Is India struggling in the Generative AI race?

According to McKinsey, generative AI could boost the world economy by $4.4 trillion annually.

A new wave of disruptive businesses in India are using cutting-edge technologies to make waves in various sectors. India invested $8 billion in Artificial Intelligence between 2013 and 2022, while the United States and Israel invested $249 billion and $11 billion, respectively, over the same time frame. As for Indian startups using generative AI, more than $475 million was invested in them between FY21 and FY23.

What the experts say

Even though this technology is still in its infancy, it has garnered interest from corporations, businesses, governments, and other startups. If they demonstrate a distinct value proposition, it will be more straightforward for later-stage startups to get money than early-stage ones. Between 2013 and 2022, $8 billion was invested in AI in India, whereas the US invested $249-plus billion and Israel invested $11 billion. Between FY21 and FY23, almost $475 million was invested in Indian firms working on generative artificial intelligence.

Experts agree on several points, with promoting AI and ML applications in education being a close second. Instead of relying solely on specialized programs, this can be accomplished through expanding access to AI and Machine Learning (ML) education in K-12 and higher education settings. Wadhwa suggests that professionals in ML hold workshops for students to facilitate the development of a competent labour force.

There is also consensus on India needing a more welcoming regulatory framework for AI and ML research and development. Businesses would have less uncertainty if the government worked on programs to raise awareness about ML.

Financial assistance for Generative AI

Investors' perceptions of the Indian Gen AI startups' potential to disrupt a vast array of industry verticals and business functions are directly correlated with the growth of funding for these companies. As investors recognize the ability of generative AI to improve productivity, efficiency, and customer experiences, in addition to allowing companies to create a profitable Gen AI business, they are investing in such startups.

In addition, the emergence of supportive ecosystems, such as incubators, accelerators, and venture capital firms, has been instrumental in fostering the growth of Gen AI enterprises. These organisations provide financial assistance, mentorship, guidance, and access to networks that can aid the success of enterprises. Corporate investors in this industry also bring significant benefits that entrepreneurs can use to accelerate their growth. As a result, many Gen AI entrepreneurs have a fertile environment to develop their concepts and acquire the necessary resources for success.

Generative AI race in India

In the high-stakes race for supremacy in the emerging field of generative AI, India, a thriving technological economy and one of the largest startup ecosystems in the world, is fighting an uphill battle to catch up with global leaders. There are no major Indian competitors to large language model titans like OpenAI's ChatGPT, Google Ventures-backed Anthropic, or Google Bard. However, India is home to over 1,500 AI-based firms that have earned over $4 billion in funding.

India, though, can benefit from this upheaval. Rapid growth in agriculture, which employs more than 40 per cent of the workforce, and the lack of a need for automation in manufacturing due to a cheap and plentiful labour force bode well for the services sector, ultimately increasing productivity. As a result, large Indian consultancies like Infosys and TCS have begun developing generative AI projects to address particular problems their clientele confront.

Meanwhile, a new breed of business owners is cashing in on consumers' fascination with generative AI.

To conclude

According to McKinsey, generative AI could boost the world economy by $4.4 trillion annually. According to the estimate, half of the world's jobs will be automated between 2030 and 2060, and startups will be crucial for this development. There are less than 20 pure-play generative AI businesses in India, out of only 259 generative AI startups worldwide.

But as investment for Indian startups shifts from generative applications to business infrastructure development, this will blow up in the next few months. As of May 2023, the Indian Generative AI sector comprised around 60 companies specialising in providing solutions and services to consumers across several industry verticals. However, some entrepreneurs have voiced concerns that investors need more conviction to back such expensive computing and other infrastructure expenses, making it unlikely that these AI businesses will focus on constructing their massive language models.