The Centre is considering an anchor investment of ₹15,000 Cr to ₹20,000 Cr in a proposed fund aimed at supporting frontier AI companies and expanding the country’s compute infrastructure.

The proposed National Frontier AI & Compute Fund (NFAICF) could provide long-term risk capital to AI companies and finance GPU clusters, specialised data centres, and other infrastructure required to develop and deploy advanced AI models, ET reported, citing sources.

The proposal is currently under consultation, and the fund’s final corpus, structure, governance framework, and the role of government capital are yet to be decided. It is also unclear whether the government would invest directly in companies and infrastructure projects or route the capital through an intermediary structure.

The government is considering a model under which it and private investors would contribute capital in a 50:50 ratio, the report said.

The proposed fund was discussed at a closed-door meeting on “Financing India’s Frontier AI & Compute Ecosystem” in Delhi yesterday. The meeting was attended by Sarvam cofounder Vivek Raghavan, Peak XV Partners MD Rajan Anandan, E2E Networks CEO Tarun Dua, MeitY secretary S Krishnan, and officials from the IndiaAI Mission.

The government sought views from VC firms, infrastructure providers, and other stakeholders on its role in attracting private capital to the frontier AI ecosystem. 

The NFAICF could be structured as a SEBI-regulated Category I AIF, with investment decisions taken by a committee comprising experts from the technology, investment, infrastructure, and finance sectors. The fund could invest through venture and growth equity, convertible instruments, infrastructure equity, fund-of-funds commitments, and direct co-investments, depending on the requirements of a company or infrastructure project.

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