India's GenAI Startups Boom: 3.7X Growth, $990M Funding In H1 CY2025: Report
News18
India Generative AI startup landscape has witnessed an exponential rise with the cumulative number of startups growing 3.7x to 890+ in the last 12 months, according to NASSCOM report titled India ' Generative AI Startup Landscape 2025′. Moreover, GenAI Application startups grew 4x to reach 740+ (83% share) during the same period as compared to Services and Model/Infra segments, it added.
Indian GenAI startups' cumulative funding grows by 30% YoY to reach $ 990 Million in H1 CY2025 as compared, significantly lower than global peers indicating constrained funding scenario in India, the NASSCOM report added.
Early-stage funding remains the ecosystem's life force as late-stage capital vanishes. This shift indicates a strategic recalibration by VCs, who are now prioritizing demonstrable progress and near-term viability.
The report said that the government's multifaceted approach marked by infra push (launch of IndiaAI Datasets Platform), compute access (launch of IndiaAI Compute Portal), and public innovation (DPI-backed collaborations) is helping early-stage GenAI startups in lowering go-to-market friction and accelerating B2G and B2B adoption.
Indian GenAI startups face a critical resource crunch, with high compute costs and a shortage of production-ready AI talent emerging as the biggest growth barriers. While global peers enjoy deeper late-stage funding, Indian ventures often struggle to secure the patient capital needed for deep-tech R&D. This has led to an over-reliance on application-layer products built on foreign-owned models, leaving the ecosystem vulnerable to shifts in pricing and access policies. Infrastructure gaps, especially in large-scale model training and orchestration, also slow the transition from pilot projects to enterprise-grade deployments.
Despite these hurdles, India holds a unique competitive edge in building domain-specific, cost-efficient AI tailored for its mobile-first, multilingual population. There is a vast untapped market for lightweight Indic-language LLMs, voice-first assistants, and AI solutions embedded into the nation's Digital Public Infrastructure like UPI and ONDC. Strategic government initiatives, including the Rs 10,372 crore IndiaAI Mission and subsidized GPU access, are creating fertile ground for startups to innovate in regulated sectors such as BFSI, healthcare, and education. By focusing on localized, high-impact applications and vertical AI specializations, Indian startups can scale rapidly and export these solutions to other emerging markets.
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