000+ high-end GPUs and large non-personal datasets. Startups have already begun work following the government's call for proposals," IT Minister posted on X.

Compared to global AI models that cost USD 2.5 to 3 per hour for usage, India's AI model is expected to cost less than INR 100 per hour (USD 1.16 per hour) after a 40 per cent government subsidy.

Vaishnaw emphasized India's potential for cost-effective AI innovation, "Lots of innovation is happening. As Sam said, every year, there is a 10x reduction in the cost of intelligence. That kind of innovation can come from anywhere in the world—why shouldn't it come from India? That's the point. Our young entrepreneurs, startups, and researchers are really focused on the next level of innovation to reduce costs. Our country sent a mission to the moon at a fraction of the cost of other countries—why can't we do the same for AI?"

India's AI industry is growing at a compound annual growth rate (CAGR) of 25 to 35 per cent and is projected to reach USD 17 billion by 2027, according to a report by BCG and Nasscom. The demand for AI professionals is also expected to grow at a 15 per cent CAGR by 2027.

During the chat, the Minister also announced an open competition to empower innovation,"Our startup community is working on unique solutions, and we'll soon be launching an open competition to empower innovation. So many problems can be solved—why not use the latest technology to do it? You guys good with that? We'd love to do it," he explained.

On the other hand, Kunal Bahl, Co-founder of Titan Capital and Snapdeal, posted key takeaways from the chat. He said,"They recognize that foundational models can only go so far ("80-90 per cent of the way"), and for specific industry or company contexts, a robust application layer will be needed to reach 100 per cent. This is important for the many startups building in the application layer."