India’s GenAI ecosystem has witnessed growth, with the total number of GenAI start-ups surging 3.6 times from over 66 in the first half of CY2023 to over 240 in the first half of 2024. According to a nasscom report, this growth is fuelled by the launch of 17 native GenAI language models in India, a 4.6 times surge in GenAI services, and an increase in the number of start-ups offering GenAI assistants comprising nearly 80 per cent of newly added start-ups.
Since the second half of CY2023 in particular, homegrown GenAI start-ups such as Krutrim, Sarvam.ai, Nurix, ZekoAI, among others, spanning infrastructure, services, and applications, have emerged. India’s Generative AI Start-up Landscape 2024 report has insights from over 110 start-up interviews and research on over 240 active GenAI start-ups.
Despite an early-stage focus, India’s GenAI start-ups have attracted over $750 million in cumulative funding since 2023, with 75 per cent start-ups in H1 2024 now generating revenue, a significant jump from 22 per cent in H1 2023. Today, India ranks 6th globally in the share of GenAI start-up ecosystems globally.
43 per cent of these start-ups leverage a hybrid approach, combining both closed and open-source models for their solutions. This adaptability has helped growth across major segments of GenAI – infrastructure, applications, and services.
Productivity -enhancing applications
Productivity-enhancing applications, like coding companions and workflow augmentation tools, have gotten 2x more funding with 45 start-ups catering to this GenAI theme, up from 20 in H1 2023. GenAI assistants have grown 4x to over 130 start-ups, 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 start-ups.
Nearly 70 per cent of surveyed GenAI start-ups are expanding their offerings by delivering industry-specific solutions across sectors such as IT & communications, retail, healthcare, BFSI, education, and media & entertainment.
Geographically, Bengaluru remains the leading GenAI start-up hub in India, housing 43 per cent of all start-ups. Emerging hubs like Ahmedabad, Lucknow, Surat, and Kolkata represent 18 per cent of the ecosystem. The report stated there are no significant differences in business models or tech stack choices between start-ups in either regions, indicating a nationwide spread of innovation.
Sangeeta Gupta, Senior Vice President and Chief Strategy Officer, nasscom, said, “Over the past year, India’s GenAI 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 start-up 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 reservations due to regulatory and trust issues remains significant.