India accounts for just 3 per cent of early-stage AI (Artificial Intelligence) infrastructure and foundational start-ups, a recent report finds.
However, the report, published by Sense AI Annual Ventures, a leading AI investment fund, also paints an optimistic picture, stating that AI application-focused start-ups captured a significant 65 per cent market share in India.
“India has a large pool of software developers with AI knowledge. Instead of building infrastructure, they rely on global providers like Google, Microsoft, and AWS, which offer free cloud access to startups in their early years,” said Rahul Agarwalla, Founding Partner, SenseAI Ventures, according to Outlook Business.
According to the report, AI tooling accounts for 22 per cent of start-ups.
The report was made with a sample of 849 companies from across India that were analysed last year. Interestingly, Bengaluru emerged as India's AI hub, accounting for more than 40 per cent of the USD 1.35 billion in funding obtained by AI start-ups in 2024. Delhi NCR (National Capital Region) was placed second, followed by Mumbai in third.
Furthermore, firms focused on the research, deployment, and usage of artificial intelligence technologies around the world, such as OpenAI, Anthropic, and Midjourney, will invest around USD 13.8 billion in AI in 2024. This represents a six-fold increase from 2023.
The report also mentions China’s DeepSeek, and the low cost it was built for in comparison to other AI models. It predicts that the cost of AI will be cheaper with time as technology becomes less expensive.
“The number of start-ups attempting to build LLMs in India is growing, especially after DeepSeek's success. The recognition that building an LLM doesn’t require a billion dollars has fueled this. Instead, startups can do it with much less capital, like around $6 million. The number of companies in this space is expected to rise, potentially reaching 20, 30, or even 40 by the end of the year,” said Agarwalla.
