India’s generative AI (Gen AI) startup landscape has seen remarkable growth, with over 240 active startups reported in the first half of 2024. This surge represents a staggering increase of over 260 percent compared to the same period last year, when only 66 AI generation startups were operational. The findings come from a report by technology industry body NASSCOM, which positions India as the sixth largest market globally in terms of its Gen AI startup ecosystem.
The rapid expansion is attributed to the launch of key Gen AI players including Krutrim, Sarvam.ai, Nurix, and ZekoAI, among others. These startups, spanning various sectors from infrastructure to services and applications, emerged predominantly in the second half of 2023.
Key drivers of this growth include the introduction of 17 native Gen AI language models and a 4.6x increase in Gen AI services. Additionally, nearly 80 percent of startups created are focused on developing Gen AI assistants, indicating a strong trend in this area.
Despite being in the early stages of development, these startups have collectively raised more than $750 million in funding since 2023, with around 75 percent already generating revenue in the first half of 2024. The report highlights that apps aimed at improving productivity, such as coding companions and workflow tools, have seen their funding double, with 45 startups dedicated to this topic, up from 20 in the first half of 2023. In addition, the number of startups specialized in Gen AI assistants have quadrupled to over 130, and many of them have moved from traditional AI chatbots to advanced Gen AI assistants. AI-enabled virtual assistants.
In the services sector, three main concepts have emerged: Gen AI-as-a-Service, enterprise platforms and data as a service, although funding remains concentrated among a few leading startups.
Sangeeta Gupta, Senior Vice President and Chief Strategy Officer, NASSCOM, highlighted the transformative changes in India’s generative AI landscape over the past year. He noted that “innovative product launches are redefining industry standards and highlighting new areas of focus, such as managed large language models (LLM) and data-driven services.” Gupta emphasized the importance of collaboration to unlock the full potential of Generation AI, urging a collective effort to prioritize funding promising startups and attract top-tier AI talent.
Despite this optimistic outlook, the report also identified several growth challenges for the ecosystem. Major obstacles include lack of patient capital, limited computing capacity impacting scalability, customer hesitancy, and a shortage of trained AI professionals. While concerns about high-quality training data and responsible AI practices have diminished since 2023, issues related to regulatory trust remain prominent.
To further accelerate growth, NASSCOM recommends that startups actively engage in experimentation and co-innovation with industry partners, as well as establish early partnerships during the MVP stage. This approach could provide access to expert AI talent and create internship opportunities for recent graduates.
Disclaimer:
The information contained in this post is for general information purposes only. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the post for any purpose.
We respect the intellectual property rights of content creators. If you are the owner of any material featured on our website and have concerns about its use, please contact us. We are committed to addressing any copyright issues promptly and will remove any material within 2 days of receiving a request from the rightful owner.