As the global AI race heats up, Indian startups have been quick to experiment with new models, seeking cost-effective and efficient solutions. When DeepSeek entered the market as a viable alternative to OpenAI, several Indian startups began integrating it into their products. But the momentum was short-lived—OpenAI swiftly responded with the release of o3-mini, its most cost-efficient reasoning model to date, shifting the tide back in its favor.
Why Indian Startups Turned to DeepSeek
India’s startup ecosystem has always been pragmatic, balancing performance with cost-effectiveness. DeepSeek, a Chinese AI model, emerged as an attractive alternative due to its affordability and competitive reasoning capabilities. For startups operating on thin margins, switching from OpenAI to DeepSeek was a logical move.
DeepSeek’s ease of integration played a crucial role in its adoption. "It took us minutes to switch," said Hemanth Mandapati, CEO of German startup Novo AI, at the GoWest conference in Sweden. Indian startups, known for their agility, followed a similar pattern, rapidly testing DeepSeek in their applications.
OpenAI’s Countermove: o3-mini
Just as DeepSeek started gaining traction, OpenAI released o3-mini, an optimized and cost-effective reasoning model. This new offering undercut DeepSeek’s pricing advantage while maintaining OpenAI’s superior ecosystem, APIs, and developer support. The result? Some startups that had switched to DeepSeek quickly reverted to OpenAI.
For many Indian founders, the decision boiled down to long-term reliability. While DeepSeek offered immediate cost savings, OpenAI’s ecosystem—including its fine-tuned models, integrations, and extensive documentation—remained unmatched. With o3-mini providing similar affordability, the incentive to move away from OpenAI weakened.
The AI Model Tug-of-War in India
The brief DeepSeek experiment highlighted a crucial trend: Indian startups are eager to explore alternatives but remain loyal to platforms that offer long-term value. While DeepSeek’s presence put pressure on OpenAI to introduce a cost-effective option, OpenAI’s swift response reinforced its dominance.
That said, DeepSeek’s arrival is a reminder that competition in the AI space is intensifying. The battle between OpenAI, DeepSeek, and other emerging models will continue, and Indian startups will keep adapting—always prioritizing what delivers the best mix of cost, efficiency, and scalability.
For now, OpenAI has regained the upper hand, but the AI landscape remains fluid. The next disruptive model could emerge anytime, and Indian startups will be the first to test its potential.