India Could Benefit from Stalled UAE Nvidia AI Chip Deal — Here’s Why

A multibillion‑dollar deal to ship Nvidia’s artificial intelligence (AI) chips to the United Arab Emirates showed no sign of progress nearly five months after its announcement, provoking frustration among Nvidia’s Jensen Huang and some senior administration officials, according to Mint. As the matter drags on, India may land in an unexpected position of advantage.

According to Reuters, The main cause of the delay is the US Commerce Department's requirement that the UAE complete promised investments in US businesses before approving chip exports.  Due to the UAE's close ties with China, national security concerns about potential technology diversion have also caused delays.

According to reports, watchdogs in US are concerned that chips destined for UAE-based AI firm G42 may wind up benefiting Chinese capabilities. The Commerce Department currently plans to block direct shipments to G42, though it retains the option to approve them in future rounds, reported Reuters.

The UAE had committed to investing in US infrastructure in exchange for up to hundreds of thousands of Nvidia chips annually, but those investments remain unfulfilled. According to a report published by Reuters on March 21, t he United Arab Emirates has committed to a 10-year, $1.4 trillion investment framework in the United States after top UAE officials met President Donald Trump during that week.

India’s Strategic Opportunity

The standoff gives Indian tech and semiconductor ambitions a breathing space. Citing  Mckinsey report, AIInvest portal reported that tariff and export restrictions are forcing companies to realign their sourcing strategies with some shifting to India and Vietnam to delegate work. India, which is already feeling the pinch from US tariff shocks, may now position itself as a more trusted alternative in the Indo-Pacific and Middle East technology supply chain.

India’s electronics sector is facing serious setback due to the imposition of steep US tariffs on Indian exports, which could cost the industry $20–30 billion, reported ET. Meanwhile, delays in AI chip shipments elsewhere may allow Indian semiconductor and AI firms a chance to expand regionally.

In addition, the US visa and export clampdowns are further pushing global tech investments toward India. Recent reporting shows US firms are actively shifting more critical work to India amid Donald Trump’s H-1B visa crackdown, reported Reuters.

Still, this is no guarantee of windfall. India faces its own supply chain hurdles, and catching up in the highly specialised AI chip domain will require years of investment, policy continuity, and industry partnerships. But in a world where advanced technology is becoming geopolitically locked, every delay is an opening — and India should be ready to step through.

However, every delay is an opportunity in a world where advanced technology is becoming geopolitically locked and India should be prepared to make the best of the moment.