India's generative AI landscape is rapidly emerging, bolstered by the country's high penetration of IT skills. This has led to a surge in generative AI investments, supported by a robust tech ecosystem and shared interest from both established companies and startups.
Investment in Indian generative AI startups has doubled, indicating significant growth. However, the sector has also seen a 50% dip in funding rounds in the first half of 2024 compared to the second half of 2023, according to a NASSCOM study quoted by the Economic Times.
In contrast, investment in generative AI startups in the US has tripled, with big tech companies increasing their investments by 1.25 times. A report suggests that top global hyperscalers are expanding infrastructure investments across geographies, committing over $80 billion in cloud capacity and data centers within the next 10-15 years.
A key driver of income growth in the generative AI sector is the deployment of solid use cases by top IT companies. For instance, Accenture announced $2 billion in revenue from generative AI during the first half of 2024, while India's software exporter TCS generated $900 million in the same period, with a 10% revenue increase projected for FY 2025.
Despite a decline in generative AI fundraising during the winter of 2024, there was a rise in overall tech startup fundraising in India and globally. In India, early-stage generative AI investments amounted to under $50 million, while in the US, two-thirds of the investments exceeded $150 million.
In 2024, generative AI platforms received more investment funding than application-based platforms, a shift from the trends in 2023. Fundamental model startups in the US garnered more than 50% of the funding.
Matrix Partners India emerged as a key investor across multiple funding rounds. Enterprise activity in generative AI increased sevenfold since the first half of 2023, with significant developments in partnerships, talent development, and new product launches. While 2023 was marked by partnerships, 2024 has seen a transition towards product launches and a focus on building and platformization across various sectors and use cases.
Enterprises have sought consultative guidance on selecting use cases, proof of concepts (PoCs), data privacy, production-related decision-making, and security challenges. From a growth perspective, one million employees were trained in generative AI in 2023, with an additional 350,000 trained in the first half of 2024.
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