India's tech sector is facing a major blow after US company Anthropic suspended access to its new AI models due to a US government directive. The decision has sparked debate over India's AI ambitions and whether the country should rely on foreign technologies. For years, India has become one of the most important markets for frontier AI companies, with Anthropic and OpenAI describing it as their second-largest market after the US.
Anthropic's sudden move to suspend access to its newest AI models, Fable 5 and Mythos 5, has raised fresh questions across the global technology industry. The US government directive, which requires the company to suspend access to the models for all foreign nationals, including its own foreign national employees, has been met with shock and confusion in India's tech sector.
Aakrit Vaish, founder of Indian AI venture platform Activate, said the decision 'completely changes things' and strengthens the case for developing domestic AI capabilities. He expects startups to increasingly turn to open-source models and plans to encourage companies in his portfolio to reduce their dependence on a small number of frontier AI providers.
Vijay Rayapati, co-founder and CEO of Atomicwork, warned that unequal access to frontier AI models could give some companies a significant edge over rivals. He argued that startup teams spanning multiple countries will be at a competitive disadvantage if access to advanced AI systems becomes subject to geopolitical restrictions.
The debate over India's AI ambitions has been ongoing for some time, with some experts arguing that the country should accelerate efforts to build domestic AI capabilities. Others believe that India should continue to rely on foreign technologies, citing the country's vast base of developers, startups, and businesses as a key driver of adoption.