India's GenAI Boom: Startups Surge 13x, Funding Lags at 1.6x Growth
Business
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Moneycontrol•29-01-2026, 20:14
India's GenAI Boom: Startups Surge 13x, Funding Lags at 1.6x Growth
- •India's Generative AI ecosystem saw a thirteen-fold increase in active startups from H1 CY2023 to H1 CY2025, reaching over 890.
- •Cumulative funding for GenAI startups rose by only 1.6 times during the same period, from $606 million to $990 million.
- •The Economic Survey 2025-26 attributes this disparity to lower entry barriers for application-layer GenAI, rising demand for productivity solutions, and continued capital concentration in infrastructure.
- •Application-layer startups leverage existing models and cloud infrastructure, enabling rapid development with less upfront capital.
- •Infrastructure and model development still absorb 63% of GenAI funding, creating a bifurcated ecosystem with many smaller application startups and fewer, well-funded infrastructure players.
Why It Matters: India's GenAI sector is experiencing rapid startup growth driven by low barriers, but funding is not keeping pace.
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