India’s artificial intelligence strategy may soon extend beyond policy support into direct equity participation, with the Centre preparing to acquire a small stake in Bengaluru-based AI startup Sarvam.
The move is part of the government’s broader effort to accelerate domestic AI capabilities under the IndiaAI Mission and support homegrown innovation in critical technologies.
According to a report by The Economic Times, the government is expected to hold around 1-2% equity in Sarvam as part of the company’s ongoing $300 million funding round.
This round values the startup at approximately $1.5 billion. Importantly, the government’s stake is not being acquired through a traditional cash investment but is instead linked to infrastructure support provided under the IndiaAI Mission.
As part of this arrangement, Sarvam received subsidised access to high-performance computing resources, particularly GPU capacity, which is essential for training and deploying large-scale AI models.
In return, the government was issued compulsorily convertible debentures (CCDs), which are expected to convert into equity during the current fundraising cycle.
A government official quoted by The Economic Times explained that support provided under the IndiaAI Mission must be reflected in some form of value capture, even if it is not structured as a direct financial investment.
This mechanism ensures that public support for strategic technology development is partially recognised through equity participation.
Sarvam has already raised significant capital in the first tranche of its funding round, securing $234 million led by HCLTech, with participation from global investors including Bessemer Venture Partners, Khosla Ventures and Peak XV Partners.
The company is expected to complete the remaining portion of its fundraising in the coming months.
The startup is one of the select companies chosen under the IndiaAI Mission to develop indigenous foundation models tailored to India’s linguistic diversity and sector-specific requirements.
The programme aims to reduce reliance on foreign AI systems while strengthening domestic innovation capacity.
A key component of the initiative is access to subsidised computing infrastructure, with the government covering up to 40% of GPU costs for selected companies.
This support addresses one of the biggest bottlenecks in AI development: access to affordable and scalable compute power.
If the conversion of instruments into equity is completed, it would mark a significant shift in how governments engage with frontier technologies, moving from purely regulatory support to partial ownership in strategically important AI ventures.
