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.
