As Anthropic suspends access to new models, India debates its AI future

Anthropic abruptly halted access to its latest AI models, Fable 5 and Mythos 5, after receiving a U.S. government directive restricting foreign nationals—including its own non-U.S. staff—from using them. The decision came just days after the company announced a partnership with Tata Consultancy Services (TCS) to expand enterprise AI adoption in India, highlighting the country’s growing dependence on U.S.-developed AI systems. The suspension stems from alleged security concerns first reported to the U.S. government by Amazon CEO Andy Jassy, though Anthropic disputes the government’s justification. Reports suggest the White House is unlikely to impose similar restrictions on other AI firms, instead criticizing Anthropic’s handling of potential model vulnerabilities. The episode has exposed vulnerabilities in India’s AI strategy, where frontier models like Anthropic’s and OpenAI’s dominate as the second-largest market globally after the U.S. India’s tech sector now faces pressure to diversify its AI dependencies, with discussions centering on accelerating domestic AI capabilities or investing in open-source alternatives. The move underscores geopolitical risks, as access to critical AI systems can be influenced by external policies beyond India’s control. Anthropic and OpenAI have already expanded operations in India, setting up offices, hiring locally, and forming partnerships with firms like Infosys to drive adoption. For Indian founders, investors, and policymakers, the suspension serves as a wake-up call about over-reliance on a handful of foreign AI providers. While some argue for deeper local innovation, others acknowledge the challenges of competing with established U.S. players. The incident has reignited debates over whether India can afford to remain dependent on external AI governance decisions.