The number of Generative AI (GenAI) startups in India surged 3.6 times, growing from over 66 in the first half of 2023 to more than 240 by the same period in 2024, according to a NASSCOM report.
This rapid growth has been driven by the launch of 17 native GenAI language models and a significant rise in startups offering GenAI assistants, which now account for nearly 80% of newly added startups over the past year.
The report, titled “India’s Generative AI Startup Landscape 2024,” is based on insights from over 110 startup interviews and research on more than 240 active GenAI startups.
Sangeeta Gupta, senior vice president and chief strategy officer at 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.”
Although still in its early stages, India’s GenAI startups have attracted over $750 million in cumulative funding since 2023, the report stated. Notably, 75% of startups in the first half of 2024 are now generating revenue, a significant increase from 22% in the year-ago period.
Around 43% of these startups have adopted a hybrid approach, blending both closed and open-source models. This flexibility has driven growth across three primary GenAI segments: infrastructure, applications, and services.
Productivity-enhancing applications, such as coding companions and workflow augmentation tools, have seen a doubling in funding, with 45 startups now focusing on this GenAI theme—up from 20 in the first half of 2023. Moreover, the number of GenAI assistants has expanded fourfold to over 130 startups, with many transitioning from traditional AI chatbots to GenAI-powered 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 most funding is concentrated in just a few startups. Nearly 70% of surveyed GenAI startups are expanding their offerings to deliver industry-specific solutions across sectors such as IT & communications, retail, healthcare, BFSI (Banking, Financial Services, and Insurance), education, and media & entertainment.
Bengaluru remains the leading hub for GenAI startups, hosting 43% of all such startups in India. However, other cities like Ahmedabad, Lucknow, Surat, and Kolkata are gaining momentum, now accounting for 18% of the ecosystem.
Despite these advancements, India’s GenAI startup landscape faces several challenges. Key obstacles include a lack of patient capital, limited compute capacity that affects the scalability of enterprise GenAI beyond proof-of-concept (PoC) stages, customer hesitancy, and a shortage of skilled AI talent.
