India Ranks 6th Globally in GenAI Startup Share Among Major Economies

India's Generative AI (GenAI) ecosystem saw the total number of startups jump 3.6 times, from more than 66 in the first half of 2023 to more than 240 in the first half this year, a Nasscom report released on Wednesday said. According to the report, India now ranks sixth in the world in the share of GenAI startup ecosystems among major economies. Despite being an early-stage focus, GenAI startups attracted over $750 million in cumulative funding since 2023. Of the GenAI startups studied between January and June 2024, 75 percent are already generating revenue as compared to 22 percent for H1 2023.

India's GenAI landscape has experienced seismic shifts over the past year, with an avalanche of product innovations redefining industry standards and creating new focus areas, including managed LLMs and data-driven services.

We need to focus on high potential GenAI startups and attract the best AI talent for them to grow. This will help nurture and unlock GenAI's actual potential that will make India strongly position itself globally in this new wave of technology revolution, said Sangeeta Gupta, SVP and Chief Strategy Officer, Nasscom.

The report explains that growth is primarily driven by the launch of 17 native GenAI language models in India, a 4.6 times surge in GenAI services, and a remarkably increasing number of startups offering GenAI assistants, which make up around 80 per cent of newly added startups over the course of the year.

Nearly 43 per cent of GenAI startups today utilize a combination of closed and open-source models to offer their solutions. This flexibility has ushered in growth across the three big areas of GenAI - infrastructure, applications, and services.

Seventy percent of GenAI startups are expanding out with industry-specific solutions in all sectors, from IT and communications to retail, healthcare, BFSI, education, and media and entertainment.

Bengaluru, however, remains the leader in GenAI startups in India, accounting for 43 per cent of the overall startup companies, followed by emerging hubs like Ahmedabad, Lucknow, Surat and Kolkata, which now represent 18 per cent according to the report.