The Economic Survey observes that as global GPU demand soars, AI computing costs are growing

Rising GPU, Memory Chip Costs Pose Challenge to India’s AI Push: Economic Survey

The Economic Survey 2025–26, released on January 29, flagged rising costs and global supply constraints as key challenges to the expansion of India’s artificial intelligence (AI) infrastructure.

The Survey said surging global demand for graphics processing units (GPUs) and shortages of high-bandwidth memory (HBM) chips are driving up costs and limiting availability, creating headwinds for domestic AI and data centre expansion.

Highlighting supply-side risks, the document noted that even if sovereign funds or domestic financial institutions are willing to finance new data centres, projects could stall if critical hardware cannot be sourced from international markets. Strong foreign demand, it said, can effectively “choke” supplies available for Indian projects.

Given these constraints, the Survey argued that India’s AI strategy in the medium term will need to depend on diversified and resilient access to global compute resources, rather than relying solely on domestic infrastructure.

At the same time, it stressed the need to gradually build domestic capabilities under the India Semiconductor Mission, so that a larger share of advanced computing requirements can be met locally over the longer term.