Challenges and Opportunities in Creating Homegrown ChatGPT and DeepSeek
Mar. 07, 2025 • Ayushi Nagwani
In a world dominated by technological innovation, India’s role has often been that of a consumer rather than a creator. Despite its large population, the country has yet to produce tech giants on the scale of global leaders. First, it lagged behind in creating social media platforms like Facebook and Instagram, and now it faces a similar challenge in the field of AI.
Following the success of ChatGPT, China has introduced its own AI, DeepSeek, further highlighting the gap. With its vast talent pool and growing tech ecosystem, India has the potential to bridge this gap and become a global leader in AI and other emerging technologies. This blog delves into these challenges and explores potential pathways for India to overcome them and emerge as a frontrunner in the global tech landscape.
Financial Investment in Research and Development
The Current Scenario
One of the primary hurdles is the insufficient allocation of funds towards research and development (R&D), Though India has increasingly made efforts and nearly doubled its investment in R&D over the last 10 years, it still spends a mere 0.6% of its GDP on R&D. In stark contrast, The United States spends about 3.4% of its GDP on R&D, while China allocates 2.4%. Additionally, the private sector’s contribution to R&D in India is also low at 36.4% of the country’s gross expenditure on R&D (GERD), whereas China and the US have contributions of 77% and 75%, respectively.
The Need for Coordinated Efforts
To foster innovation and drive technological breakthroughs, there is an urgent need for both the government and the private sector to significantly increase their R&D investments. Some of the key efforts taken by government include successive increase in budget allocations, incentivising investment by the private sector to increase their share in GERD [Gross Domestic Expenditure on R&D], creating avenues for collaborative STI [Science, Technology, and Innovation] funding through portfolio-based funding mechanisms such as Public Private Partnerships and other innovative hybrid funding mechanisms.
Another critical challenge is the slow transition from “Lab to Land.” While Indian institutions develop cutting-edge technologies, the rate at which these innovations are translated from labs to real-world applications for societal benefit remains disappointingly low. Addressing this gap is essential to ensure that technological advancements reach and impact the lives of people effectively.
Market Dynamics and Competition
Vulnerability of Startups
The Indian market’s openness, while beneficial in many aspects, poses significant challenges for local startups. Without protective measures, Indian startups are vulnerable to competition from established American tech giants. For instance, if an Indian startup were to develop a homegrown alternative to Google, it would struggle to compete against Google’s established, cheaper, and more refined services. This scenario was evident in the case of India’s social media platform, Koo, which failed to withstand the competition.
Lessons from China
In contrast, China’s closed market provides a protective environment for its homegrown companies. This allows Chinese firms the necessary space to fail, improve, and eventually succeed without the immediate threat of being overshadowed by foreign competitors. India could benefit from adopting similar strategies to nurture its local tech industry.
Technological Lag and the AI Race
The Challenge of Being Behind
For India, the challenge is twofold: its thriving IT services industry, which employs millions, faces the risk of obsolescence, and the country has yet to establish itself as a leader in AI innovation. India is already playing catch-up in several foundational technology sectors, such as the internet, semiconductors, and mobile and smartphone manufacturing. This lag in foundational technologies creates a significant hurdle in competing in advanced fields like artificial intelligence (AI). The tech sector often follows a cumulative progression, meaning that falling behind early on makes it increasingly difficult to close the gap later.
However, India is not without its strengths. The country boasts two significant advantages: a vast, cost-competitive talent pool and an abundance of data. India produces millions of engineers annually, and its massive population generates diverse and extensive datasets—both of which are critical for developing and training AI models. Leveraging these strengths effectively could pave the way for India to carve out a leadership role in the global AI landscape.
Focusing on New Technologies
One potential strategy for India is to leapfrog traditional technological advancements and focus directly on emerging technologies like AI. However, this approach comes with its own set of challenges, particularly in acquiring the necessary hardware. For example, AI development requires specialized semiconductors, predominantly produced by the US company Nvidia. The US government has capped the number of advanced chips that countries like India can purchase, limiting India’s ability to scale its AI initiatives.
Strategic Stockpiling and Local Production
China anticipated such restrictions and began stockpiling chips in advance. Additionally, Chinese companies like Huawei are now producing their own semiconductors, which are reportedly of high quality. India could consider similar strategies, including investing in local semiconductor manufacturing and forming strategic stockpiles to mitigate dependency on foreign suppliers.
The Path Forward: A National Campaign
Learning from Global Examples
The success stories of US tech giants and Chinese firms highlight the importance of government involvement and strategic planning. In the US, government agencies like the CIA and the Pentagon played crucial roles in the growth of Silicon Valley. Similarly, Chinese firms benefit from substantial state subsidies and a protected market.
A Unified National Mission
For India to make significant strides in technology, a coordinated national mission is essential. This mission should bring together all stakeholders, including the government, startups, private investors, and the general public. By fostering a collaborative environment and providing the necessary support and resources, India can create a conducive ecosystem for technological innovation.
Conclusion
The journey to creating homegrown versions of global tech giants like ChatGPT and DeepSeek is fraught with challenges. However, with increased investment in R&D, strategic market protections, and a unified national effort, India has the potential to overcome these hurdles. By learning from the successes and strategies of other nations, India can position itself as a formidable player in the global technology arena. By bridging ambition with execution, India can rise from being a tech consumer to a trailblazer in the AI revolution.
References
The author affirms that this article is an entirely original work, never before submitted for publication at any journal, blog or other publication avenue. Any unintentional resemblance to previously published material is purely coincidental. This article is intended solely for academic and scholarly discussion. The author takes personal responsibility for any potential infringement of intellectual property rights belonging to any individuals, organizations, governments, or institutions.