The report highlights that India now hosts more than 890 GenAI startups as of H1 CY2025, with application-focused ventures accounting for over 740 of them—nearly 83% of the total. Pivoting has emerged as a defining trend, with 63% of Indian startups shifting towards vertical SaaS and domain-specific applications in the last year.
On the funding front, cumulative investments in Indian GenAI startups touched $990 million by H1 CY2025, a 30% year-on-year growth. However, this figure still lags significantly behind global peers, where total funding has surged 2.7X to $54 billion. Notably, the bulk of global capital—around 88%—is being directed toward late-stage players, signaling strong investor confidence in scaling and enterprise adoption.
Globally, the GenAI ecosystem has grown ninefold in just two years, crossing 4,500 startups by mid-2025. The United States continues to dominate the landscape, driven by big-tech partnerships, advanced compute infrastructure, and deep-pocketed venture capital. Yet, mature markets like the US are now seeing a slowdown in new startup formation, reflecting rising barriers for early-stage entrants—a gap India is actively filling.
Despite India’s momentum, the report flags structural challenges. While 64% of founders are focused on model efficiency, 58% still lack a sustainable compute strategy, underlining concerns around operational readiness and cost planning. Talent, compute, and capital scarcity remain pressing hurdles, with many startups struggling to move beyond low-complexity applications due to risk-averse capital markets and limited deep tech R&D funding.
On the enterprise adoption front, Indian GenAI startups are moving from pilot projects to real-world deployment, with business units increasingly driving purchasing decisions. A majority—79%—leverage proprietary customer data, while 45% also employ synthetic data for improved fine-tuning and accuracy. The ecosystem is also witnessing strong alignment with global technology trends, with most startups adopting autoregressive models.
However, scaling challenges persist. Nearly 30% of startups still lack active partnerships with enterprises, while regulatory hurdles and intellectual property protection remain top concerns for the second consecutive year.
Nasscom’s report underscores that India has the potential to chart a differentiated path in the global GenAI race by focusing on areas such as AI agents, vernacular large language models (LLMs), and digital public infrastructure (DPI)-linked AI solutions. To realize this vision, the report recommends strategic interventions around compute access, patient capital, and scalable adoption enablers, offering a forward-looking playbook for founders, investors, enterprises, and policymakers.
