DeepSeek is a lesson for India too
The Space Race of the 1960s spawned a popular myth: NASA spent millions developing zero-gravity pens while the Soviet Union simply used pencils. Though untrue (both used American-made pens), this tale perfectly captured how resource constraints can spark innovative solutions. Today, a similar David-versus-Goliath story is unfolding in the global AI race.
DeepSeek, a little-known Chinese company from Hangzhou, has disrupted the AI landscape dominated by tech giants. In December, it released its traditional V3 large language model, followed by the R1 reasoning model in January. These models achieved performance levels comparable to those from OpenAI, Anthropic, and Google—but at a fraction of the cost.
What is remarkable here is how DeepSeek's engineers optimised their limited resources. They developed innovative software to train their models instead of copying expensive ways adopted by Western companies, and faced with US restrictions on advanced Nvidia AI chips, they maximised efficiency with available hardware. More significantly, they made their open-source models accessible to anyone with a computer and internet connection, without asking for subscription fees like others.
This breakthrough rattled US markets as investors who were backing big spenders like OpenAI, Google and Meta and high end chip maker Nvidia – counting on their unrestrained growth – suddenly saw red flags ahead. This naturally put DeepSeek under the global spotlight and many analysts raised concerns about their censorship and data handling.
Such criticism, however, overlooks the reality that as a Chinese company, DeepSeek must operate within its national legal framework – much as US companies comply with their own government's requirements and requests. (Remember Edward Snowden's revelations?)
New Leader
Normalcy now has returned to the market and the tech giants have doubled down on their stance that AI is an expensive business and are seeking billions more from investors. But in a note, Goldman Sachs says the new development could reshape competition between established tech giants and startups by lowering barriers to entry.
DeepSeek's emergence itself was unexpected. Founded just in 2023, it wasn't considered a serious competitor to established Chinese tech giants like Alibaba, Baidu, and Tencent. Its founder, Liang Wenfeng, a 40-year-old hedge fund manager, maintained such a low profile that his appearance at a government meeting with Premier Li Qiang in February sparked great curiosity in the domestic media, with one reporter saying he resembled more a student representative than a tech mogul.
As DeepSeek's impact reverberated through global tech markets, Liang's status rose dramatically. His village celebrated his return for the Lunar New Year, with his modest house becoming a popular selfie spot. This folk hero represents a different breed of AI researcher – one driven by technological advancement rather than profit. His company prioritises research and innovation over business opportunities, with the ambitious goal of achieving human-level artificial general intelligence.
Liang's recruitment strategy focused on passionate young AI enthusiasts, regardless of their academic qualifications. “The biggest draw for top talent is definitely to solve the world's toughest challenges,” he explained and later said China must gain global AI leadership through innovation: “What we see is that Chinese AI can't be in the position of following forever. We often say that there is a gap of one or two years between Chinese AI and the United States, but the real gap is the difference between originality and imitation.”
Lesson for India
By making their products available to users without burning a hole in their pocket, DeepSeek has already shown the way. It has become the most downloaded app in 140 countries and India heads the list, accounting for 15.6 per cent of all downloads since January.
This widespread adoption contrasts sharply with the approach of most Indian tech giants, who have hesitated to invest in domestic LLM development. When Sam Altman visited in 2024, he dismissed such attempts, suggesting that $100 million investments wouldn't suffice as OpenAI was spending that much annually.
While most Indian IT leaders accepted this narrative, DeepSeek's success challenges these assumptions, proving that smaller teams with modest resources can develop competitive AI models. Though DeepSeek's models may not match the sophistication of well-funded competitors like OpenAI and Google, they embody Silicon Valley's original ethos: passion-driven innovation to disrupt the status quo.
This startup spirit has often seemed lost as tech companies grew larger and more profit-focused. ChatGPT's arrival through the not-for-profit OpenAI that stood for open source community briefly rekindled this excitement as it challenged entrenched firms like Google, but the company's subsequent transformation highlighted how quickly commercial interests can reshape priorities. Sam Altman’s company still retains the word “open” in its name, but not sure it is there in spirit.
As Nvidia senior research manager Jim Fan put it on X: “We are living in a timeline where a non-US company is keeping the original mission of OpenAI alive — truly open, frontier research that empowers all.”
For Indian startups facing daunting financial and technological barriers, DeepSeek offers a powerful lesson: lamenting about what is not available is easy, but trying to get around it with what is available is the trick. Their story proves that innovation doesn't always require massive resources—sometimes, it just needs determination and ingenuity.