India's Generative AI (GenAI) ecosystem is experiencing remarkable growth, with the number of startups increasing from over 66 in the first half of 2023 to more than 240 in the same period this year, marking a 3.6-fold rise, according to a recent report by Nasscom. This surge has propelled India to sixth place globally among major economies in terms of its share of GenAI startups.
Despite being in the early stages of development, GenAI startups have attracted over $750 million in total funding since 2023. Notably, 75 percent of these startups reported generating revenue in the first half of 2024, a significant increase from just 22 percent during the same period last year.
The past year has seen a transformative shift in India's GenAI landscape, characterized by a wave of innovative product launches that are redefining industry standards. The focus has increasingly shifted towards managed large-language models (LLMs) and data-driven services.
Sangeeta Gupta, SVP and Chief Strategy Officer at Nasscom, emphasized the importance of prioritizing funding for high-potential GenAI startups and attracting top-tier AI talent. “Through collaboration, we can unlock the full potential of GenAI and position India as a global leader in this technological revolution,” she said.
The report highlights that the growth of the GenAI sector is largely driven by the introduction of 17 native GenAI language models in India, a 4.6-fold increase in GenAI services, and a notable rise in startups offering GenAI assistants, which now account for nearly 80 percent of the new startups added over the past year.
Approximately 43 percent of GenAI startups are now adopting a hybrid approach that combines both closed and open-source models in their solutions. This flexibility has fostered growth across the three main segments of GenAI: infrastructure, applications, and services.
Around 70 percent of GenAI startups are also expanding their offerings to provide industry-specific solutions across various sectors, including IT and communications, retail, healthcare, banking, finance and insurance (BFSI), education, and media and entertainment.
Bengaluru continues to be the leading hub for GenAI startups in India, hosting 43 percent of all startups in this sector. Meanwhile, emerging hubs like Ahmedabad, Lucknow, Surat, and Kolkata are rapidly growing and now represent 18 percent of the overall ecosystem.
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