NASSCOM Report Unveils India’s Generative AI Startup Landscape 2024

The National Association of Software and Service Companies (NASSCOM), in its latest report titled “India’s Generative AI Startup Landscape 2024,” reveals promising trends in the Indian and global generative AI (GenAI) ecosystem. This second edition of the annual landscape analysis covers developments between H1 CY2023 and H1 CY2024, offering key insights into the evolution of GenAI startups, funding patterns, challenges, and India's growing presence in the global GenAI space.

Global GenAI Boom: India in the Race but Trailing in 6th Place

The global generative AI sector has experienced 5X growth in the number of startups from H1 CY2023 to H1 CY2024, with significant investments, particularly in growth and late-stage funding rounds. Countries across the world are accelerating GenAI adoption and innovation efforts. Although India has made considerable progress, the report ranks it 6th among the top global economies driving the GenAI landscape.

India’s GenAI Startup Growth: 3.6X Surge in Numbers, Early-Stage Funding Dominates

India’s GenAI ecosystem has expanded 3.6 times between H1 CY2023 and H1 CY2024, marking a robust increase in the number of startups. However, funding in the Indian segment has grown at a more moderate pace, with early-stage rounds constituting the majority of investments. Despite the limited funding, many Indian startups have begun to generate revenues by focusing on specific regions and industry sectors.

Key Trends: Infrastructure, Applications, and Services Lead Growth

The expansion of India’s GenAI ecosystem is broad-based, with growth spanning three key segments:

• Infrastructure: New tools and technologies are enabling startups to develop scalable solutions.
• Applications: The number of GenAI assistant applications has surged 4X, with more than 17 Indic and vertical-specific AI models launched within the past year.
• Services: GenAI services startups have recorded 4.6X growth, reflecting rising demand across industries.

The emergence of 10-15 new startup hubs across the country has added to the momentum, even as established tech hubs continue to dominate the GenAI space.

Challenges Hindering Growth: Funding and Talent Remain Key Bottlenecks

While India’s GenAI startups are actively leveraging industry partnerships for growth and innovation, the sector faces significant challenges. These include:

• Limited patient capital to support long-term ventures
• Customer hesitation in adopting GenAI solutions
• Shortage of skilled AI talent

Addressing these bottlenecks will be critical to unlocking the ecosystem’s full potential.

Recommendations to Strengthen the Ecosystem

To foster deeper and more diverse innovation, the report emphasizes the need for holistic ecosystem support, including:

• Co-innovation initiatives with industry stakeholders
• Access to expert AI talent through academic and industry collaborations
• Adequate funding mechanisms to support high-impact, scalable GenAI solutions

Conclusion: India Positioned to Scale GenAI with Strategic Support

The “India’s Generative AI Startup Landscape 2024” report underscores India’s significant progress in GenAI but highlights the need for enhanced investments and talent development to keep pace with global leaders. With strategic efforts to tackle existing challenges, the Indian GenAI ecosystem is poised for sustained growth, contributing to the country’s position as a key player in the global innovation landscape.

The full report offers an in-depth look into the trends and challenges shaping India’s GenAI journey, and NASSCOM recommends collaborative efforts to drive the sector forward.