Impact of Export Controls on AI Diffusion Under the Biden Administration
The Export Control Framework for Artificial Intelligence (AI) diffusion, introduced by the Biden administration, is expected to significantly affect global AI development and deployment. These restrictions extend beyond U.S.-based companies, influencing nations like India, which now faces licensing requirements for importing advanced AI chips.
Advanced AI Chip Control will be Tiered Access System (see image below )
- Closest US Allies and Partners (18countries):
- Unlimited chip access with robust export controls
- No restrictions for verified companies
- Other Countries (non-embargoed):
- New licensing pathways for chip production/development
- Low-volume exemption up to 1700 GPUs (~$40-50M)
- License review for larger orders up to $1B worth of chips
- Embargoed Countries : Restricted.
- Countries can move between tiers based on strategic relationships and export control commitments.
Data Center Validation Programs
- Universal Validated End User (UVEU):
- Available to US companies
- Single authorization for global data centers (except embargoed countries)
- Must follow standards like FedRAMP and NSA guidance
- Geographic requirements:
- Minimum 50% of chips in US
- Minimum 75% in US and close allies
- Maximum 7% in any single other country
- National Validated End User (NVEU):
- Available to companies outside US allies/partners
- Progressive chip allocation limits expected :
- 2025: <100,000 units of H-100-equivalent GPUs
- 2026: 270,000 units
- 2027: 320,000 units
Potential Challenges for India
India’s AI sector could face several hurdles due to these restrictions:
- Impediments to AI Development: Restricted access to advanced AI chips may slow innovation and development and SCALING UP of installations.
- Increased Procurement Costs: Licensing requirements could raise costs and introduce delays due to authorisations.
- Dependence on Global Companies: Indian companies may rely heavily on global corporations for AI infrastructure, such as data centers.
- Shortterm : impact is expected to be minimal.
Large-scale AI data centers, requiring several hundred thousand GPUs, may be delayed or scaled down, putting global companies at a competitive advantage over Indian enterprises. However, small-scale setups could still enable experimentation, innovation, and restricted model development.
Licensing and Authorization Outlook
India could potentially secure General National Validated End User (NVEU) authorizations due to its status as neither a re-exporter of Compute ICs nor an advanced compute manufacturing hub. This distinction, combined with the presence of significant Indian design centers for GPU makers like NVIDIA and AMD and their management commitment of support to India, could position India favorably for license approvals.
Expected NVEU Restrictions:
- 2025: <100,000 units of H-100-equivalent GPUs
- 2026: 270,000 units
- 2027: 320,000 units
The small qty of less than 1700 units of H-100 eq per company per year would have License exception.
Impact on Global AI Providers
U.S.-based providers like Amazon, Microsoft, Meta, etc are expected to receive global authorizations but will be limited to deploying only 50% of their AI computing power outside the U.S.
Implications for India’s AI Ambitions
India’s National AI Mission aims to develop infrastructure with over 10,000 GPUs through public-private partnerships, supported by a ₹10,000 crore investment over five years. In the short term, the new export controls may not significantly impact India. However, the uncertainty of securing licenses and trade negotiations could challenge India’s ambitions for large-scale AI hardware deployment.
Administrative Challenges
The licensing process entails stringent conditions for Validated End Users (VEUs), including:
- Continuous monitoring and due diligence
- Adherence to export restrictions and acceptable use policies
- Maintenance of records for ten years Failure to meet these conditions requires notification to the Bureau of Industry and Security (BIS).
New rules aim to streamline licensing for verified users while maintaining security
Looking Ahead
The export controls are set to take effect in 120 days, allowing the incoming administration under President-elect Trump to potentially amend these rules.Thus it is bit uncertain whether Mr. Trump administration will make it easy or pass the rule as is. Amid growing concerns from technology industries, the global AI landscape may witness a shift, impacting both U.S. technological leadership and India’s growth trajectory in AI infrastructure.Though , In short term India may not have major impact but in long run scaling up by any Indian conglomerate could face the hurdles of quantity cap.
Ashok Chandak
President : IESA India.
