The first tranche of the India–US trade deal is expected to lower import duties on advanced AI hardware, reduce GPU infrastructure costs and attract large-scale data centre investments, potentially positioning India as a key global hub for AI compute services.

New Delhi: The finalisation of the first tranche of the India–US trade deal comes as a booster shot for the AI hardware, particularly advanced computing components, as it is expected to significantly lower costs and facilitate domestic capacity building.

For the first time, AI compute infrastructure has effectively been treated as a strategic asset within a bilateral trade arrangement between two major economies, a move that could have long-term implications for India’s technology landscape, according to an article in Khalsa Vox news portal.

One of the sector’s biggest challenges so far has been the steep import duties on enterprise-grade GPU servers, which currently range between 20 and 28 per cent. These levies have pushed up the cost of GPU-based services in India, making them substantially more expensive than in competing hubs such as Singapore or the UAE.

Industry estimates suggest that rationalising duties could reduce the cost of setting up GPU-enabled data centres by around 14 per cent, potentially unlocking large-scale investments across the country, the article explains.

The timing is also seen as favourable. While India generates close to one-fifth of the world’s data, it hosts only a small fraction of global data centre capacity and an even smaller share of installed enterprise GPUs.

With global cloud and hyperscale companies expected to invest more than $80 billion in India by the end of the decade, the trade framework is being viewed as a catalyst that could help bridge this gap and position the country as a serious contender in global AI compute services, the article states.

It also highlights that industry experts have emphasised the need for safeguards. They are of the view that easier access to advanced hardware must go hand in hand with policies that protect data sovereignty, national security and domestic value creation. Without such measures, there is a risk that India could end up providing low-margin compute services while the real economic and strategic benefits flow to other countries, the article added.