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Govt’s frontier AI push; Insurance stock rout continues
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The government is weighing an anchor investment for a frontier AI development fund. This and more in today’s ETtech Top 5.
Also in the letter:
■ Tata Electronics top deck shuffle
■ ETSA 2026: Progcap’s next big bet
■ Anthropic-Akamai deal
The government is exploring an anchor investment of Rs 15,000-20,000 crore for a proposed National Frontier AI & Compute Fund (NFAICF) under the IndiaAI Mission, people in the know told us.
Driving the news: The fund aims to provide long-term risk capital to India’s frontier AI companies and finance GPU clusters, specialised data centres, and other AI infrastructure, sources said. Its final size, structure, governance, and the exact role of government capital is still being deliberated, they added.
Why now: Frontier AI development is becoming prohibitively expensive. A study by Epoch AI estimates training large models could cost over $1 billion per run (a complete training cycle) by 2027, way beyond the capacity of Indian venture capital and grant-based funding. This vehicle is expected to help attract private capital into frontier AI.
Yes, and: While the IndiaAI Mission offers subsidised compute and support for indigenous foundation models through its Rs 10,372-crore outlay, there is no dedicated domestic equity vehicle for frontier AI.
The proposed fund was discussed at a closed-door meeting in Delhi on Thursday, where several AI startups and ecosystem stakeholders were in attendance. This includes Sarvam AI cofounder Vivek Raghavan, Peak XV managing director Rajan Anandan, E2E Networks chief executive Tarun Dua, and MeitY (Ministry of Electronics and Information Technology) secretary S Krishnan.
How will it work: The fund is likely to be structured as a Sebi-registered Category I Alternative Investment Fund, with investment decisions made by an expert committee.
Insurance stocks remained under pressure for a second straight session on Friday after IRDAI (Insurance Regulatory and Development Authority of India) proposed bringing back product-level commission caps, more than three years after shifting to the Expenses of Management (EoM) framework.
Two-day rout: PB Fintech has lost 38.7% over the past two sessions, while Turtlemint is down about 36%. Both stocks saw sharp declines on Thursday and extended losses on Friday.
Earnings pressure: The proposed caps could squeeze earnings for insurance distributors such as PB Fintech, Turtlemint, and InsuranceDekho, which sell policies from multiple insurers. Brokerage firm Jefferies estimates that a 10% reduction in new-business commission rates could translate into a 10-12% decline in earnings for distributors such as PB Fintech and Turtlemint.
Banks, NBFCs: The impact could extend to bancassurance businesses. Macquarie said Axis Bank and HDFC Bank could see a larger impact from the proposed changes than ICICI Bank and Kotak Mahindra Bank because insurance fee income contributes more to their revenue and profit.
Diversification: The proposed framework could also allow distributors to sell non-insurance financial products, potentially giving companies such as PB Fintech, Turtlemint, and InsuranceDekho additional avenues to diversify revenues.
Industryspeak: PB Fintech said the proposed changes to insurance distribution economics could make it harder to justify remaining solely a distributor. Cofounder and group chairman Yashish Dahiya said in an analyst call, “I never wanted to be in manufacturing (creating / underwriting policies), but I think now this has almost forced us to.” Dahiya termed the proposals “quite extreme”.
After a flurry of senior-level exits, Tata Electronics has roped in two senior semiconductor veterans, Fiachra Mullett of Intel Ireland and Terry Behrens of AM Technical Solutions, sources said.
Driving the news: Mullett has been brought in as a replacement for Gerald Goff, a US-based, advanced technology facilities design consultant, who was appointed to handle construction of the 91,000 crore chip fabrication project in Gujarat. He resigned in six months.
Behrens, an engineering professional with over 40 years of experience in high-tech industries, will oversee design.
Top deck exits: The company has seen several high-profile exits on the construction side.
