India’s Generative AI (GenAI) startup ecosystem has seen significant evolution in the past 18 months, marked by a surge of innovative product launches that are redefining the industry landscape. Since the second half of 2023 in particular, a diverse array of homegrown GenAI startups,such as Krutrim, Sarvam.ai, Nurix, ZekoAI, among others, spanning infrastructure, services, and applications, has emerged. To capture this rapidly shifting landscape, nasscom has unveiled the India’s Generative AI Startup Landscape 2024 report. This comprehensive analysis, based on insights from over 110 startup interviews and research on more than 240 active GenAI startups, explores the sector’s key growth drivers, funding trends, emerging themes, and strategic partnerships shaping the future of this dynamic industry.
India’s GenAI ecosystem has witnessed strong, broad-based growth, with the total number of GenAI startups surging 3.6 times, from over 66 in the first half of CY2023 to more than 240 by the first half of 2024. This growth is majorly fueled by the launch of 17 native GenAI language models in India, a 4.6X surge in GenAI services , and a significant increase in the number of startups offering GenAI assistants comprising nearly 80% of newly added startups over the year. Despite an early-stage focus, India’s GenAI startups have attracted over $750 million in cumulative funding since 2023, with 75% startups in H1 CY2024 now generating revenue, a significant jump from 22% in H1 CY2023. Today, India ranks 6th globally in the share of GenAI startup ecosystems among major economies.
Indian GenAI startups are also demonstrating quick adaptability in their technology choices and market focus. 43% of GenAI start-ups now leverage a hybrid approach, combining both closed and open-source models for their solutions. This adaptability has helped growth across all three major segments of GenAI – infrastructure, applications, and services. Productivity-enhancing applications, such as coding companions and workflow augmentation tools, have gotten 2x more funding with 45 startups catering to this GenAI theme, up from 20 in H1 CY2023. GenAI assistants have grown 4x to over 130 startups, many of which have pivoted from traditional AI-based chatbots to GenAI-enabled conversational bots or virtual assistants. In the services segment, three key concepts have emerged: GenAI-as-a-service, enterprise platforms, and data-as-a-service, though funding remains concentrated to 2-3 startups.
Nearly 70% of surveyed GenAI startups are expanding their offerings by delivering industry-specific solutions across sectors such as IT & communications, retail, healthcare, BFSI, education, and media & entertainment. Geographically, while Bengaluru remains the leading GenAI startup hub in India, housing 43% of all startups, emerging hubs like Ahmedabad, Lucknow, Surat, and Kolkata are growing quickly, now representing 18% of the ecosystem. Notably, there are no significant differences in business models or tech stack choices between startups in established hubs and those in these emerging regions, indicating a nationwide spread of innovation.
Speaking on the potential of India’s burgeoning GenAI startup landscape, Sangeeta Gupta, Senior Vice President and Chief Strategy Officer, nasscom, said, “Over the past 12 months, India’s Generative AI landscape has undergone a seismic transformation, with a wave of innovative product launches redefining industry standards and highlighting new focus areas such as managed LLMs and data-driven services. Achieving this progress requires a collective effort centered on rapid co-innovation within a nurturing ecosystem. We must prioritize funding for high-potential GenAI startups and focus on attracting and developing top-tier AI talent. Equally crucial is building trust in AI systems by implementing strong responsible AI frameworks. Through collaboration, we can unlock the full potential of GenAI and position India as a global leader in this technological revolution.”
While the GenAI startup landscape is growing, it faces significant challenges, including lack of patient capital, limited compute capacity hurting scalability of enterprise GenAI beyond PoCs, customer hesitation, and a shortage of skilled AI talent. While concerns around high-quality training data and responsible AI have diminished compared to 2023, client reticence due to regulatory and trust issues remains significant.
To position India as a global GenAI leader, the ecosystem must foster rapid co-innovation. Startups should aggressively experiment, co-innovate with industry partners, and establish early partnerships with industry, almost at the stage of MVP, to get access to deployed expert AI talent, and academia for internship-led access to fresh graduates. Investors should target whitespace opportunities with global potential, ensure compliance with responsible AI and local data laws, and diversify with high-risk, high-reward models. The industry must collaborate to drive GenAI market awareness, promote responsible AI, and the government should prioritize on making IndiaAI mission a time-bound success, by investing in the India AI stack, bringing AI expert talent into India and strengthening the country’s native talent pipeline.
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