New Delhi: India’s technology ecosystem is making strides in the field of generative AI, with a new generation of entrepreneurs capitalizing on the enthusiasm surrounding this emerging technology. Despite being home to one of the world’s largest startup ecosystems, India is yet to make a material impact in the rapidly advancing AI arena, with no homegrown Indian contenders emerging to challenge the dominance of large language model titans. However, many of India’s major startups are using machine learning to enhance aspects of their business operations, such as e-commerce giant Flipkart, which uses machine learning to refine customer shopping experiences, while Razorpay utilizes AI to combat payment fraud. Unicorn edtech Vedantu recently integrated AI into its live classes, making them more accessible and affordable.
Industry insiders attribute India’s dearth of AI-first startups in part to a skills gap among the nation’s workforce, which could be exacerbated by the advent of generative AI. Dev Khare, a Partner at Lightspeed Venture Partners India, recently assessed the disruptive potential of AI and warned that jobs and processes in industries such as market research, content production, legal analysis, financial analysis, and various IT services jobs could be impacted. However, for India, this disruption also presents an opportunity, with the services sector standing to benefit the most.
Indian consultancy giants Infosys and TCS are already recognizing the potential of generative AI, with Infosys revealing that it is working on several projects to address specific aspects of clients’ businesses, while TCS is exploring cross-industry solutions to automate code generation, content creation, copywriting, and marketing.
Despite the more established segment of India’s startup ecosystem staying muted in the generative AI race, young firms are stepping up to the occasion, with startups such as Gan, TrueFoundry, and Cube leading the charge. The surge of interest has prompted nearly all venture funds in India to develop investment strategies in the emerging space. Sequoia India and SEA, for example, is evaluating at least five firms in this space each week, according to Anandamoy Roychowdhary, Partner at Surge, Sequoia India & Southeast Asia.
However, some founders expressed concerns that these AI startups are unlikely to focus on creating their own large language models due to the lack of funding and conviction from investors to support such high compute and other infrastructure expenses. An investor cautioned that the current frenzy around AI deals somewhat echoes aspects of the crypto craze in 2021.
In response to this landscape, New Delhi has declared that India will not regulate the growth of AI, taking a different approach from many other countries. “AI is a kinetic enabler of the digital economy and innovation ecosystem. Government is harnessing the potential of AI to provide personalized and interactive citizen-centric services through digital public platforms,” India’s Ministry of Electronics and IT said last month.
Overall, India may be facing an uphill battle to catch up to global leaders in the generative AI race, but with the right resources, upskilling, and investment, there is potential for India’s technology ecosystem to emerge as a key player in this rapidly advancing field.