Days before demitting office, the Joe Biden administration has released an expansive regulatory framework on the export of artificial intelligence (AI) hardware such as graphics processing units (GPUs), which could have far-reaching consequences for India’s AI ambitions. In an “interim final rule”, titled ‘Framework for Artificial Intelligence Diffusion,’ the US government has proposed to create three tiers of countries with specific restrictions on the export of AI chips and GPUs for each. India is in the middle tier of this classification and will face some restrictions on the number of GPUs it can import from the United States. That could impact the ongoing process of procuring 10,000 GPUs to build up India’s domestic AI computing capacity. The first tier, which includes 18 of the closest allies of the United States, has almost no export restrictions. The third tier has countries of concern to the US, to which the export of technology is all but prohibited. The rules seem intended to keep advanced chips and AI models under the control of the US and its closest allies. Their enforcement, however, will depend on the incoming administration of President Donald Trump. The three tiers of countries TIER 1: The first tier comprises 18 of the closest allies of the US: Australia, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, South Korea, Spain, Sweden, Taiwan, and the United Kingdom. US companies can deploy as much computing power as they like in these countries, and the security requirements are relatively straightforward. TIER 2: The vast majority of countries in the world, including India, are in this category. These countries will face a limit on how much computing power they can import from American companies, unless that computing power is hosted in trusted and secure environments. There are caps on the levels of computing power that can go to each of these countries: roughly around 50,000 advanced AI chips through 2027, although that can double if the state reaches an agreement with the US. India is trying to procure 10,000 GPUs for its IndiaAI Mission, and it remains to be seen how this classification could impact large companies looking to build large AI data centres. Smaller firms are not likely to be impacted. TIER 3: Export of US technology to these countries – including Russia, China, Libya, North Korea etc. – will be almost prohibited. Special provision for India, China Apart from this tiered classification, the law also envisions a special review called the General Validated End User. This list includes only two countries: India and China. Indian companies that get this authorisation can use the exported items for civilian and military purposes, but not for nuclear use. Chinese companies with this authorisation can only use the technology for civilian use. Nvidia’s criticism of the rules Nvidia, which has a near monopoly on AI GPUs currently, has released a scathing statement against the AI diffusion rules. “In its last days in office, the Biden Administration seeks to undermine America’s leadership with a 200+ page regulatory morass, drafted in secret and without proper legislative review,” the company said in a statement. “This sweeping overreach would impose bureaucratic control over how America’s leading semiconductors, computers, systems, and even software are designed and marketed globally,” it said. The statement compared the difference in approach between the Biden and Trump administrations, contributing to the visible trend of tech companies seeking to reach out to the incoming President. “The first Trump Administration laid the foundation for America’s current strength and success in AI, fostering an environment where US industry could compete and win on merit without compromising national security,” Nvidia said. “Rather than mitigate any threat, the new Biden rules would only weaken America’s global competitiveness, undermining the innovation that has kept the US ahead.”
