Why Was India Excluded from Unrestricted Access to Advanced AI Chips by the US?

By Nayan Seth | January 14, 2025

In a move to bolster artificial intelligence (AI) infrastructure, U.S. President Joe Biden signed an executive order on Tuesday. This decision came just a day after the Biden administration announced sweeping restrictions on access to advanced semiconductors for China and other adversarial nations. However, India, a strategic partner of the U.S. in the Indo-Pacific region, was notably excluded from a list of 18 countries granted unrestricted access to these cutting-edge AI chips.

Analysts suggest that while India's growing technological collaboration with the U.S. could eventually make it eligible for such access, its current ties with Moscow and perceived weaknesses in its technology regulatory framework have delayed its inclusion in the top-tier list.

Exclusion Not a Surprise

The U.S. Commerce Department's policy framework categorizes nations into three tiers. The first tier includes the U.S. and 18 allied countries with unrestricted access to advanced semiconductors. The second tier comprises over 100 nations, including India, Israel, and Singapore, which face new caps on semiconductor access but may receive individual exemptions. The third tier includes adversaries like China and Russia, which are subject to maximum restrictions.

Bhaskar Chakravorti, Dean of Global Business at Tufts University's Fletcher School of Law and Diplomacy, noted that India's historical ties with Russia place it outside the "super safe" category. These ties date back to the Soviet Union's support for India's independence from Britain and persisted during the Cold War, when the U.S. aligned with India's rival, Pakistan.

Scott Jones, a non-resident fellow at the Stimson Center, acknowledged recent allegations that some Indian companies aided Russia's war efforts in Ukraine. However, he emphasized that while India's exclusion is disappointing, it does not represent a significant setback. Jones also pointed out that India's technology regulatory framework is perceived as less robust compared to the 18 countries on the unrestricted list.

A Pathway for Future Inclusion

Despite its current exclusion, analysts believe India's deepening technological partnership with the U.S. could shield it from some restrictions. Richard Rossow, Senior Adviser at the Center for Strategic and International Studies, highlighted that the new framework includes provisions for exemptions, suggesting India could soon qualify for advanced chip access.

In early January, U.S. National Security Adviser Jake Sullivan visited India, meeting with Prime Minister Narendra Modi and other senior officials. Both nations reaffirmed their commitment to a "strategic technology partnership" under the U.S.-India Initiative on Critical and Emerging Technology (iCET). This partnership includes significant investments in India's semiconductor manufacturing and research and development (R&D) collaboration.

During his visit, Sullivan highlighted Micron's $2.7 billion investment in India to establish semiconductor packaging facilities, aiming to position India as a global hub in the chip ecosystem. The Indian government is also investing billions through initiatives like the India Semiconductor Mission and the Production Linked Incentive scheme.

Rossow noted that India likely anticipated its exclusion from the unrestricted list, given the ongoing discussions between the two nations. Jones echoed this sentiment, suggesting that Sullivan likely informed Indian officials about the impending policy changes during his visit.

Securing U.S. Leadership in AI

The Biden administration has prioritized AI as central to U.S. national security and economic strength. A White House factsheet outlined that the latest measures aim to prevent the offshoring of critical AI technology and ensure that "the world's AI runs on American rails."

Since October 2022, the U.S. has implemented a series of export controls to restrict China's access to advanced semiconductors, particularly for military applications. While these measures initially impacted China's semiconductor industry, Beijing has continued to advance its capabilities, narrowing the technology gap.

Chakravorti raised concerns about the challenges of implementing this global strategy, including potential lobbying from U.S. chipmakers and the risk of leaks in the carefully curated list of countries. He also questioned how the policy might influence the location of future data centers.

Jones described the policy as more of a "symbolic gesture" with a clear message to the world: nations must choose between aligning with the U.S. or China in the AI ecosystem. "You can't have it both ways," he concluded.

Key Takeaways: - India's exclusion from the unrestricted list stems from its ties with Russia and perceived regulatory weaknesses. - The U.S. is fostering a strategic technology partnership with India, including significant semiconductor investments. - The Biden administration aims to secure U.S. leadership in AI by restricting access to advanced chips for adversaries. - India may gain access to advanced chips in the future through exemptions and continued collaboration with the U.S.