India’s generative AI revolution: Debunking the 'missed the bus' narrative
While the West may dominate in absolute investment figures, India’s focus on scalability, inclusivity, and transformative innovation sets it apart. With its vast talent pool, abundant data, thriving startup ecosystem, and supportive government policies, India is far from being a mere passenger - it is actively steering the bus toward a transformative future, ensuring that GenAI’s benefits are widespread and equitable.
Recent narratives suggesting that India has "missed the bus" in the generative AI (GenAI) race have gained attention, often citing stark investment gaps and adoption challenges when compared to the West. However, such notions fail to appreciate the substantial advancements the country has made in AI adoption, innovation, and investment. While Western nations may boast higher absolute figures in AI funding, India's progress must be understood within the context of its economic scale, socio-economic challenges, and unique strengths. Far from lagging, India is positioning itself as a major global player in the AI and GenAI ecosystems.
Here's why the "missed the bus" narrative doesn't hold water.
Investment trends: Comparing apples to oranges
Critics often point to the disparity in AI investments, such as India’s $11.3 billion raised in 2024 versus the West’s $184 billion. While the difference in absolute terms is significant, the comparison lacks nuance.
It’s misleading to compare India, a single developing nation, to the collective economies of the West. India’s nominal GDP is $3.73 trillion, while the combined GDP of Western economies exceeds $40 trillion. Adjusting for economic scale, India’s AI investment aligns proportionally with its economic standing. Moreover, investments in India are growing at an impressive compounded annual growth rate (CAGR) of 25-35%, according to NASSCOM’s 2024 AI Adoption Index. This growth trajectory demonstrates India’s sustained focus on GenAI, backed by public-private initiatives like the IndiaAI mission, which fosters innovation and ensures ethical AI development.
According to NASSCOM's latest Generative AI Tracker: Tech Industry Activity report, India’s GenAI startup funding in Q2FY2025 soared to $51 million, marking a remarkable 6X increase quarter-on-quarter (q-o-q) after subdued activity in previous quarters. This surge, led B2B and agentic AI startups, aligns with a broader global trend, where investment focus shifted from foundational model development to application-driven solutions. Despite a 2.3X drop in global GenAI funding during the same period, India’s rising funding rounds, which reached a record high of 20 in Q2FY2025, signal growing investor confidence in the country’s GenAI ecosystem.
India’s strengths: Talent, data, and infrastructure
Talent Pool: A Reservoir of Expertise
India boasts the second-largest AI talent base globally, producing over 1.5 million engineering graduates annually. NASSCOM's Generative AI Tracker: Tech Industry Activity report highlights that AI skilling and talent development in India are shifting toward advanced GenAI upskilling, moving beyond basic literacy to creating expertise in areas like large language models and generative platforms. This positions India as a critical global hub for GenAI innovation.
Data Abundance: A Goldmine for AI
India’s vast and diverse population generates a treasure trove of data, essential for training GenAI models. This data richness is especially advantageous for natural language processing (NLP), enabling the development of AI tools in multiple Indian languages. Moreover, initiatives like Aadhaar for digital identity and UPI for digital payments create a scalable infrastructure for integrating GenAI solutions into everyday life, ensuring accessibility and inclusivity.
Thriving Startup Ecosystem: Scaling Innovation
India’s startup ecosystem is another key strength, with over 4,000 AI-focused startups driving innovation. Between H1 CY2023 and H1 CY2024, it expanded by 3.6X, with over 240 active startups, 75% of which are generating revenue. Notable platforms like TCS WisdomNext and Wipro Lab45 are spearheading innovative solutions tailored to local and global needs. These startups are not only solving India-specific problems but also creating scalable solutions with global relevance
Why India is very much on the bus?
Strategic Focus on Application-Driven Growth
While the West dominates in foundational model development, India’s focus is on scalable, application-driven solutions. This strategic approach ensures that GenAI tools are accessible and impactful across sectors.
Leveraging Global Trends
The rise in partnerships, product launches, and revenue generation further underscores India’s growing influence in GenAI. Q2FY2025 saw a 25% increase in partnerships compared to the previous quarter, driven by collaborations with hyperscalers and global tech giants. Indian companies like Accenture and TCS reported robust revenue pipelines, with bookings of $3 billion and $1.5 billion, respectively, reflecting the increasing demand for production-ready GenAI solutions.
Inclusivity in AI Adoption
India’s "AI for All" vision emphasizes the democratization of AI benefits, ensuring that advancements reach all segments of society. This inclusive approach distinguishes India from Western economies that often focus on niche, high-margin applications.
Future Prospects: Scaling new heights
The comparison of India’s GenAI efforts with the collective achievements of the West overlooks the fact that India’s focus is not on replicating Western models but on creating scalable solutions tailored to its unique challenges.
India’s GenAI journey is just beginning, and its future potential is immense. By 2035, GenAI is projected to contribute $1 trillion to India’s economy, accounting for 15% of its GDP. The technology is expected to create 2 million new jobs by 2025, primarily in AI development, data science, and related fields. These figures underscore the transformative potential of GenAI in driving economic growth and job creation.
India’s increasing focus on indigenous R&D will further strengthen its position in the GenAI landscape. Collaborative efforts between the government and private sector are accelerating the deployment of GenAI solutions, from predictive healthcare to logistics optimization. India’s participation in global forums like the G20 ensures its voice in shaping international AI policies and standards.
To sum up, while the West may dominate in absolute investment figures, India’s focus on scalability, inclusivity, and transformative innovation sets it apart. With its vast talent pool, abundant data, thriving startup ecosystem, and supportive government policies, India is far from being a mere passenger - it is actively steering the bus toward a transformative future, ensuring that GenAI’s benefits are widespread and equitable.
References:
NASSCOM's 2024 AI Enterprise Adoption Index 2.0
- FIRST PUBLISHED IN:
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