But why: Experts said the exits are typically due to pressures stemming from fast-tracked global semiconductor timelines, the capex meter running, and local execution challenges, as well as misalignment of operating cultures.
Supply-chain financing startup Progcap has identified its next growth bet. CEO Pallavi Shrivastava, who won the Woman Ahead prize at the ET Startup Awards 2026, said the company is adding payments to ProgComm, its commerce platform for brands, distributors, and retailers.
How it will work: Under ProgComm, businesses will be able to pay suppliers from the same platform where they place orders and manage invoices, and each payment will be added to their transaction history. This also gives Progcap richer data to assess working-capital needs.
Shared honour: Shrivastava shared the award with demi-fine jewellery startup Palmonas founder Pallavi Mohadikar. Atlan founder Prukalpa Sankar (2025), Kinara Capital founder Hardika Shah (2024), and Rashi Narang of Heads Up For Tails (2023) are among other recent winners in the Woman Ahead category.
About Progcap: Founded in 2017, Progcap began by sourcing loans for banks and NBFCs, then started balance-sheet lending via its NBFC, Progfin, in 2022. It has raised about $111 million from investors including Peak XV, Tiger Global, Creation Investments, and Google, with a 2022 round valuing it near $600 million.
Anthropic has entered into a $11.6 billion cloud services agreement with Akamai Technologies to secure additional computing capacity for its expanding AI workloads.
Deal details:
Market reacts: Following the announcement, Akamai’s shares rose 15% in extended trading on Thursday. This deal adds to the over $2.8 billion multi-year cloud infrastructure commitments Akamai had announced earlier in 2026.
Also in the letter:
■ Tata Electronics top deck shuffle
■ ETSA 2026: Progcap’s next big bet
■ Anthropic-Akamai deal
Govt mulls Rs 20,000 crore fund to power frontier AI
The government is exploring an anchor investment of Rs 15,000-20,000 crore for a proposed National Frontier AI & Compute Fund (NFAICF) under the IndiaAI Mission, people in the know told us.
Driving the news: The fund aims to provide long-term risk capital to India’s frontier AI companies and finance GPU clusters, specialised data centres, and other AI infrastructure, sources said. Its final size, structure, governance, and the exact role of government capital is still being deliberated, they added.
Why now: Frontier AI development is becoming prohibitively expensive. A study by Epoch AI estimates training large models could cost over $1 billion per run (a complete training cycle) by 2027, way beyond the capacity of Indian venture capital and grant-based funding. This vehicle is expected to help attract private capital into frontier AI.
Yes, and: While the IndiaAI Mission offers subsidised compute and support for indigenous foundation models through its Rs 10,372-crore outlay, there is no dedicated domestic equity vehicle for frontier AI.
The proposed fund was discussed at a closed-door meeting in Delhi on Thursday, where several AI startups and ecosystem stakeholders were in attendance. This includes Sarvam AI cofounder Vivek Raghavan, Peak XV managing director Rajan Anandan, E2E Networks chief executive Tarun Dua, and MeitY (Ministry of Electronics and Information Technology) secretary S Krishnan.
How will it work: The fund is likely to be structured as a Sebi-registered Category I Alternative Investment Fund, with investment decisions made by an expert committee.
Insurance commission overhaul keeps stocks under pressure
Insurance stocks remained under pressure for a second straight session on Friday after IRDAI (Insurance Regulatory and Development Authority of India) proposed bringing back product-level commission caps, more than three years after shifting to the Expenses of Management (EoM) framework.
Two-day rout: PB Fintech has lost 38.7% over the past two sessions, while Turtlemint is down about 36%. Both stocks saw sharp declines on Thursday and extended losses on Friday.
Earnings pressure: The proposed caps could squeeze earnings for insurance distributors such as PB Fintech, Turtlemint, and InsuranceDekho, which sell policies from multiple insurers. Brokerage firm Jefferies estimates that a 10% reduction in new-business commission rates could translate into a 10-12% decline in earnings for distributors such as PB Fintech and Turtlemint.
