India is carving out a prominent position in the global generative artificial intelligence (GenAI) landscape, ranking sixth globally, following the US, UK, Japan, Israel, and the European Union. According to Nasscom’s GenAI Tracker: Tech Industry Activity report, the country is experiencing a significant upswing in funding for GenAI startups, driven by enterprise applications and agentic AI solutions.
Funding Trends in Q2 FY25
The second quarter of FY24-25 saw a remarkable turnaround in GenAI funding, surging to $51 million across 20 funding rounds. This marks a sixfold increase from the $8 million raised in the previous quarter (Q1 FY25). The year-on-year growth in total funding also stands at an impressive 3.4x, compared to $15 million raised over nine rounds in Q2 of FY24.
Key Drivers of Growth
- Concentration in Top Startups: Over 90% of the Q2 FY25 funding was attributed to three startups—Nurix AI, Dashtoon, and Mihup—highlighting the growing interest in scalable GenAI solutions.
- Early-Stage Focus: Angel and seed investments dominated the quarter, accounting for 77% of funding rounds. However, individual rounds were relatively modest, with seed-stage funding staying below $12.5 million and Series A investments capped at $15 million.
Changing Investment Dynamics
While earlier quarters saw significant investments in large-scale GenAI projects like Krutrim and Sarvam, Q2 FY25 focused more on targeted innovations and smaller-scale initiatives. Sangeeta Gupta, Senior Vice President and Chief Strategy Officer at Nasscom, emphasized the importance of strategic innovation, saying, “Future success will depend on redefined strategies, pilot outcomes, and the lessons learned during implementation.”
Industry Advancements in GenAI
The tech industry is evolving its approach to generative AI, transitioning from building use cases and platforms to deploying active proof-of-concept projects. This shift is reflected in:
- Increased Partnerships: Partnership activity rose by 25% compared to Q1, with collaborations enhancing product capabilities, joint market strategies, and global AI alliances. Notable examples include:
- Accenture and Unilever: Leveraging GenAI to improve operational efficiency and agility.
- Genpact and Volkswagen Financial Services: Exploring AI-driven solutions for financial operations.
- Strengthened Revenue Pipelines: The GenAI business pipeline is expanding among IT services providers. Accenture reported $3 billion in bookings and realized $1 billion in revenue, while Tata Consultancy Services (TCS) achieved $1.5 billion in bookings.
Future Outlook
With the funding landscape recovering and partnerships on the rise, India’s GenAI ecosystem is set for accelerated growth. The focus on strategic innovation, production-ready applications, and enhanced collaboration is positioning Indian startups as key players in the global AI economy. The coming quarters will likely see this momentum translating into broader adoption and impactful innovations across industries.
Update: how GenAI funding has grown since
The figures above cover the July-September 2024 quarter, when GenAI startups in India raised about $51 million. The sector has grown since. According to Nasscom’s GenAI Startup Landscape Report 2025, Indian GenAI startups raised about $990 million in the first half of 2025, up around 30% from a year earlier, and the number of such startups crossed 890, about 3.7 times more than a year before.
The same report flagged problems that have not gone away. Most money still goes into early-stage rounds, while larger late-stage deals remain rare. Founders named the high cost of computing power and limited infrastructure as the main reasons. More than 83% of the startups build applications for specific sectors, such as banking and finance, healthcare and legal services, rather than building large foundation models of their own.
GenAI terms explained
- Generative AI (GenAI): software that creates text, images, audio or code from instructions.
- Foundation model: a large AI model trained on huge amounts of data that other products are built on.
- Agentic AI: AI systems that can carry out multi-step tasks on their own, such as booking, searching or filling forms, rather than only answering questions.
- Seed and Series A: early funding rounds. Seed money helps build a first product; Series A usually funds growth after a product shows early demand.
For more on India’s AI capacity, read our report on India’s GPU and chip push.
Questions to think about
- Should Indian startups build their own large AI models or focus on applications?
- Can AI startups grow big if computing power stays expensive?
- Which Indian industries could gain the most from generative AI tools?
