With over 240 Gen AI (generative AI) startups in India as of the first half of calendar year 2024, the country now ranks 6th globally in its share of Gen AI startup ecosystems, said a report by tech industry body nasscom.
The number of Gen AI startups grew by over 260 percent or 3.6X as of H1CY24 as compared to H1CY23, when there were only 66 Gen AI startups. This was driven by several key Gen AI startups including Krutrim, Sarvam.ai, Nurix, ZekoAI, among others, spanning infrastructure, services, and applications getting launched in the second half of 2023.
“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,” India's Generative AI Startup Landscape 2024 report said.
Despite being at early-stages, these startups have gathered more than $750 million in cumulative funding since 2023. According to the report, almost 75 percent of these startups have already started generating revenue as well in H1CY24.
Further, 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.
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,” she added.
Challenges in the ecosystem
The report also highlighted the key growth bottlenecks faced by the ecosystem. These include 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,” the report said.
To accelerate growth of the ecosystem, nasscom suggested that the 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.”
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
