Indian startups are rebuilding their products on Chinese foundations. Qwen , DeepSeek and Kimi allowed significant cost savings, run almost as well as the American frontier, and lag it by about six months. Nikkei Asia reported in July 2026 that Indian companies are increasingly switching to Chinese large language models (LLMs) to contain Artificial Intelligence (AI) costs, with one venture investor noting that startups are cutting costs by an order of magnitude.
This open-weight generosity is neither charity nor a workaround for chip controls. It is a strategy supported by different independent logics that make it durable. But durable is not permanent. The fourth is capital. Financial repression traps Chinese household savings in state banks, which lend cheaply to strategic sectors. The result is the same state subsidisation and overcapacity that flattened global solar and electric vehicle markets.
The assessment by these writers is that China will begin graduating access to its frontier open-weight models around late 2028. In AI, this dynamic has led to 820 LLMs registered with China’s cyberspace authority by early 2026.
What India should do about it
The first is consolidation. The irony is that U.S. export controls, by raising costs for Chinese labs through chip export controls, are accelerating the very consolidation that makes Chinese restriction feasible. India should leverage the open ecosystem while pricing in the switching costs. Government departments and regulated sectors should be built on model-agnostic architectures such as abstraction layers and harnesses that work across stacks. Instead of offering compute subsidies on GPU slices, the Ministry of Electronics and Information Technology (MeitY) should consider using an OpenRouter equivalent for the public sector. Focus on areas where India can actually win such as applications, industrial and language data, edge inference silicon design, and domain-specific fine-tuning. This is atmashakti (self-strength through increasing capabilities in a few selective segments), rather than full self-sufficiency, which India cannot afford and does not need.
Beijing can coordinate five firms; it cannot coordinate 800.
Xinhua has already announced the shift from the “Hundred Model War” to the “Top Five Basic Models.
