India’s GenAI startups surge but face funding, talent gaps: Nasscom
UTTAR PRADESH, INDIA — India’s Generative AI (GenAI) startup ecosystem has expanded rapidly, with the number of firms growing 3.7 times to over 890 in the past year.
However, the National Association of Software and Services Companies (Nasscom) reports there is still a challenge of funding, with investments touching a paltry figure of $990 million, against the total amount of $54 billion raised in other parts of the world, with start-ups facing late-stage investing, computing access, and talent scarcity.
Rapid growth, but skewed toward applications
Eighty-three percent of these startups focus on application-layer solutions like copilots and domain-specific agents, rather than foundational model development. This trend reflects both market opportunities and constraints in capital and infrastructure.
Sangeeta Gupta, Nasscom Senior Vice President, noted that while India’s SaaS expertise helps startups build atop global AI models, limited funding and compute access push them toward applications.
“As a sector that is always, not just built for India, but built for the world, you are seeing more GenAI startups in India that are really leveraging models from across all platforms and building on top of it. I would say, yes, it’s a constrained environment because of capital, but we are making the best out of it,” Gupta told CNBC TV 18.
Investments in Indian GenAI grew just 30% to $990 million, lagging far behind the $54 billion global total.
Funding and talent gaps threaten long-term growth
Despite investor interest in sectors like climate tech—EcoRatings raised $2 million—deep-tech and niche AI fields face steep challenges.
Aridni Shah of immunitoAI highlighted the rigorous validation required in healthcare AI, where every output must be lab-tested before deployment. “Every single output from the AI gets tested in the lab. We cannot have a solution directly accessible to the public,” she said, underscoring the sector’s unique hurdles.
Aqeel Ahmed of EcoRatings pointed to the scarcity of patient capital for long-term IP development. Meanwhile, talent shortages in specialized areas like diffusion models further strain startups.
Nasscom’s report warns that without solutions to these gaps, India’s GenAI boom could struggle to sustain its momentum.
“With collective action, India can transform its GenAI momentum into a lasting global leadership position, creating AI solutions that are trusted, inclusive, and transformative for billions worldwide,” notes Rajesh Nambiar, President of Nasscom.