Banks, NBFCs: The impact could extend to bancassurance businesses. Macquarie said Axis Bank and HDFC Bank could see a larger impact from the proposed changes than ICICI Bank and Kotak Mahindra Bank because insurance fee income contributes more to their revenue and profit.
Diversification: The proposed framework could also allow distributors to sell non-insurance financial products, potentially giving companies such as PB Fintech, Turtlemint, and InsuranceDekho additional avenues to diversify revenues.
Industryspeak: PB Fintech said the proposed changes to insurance distribution economics could make it harder to justify remaining solely a distributor. Cofounder and group chairman Yashish Dahiya said in an analyst call, “I never wanted to be in manufacturing (creating / underwriting policies), but I think now this has almost forced us to.” Dahiya termed the proposals “quite extreme”.
Tata Electronics hires two semicon veterans following senior-level exits
After a flurry of senior-level exits, Tata Electronics has roped in two senior semiconductor veterans, Fiachra Mullett of Intel Ireland and Terry Behrens of AM Technical Solutions, sources said.
Driving the news: Mullett has been brought in as a replacement for Gerald Goff, a US-based, advanced technology facilities design consultant, who was appointed to handle construction of the 91,000 crore chip fabrication project in Gujarat. He resigned in six months.
Behrens, an engineering professional with over 40 years of experience in high-tech industries, will oversee design.
Top deck exits: The company has seen several high-profile exits on the construction side.
- Former Global Foundries executive KC Ang stepped down in December 2025 as president and head of Tata Semiconductor Manufacturing after less than a year in the role.
- Intel Israel's Reda Masarwa, former senior vice president, construction and facility, at Tata Electronics, exited after a little over a year and a half.
But why: Experts said the exits are typically due to pressures stemming from fast-tracked global semiconductor timelines, the capex meter running, and local execution challenges, as well as misalignment of operating cultures.
ET Startup Awards 2026: Pallavi Shrivastava’s Progcap is powering a million kiranas
Supply-chain financing startup Progcap has identified its next growth bet. CEO Pallavi Shrivastava, who won the Woman Ahead prize at the ET Startup Awards 2026, said the company is adding payments to ProgComm, its commerce platform for brands, distributors, and retailers.
How it will work: Under ProgComm, businesses will be able to pay suppliers from the same platform where they place orders and manage invoices, and each payment will be added to their transaction history. This also gives Progcap richer data to assess working-capital needs.
Shared honour: Shrivastava shared the award with demi-fine jewellery startup Palmonas founder Pallavi Mohadikar. Atlan founder Prukalpa Sankar (2025), Kinara Capital founder Hardika Shah (2024), and Rashi Narang of Heads Up For Tails (2023) are among other recent winners in the Woman Ahead category.
About Progcap: Founded in 2017, Progcap began by sourcing loans for banks and NBFCs, then started balance-sheet lending via its NBFC, Progfin, in 2022. It has raised about $111 million from investors including Peak XV, Tiger Global, Creation Investments, and Google, with a 2022 round valuing it near $600 million.
Akamai, Anthropic sign $11.6 billion cloud services deal
Anthropic has entered into a $11.6 billion cloud services agreement with Akamai Technologies to secure additional computing capacity for its expanding AI workloads.
Deal details:
- The seven-year contract includes provisions for a potential $9 billion expansion. This could bring the total commitment to approximately $20 billion.
- As part of the deal, Akamai has issued Anthropic a warrant that could grant the AI lab up to 5% of Akamai’s outstanding common stock.
- About 2% of this equity stake is expected to vest under the initial $11.6 billion commitment.
Market reacts: Following the announcement, Akamai’s shares rose 15% in extended trading on Thursday. This deal adds to the over $2.8 billion multi-year cloud infrastructure commitments Akamai had announced earlier in 2026.
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