The Indian government could become a minority shareholder in AI startup Sarvam through its support under the IndiaAI Mission, according to an Economic Times report.

The report said the Centre may end up with a 1-2% stake in Sarvam as part of the startup’s ongoing $300 million funding round, which values the company at about $1.5 billion. Under the IndiaAI Mission, the government provided computing support to Sarvam and received compulsorily convertible debentures (CCDs) in return. The ongoing funding round is expected to convert these CCDs into equity.

Funding round and unicorn status: The development comes days after Sarvam announced the first close of its Series B round, raising $234 million and becoming one of India’s few AI unicorns. HCLTech led the round with a $150 million investment, while existing investors, including Khosla Ventures and Peak XV Partners, also participated. The company is yet to close the remaining portion of the round.

IndiaAI Mission support: Founded in 2023, Sarvam was selected by the government in 2025 to build a sovereign large language model under the IndiaAI Mission. The company received the largest compute subsidy under the program, Rs 98.68 crore against a total compute bill of Rs 246.71 crore, for access to 4,096 Nvidia H100 GPUs for six months.

The government-backed IndiaAI Mission has a five-year outlay of Rs 10,371.92 crore to support AI infrastructure, foundation models, startups, and research. However, the government had released only about Rs 400 crore under the mission by February 2026, according to data it presented in Parliament earlier this year.

Sovereign AI push: Sarvam’s latest funding round comes amid growing debate over India’s dependence on foreign AI models. Days before Sarvam announced the investment, the United States restricted foreign access to Anthropic’s advanced AI models, renewing discussions about India’s efforts to build domestic AI capabilities.

Questions around funding model: The proposed government stake also revives questions raised by some IndiaAI Mission participants earlier this year over the use of convertible equity instruments in exchange for compute support, with some arguing that grant-based funding would reduce ownership dilution for startups.

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