Regulating DeepSeek: A Strategic Approach for India

The potential ban on DeepSeek, a Chinese AI model, has fueled intense debate in India, with comparisons drawn to previous restrictions on Chinese apps like TikTok. However, the nature of DeepSeek’s operations is fundamentally different, as it serves businesses and researchers rather than mass consumers.

While concerns over data security, privacy, and foreign influence remain valid, India must take a balanced approach by implementing strong regulations instead of an outright ban. A well-structured regulatory framework will help mitigate risks while fostering innovation, ensuring that India continues to thrive in the AI revolution.

Unlike social media platforms, which collect extensive personal data from individual users, DeepSeek functions as a business-to-business (B2B) AI tool. Its AI models are primarily used in automation, research, and enterprise-level applications, making the risk profile different from consumer-driven platforms.

However, concerns remain about DeepSeek storing user inputs and metadata in China, raising fears of data leaks, unauthorized surveillance, and national security threats. These risks necessitate government intervention through strict regulations, ensuring that sensitive information is safeguarded.
Recognizing these issues, India’s IT Minister, Ashwini Vaishnaw, has announced that DeepSeek will soon be hosted on Indian servers. This step will allow for greater oversight, improved cybersecurity compliance, and stricter enforcement of data protection laws.

Hosting DeepSeek within India ensures data residency, limiting the possibility of unauthorized cross-border data transfers. Additionally, the government can mandate security audits and compliance measures, reducing the risk of potential misuse or foreign interference.

In a move to reduce dependency on foreign AI models, India has launched the IndiaAI mission, allocating ₹10,300 crore to AI infrastructure, startup funding, and research. As part of this initiative, 18,693 GPUs have been empaneled to establish a national AI computing facility, ensuring that Indian researchers and businesses have access to advanced computational power. This initiative highlights India’s commitment to becoming a global AI leader, accelerating domestic innovation while maintaining controlled collaborations with global firms.

Beyond concerns over data security, ethical challenges surrounding DeepSeek’s AI development have also surfaced. OpenAI has accused DeepSeek of copying its technology, sparking discussions on intellectual property violations. To address these issues, India must enforce AI ethics regulations, security audits, and controlled API access, ensuring that foreign AI models comply with national standards.

Despite India’s rapid AI expansion, private sector investment in AI research and development remains limited. While Mukesh Ambani has announced plans to build the world’s largest data center, investing in Nvidia chips for AI model training, infrastructure alone is not sufficient. True advancements in natural language processing and AI model development require sustained funding and long-term commitment.

However, many Indian IT firms continue to focus on short-term shareholder gains, prioritizing dividends and buybacks over bold AI investments. This cautious approach could slow down India’s AI growth, allowing global competitors to dominate.

Banning DeepSeek outright could also have geopolitical consequences. India and China already have strained trade relations, and further restrictions on Chinese technology could escalate economic tensions. Unlike previous bans on WeChat and UC Browser, DeepSeek operates in a different category, where complete elimination may not be necessary. A well-defined regulatory framework would allow India to control AI risks while maintaining technological access.

Additionally, India lacks homegrown AI models that can compete with DeepSeek, OpenAI, and Google DeepMind. Cutting off DeepSeek without a strong local alternative would make Indian businesses and researchers overly dependent on Western AI technologies, limiting India’s strategic autonomy.

To mitigate these risks while ensuring security, India should implement targeted AI regulations rather than a blanket ban. This includes:

Data Localization – Ensuring that all AI-related data is stored and processed within India’s jurisdiction.

Cybersecurity Audits – Conducting regular security assessments to detect vulnerabilities in foreign AI models.

Controlled AI Access – Restricting sensitive applications to Indian-developed AI models to enhance security.

Ethical AI Guidelines – Enforcing compliance with AI transparency, accountability, and fairness standards.

India’s approach to DeepSeek should be based on security assessments rather than reactionary bans. By enforcing strong AI regulations, cybersecurity audits, and controlled data-sharing protocols, the government can protect national interests while allowing businesses to leverage global AI advancements. The establishment of India’s AI Safety Institution, expansion of AI infrastructure, and increased private investment in AI research will play a crucial role in shaping India’s future as a global AI leader.

Moving forward, by striking a balance between innovation, security, and regulatory oversight, India can position itself at the forefront of AI development while safeguarding its digital ecosystem.