The US has announced the rescission of the AI Diffusion Framework, a stringent set of export controls on Artificial Intelligence (AI) technology, viewed as a national security imperative.

• India has welcomed the developments however the method may have changed, the strategic objectives of AI control and dominance remain intact.

About the AI Diffusion Framework

• It was introduced during the final phase of the Biden administration, the AI Diffusion Framework treated AI capabilities as a matter of national security.
• It aimed to preserve the U.S. AI leadership by limiting adversaries’ access and consolidating AI development among allies.
  • Prevent adversaries like China and Russia from accessing advanced AI chips and model weights.
  • Strengthen U.S. leadership by concentrating AI development within allied nations.
  • Treat AI on par with military-grade technologies like nuclear arms, focusing on compute power as the key to AI superiority.
• Under the framework the US government has proposed to create three tiers of countries with specific restrictions on the export of AI chips and GPUs for each.
• Countries were categorized into trusted allies, restricted partners, and embargoed adversaries, 
• India was in Tier 2 of the classification (restricted partners), certain restrictions were imposed for import of GPUs unless the computing power is hosted in trusted and secure environments.
• The framework was based on the logic that greater computational power (compute) translates to superior AI capability.

Criticism of the AI Diffusion Framework

1. Strategic Overreach: The framework attempted to internationalize U.S. export norms, leading to resistance even from allies.
   • It was seen as a technological diktat, undermining collaborative innovation.
   • Nvidia (AI GPU Manufacturer) criticised the framework as undermining innovation and  weakening America’s global competitiveness.
2. Civil-Military Misclassification: AI, unlike nuclear technology, is primarily a civilian-driven innovation with dual-use potential.
   • Treating it purely as a military asset was considered misplaced.
3. Counterproductive Innovation Pressure: Export controls encouraged indigenous innovation in adversary states.
   • Example: China’s DeepSeek R1 achieved near-parity with U.S. models using far less compute—illustrating the limits of hardware-based restrictions.
4. Loss of Trust and Technological Fragmentation: Allies viewed the framework as a signal of unreliability in tech cooperation.
   • It pushed countries to develop parallel AI ecosystems, undermining U.S. influence in the long run.

India’s Opportunities

• India was not favourably placed under the original framework, limiting access to high-end AI chips and partnerships.
• The rollback is a positive development, giving India more space to:
  • Strengthen its AI R&D ecosystem
  • Push for a balanced global AI governance model
  • Reduce dependence on imported AI infrastructure

However, the continued evolution of U.S. policy through chip-level controls, tracking features, and blacklisting of entities could still affect India’s technological ambitions.

Way Forward

A. Global Framework for AI Regulation

• Promote multilateral dialogue under institutions like the UN, OECD, or G20 for AI norms and export governance.
• Focus on: Transparency in AI systems
• Dual-use management without stifling innovation Establishing shared ethical principles (e.g., fairness, safety, accountability)
• Encourage technological cooperation, especially among Global South countries, to avoid a fragmented AI landscape.

B. Policy Perspective for India

• Invest in indigenous chip and compute infrastructure through missions like Digital India and IndiaAI.
• Develop a comprehensive AI policy framework that balances:
  • National security
  • Ethical concerns
  • Industrial growth
• Build strategic alliances with like-minded countries (eg. Japan, Australia, etc) to push for open and inclusive AI ecosystems. 
• Encourage public-private partnerships in foundational AI research and AI applications in sectors like agriculture, health, and governance.
• Ensure data protection, algorithmic transparency, and privacy safeguards in alignment with India’s democratic values.

Conclusion

The rescission of the AI Diffusion Framework reflects a shift in tactics but not in the strategic direction of the U.S. AI policy. India must seize this policy moment to assert its strategic autonomy, foster international cooperation, and lead the discourse on ethical and equitable AI development globally.

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