Building an AI startup in India is not easy as it seems to be. The country has made several moves in recent years to make the startups formation smooth but challenges still persist and even for the most determined entrepreneurs. The rise of generative AI in 2021 offered a fresh wave of opportunities and enabled Sarvam AI, Krutrim and more such startups to create localized solutions. However, sustaining and scaling the ventures obviously needs more than just innovation like significant capital and global vision.
Stanford’s 2024 AI Index Report reveals India ranks seventh in the world for AI startup growth and it seems impressive. However, it pales in comparison to leaders like the US and China. Indian startups raised $864 million in funding by August 2024 and it is just a fraction of what US startups received in just a single quarter. Established names like Uniphore and Gupshup have secured major investments, but foundational AI still lacks the necessary support. Most funding in India goes toward application-based solutions that simply tweak existing models.
The biggest strength in India is cost efficiency and the same is being pointed out by Tablesprint CEO Abhijeet Kumar. He says that developing software in India costs far less compared to the West. The cost advantage and coupled with a large pool of talented engineers are drawing some entrepreneurs back to India from Silicon Valley. However, it is not enough to overcome deeper issues. Foundational AI work requires money as well as a powerful support system.
Many startups adopt a hybrid approach to keep operations in India for cost efficiency and target US markets for larger deals as well as quicker adoption. The strategy works as of now but it also raises questions about whether India can ever become a global leader in the AI development.
