The Great Tech Divide: U.S. AI Export Framework Could Reshape Global Power Dynamics and India's Ambitions

The Biden Administration's proposed framework for exporting advanced computer chips is a strategic effort to maintain technological superiority while curbing the capabilities of countries like China and Russia. This initiative arises amid growing concerns about the dual-use nature of AI, particularly its increasing application in warfare.

The move is reminiscent of the global dynamics created by the 1968 Treaty on the Non-Proliferation of Nuclear Weapons (NPT), which divided nations into nuclear “haves” and “have-nots.” Similarly, the U.S.'s regulations are poised to reshape the technological landscape by selectively granting access to advanced AI chips, leaving the world on the brink of an AI revolution—both perplexed and anxious.

As India emerges as a strong contender in the AI race, it is crucial to evaluate the tangible and intangible impacts of this decision on the country's AI ambitions. The U.S. framework has introduced a three-tiered system, imposing restrictions on GPU exports. India has been categorized as a tier-2 country, limiting the number of GPUs it can import. This restriction is likely to affect India's advanced computing capabilities.

Repercussions on India’s AI Capacity Build Out

India’s ambitious IndiaAI Mission includes procuring 10,000 GPUs to build a robust domestic AI ecosystem. However, the framework's limitations may ripple across industries reliant on advanced computing. Beyond the immediate technological challenges, it is essential to assess the broader implications for India’s foreign policy and global positioning.

The framework includes a provision to double the GPU import limit of 50,000 by agreeing to additional terms which could impact the strategic autonomy of tier-2 countries like India. Greater reliance on the U.S. for advanced technology risks aligning India’s AI developments with U.S. interests, potentially stifling innovation and widening technological disparities.

Impact on Geo-political Play

Exclusion of countries like China, Russia, and Iran add to India’s geopolitical challenges. India must carefully balance its technological ambitions with its diplomatic ties to these nations. While relations between India and China showed signs of softening following agreements in October 2024, lingering mistrust persists. This makes it critical for India to navigate its national security priorities alongside the U.S.’s adversarial relationship with China – a fact that will hit home harder with the incoming Trump administration.

The Indo-Pacific region—a cornerstone of India’s national security—is further complicated by the U.S.'s Indo-Pacific strategy to counter China. Balancing regional interests with U.S. objectives will test India’s diplomatic agility in this increasingly complex landscape.

India’s close defense and economic ties with Russia, amid the Russia-Ukraine conflict, could further strain relations with the U.S. In 2022, India avoided sanctions under the Countering America’s Adversaries Through Sanctions Act (CAATSA), 2017 after purchasing the S-400 missile system from Russia. However, this delicate balance could be tested further by the U.S. AI regulatory framework, potentially pressuring India to recalibrate ties with Russia.

India and Iran have recently discussed reviving trade ties, including infrastructure projects like the Chabahar Port and North-South Transport Corridor. Yet, the U.S. framework, barring Iran from importing GPUs, could complicate this relationship. India’s reliance on U.S. technology may limit its ability to deepen ties with Iran, adding complexity to its foreign policy.

Within BRICS, members like India, China, Russia, and Iran may explore alternative technological solutions to counter the framework’s impact. However, diverging national interests could challenge the group’s cohesiveness.

The Bottom Line

The future of this framework remains uncertain as it transitions from the outgoing Biden Administration to the incoming Trump Administration, each with divergent priorities and approaches toward regulating technological exports. This uncertainty exacerbates global insecurity. If implemented, the framework could establish a rigid technological hierarchy.

In an increasingly fragmented world, the US will leverage the potency of its technological might, especially AI, to drive hard bargains on geo-economic negotiations. The Magnificent Seven—the most consequential tech corporations of our times—is being deployed as an effective weapon in diplomacy. The American tech giants will rely on Trump 2.0 to navigate increasingly complex global regulatory and market access environments. As Foreign Minister S. Jaishankar might put it, it's time for the Indian way of dealmaking.