India's Generative AI Ecosystem Sees Six Times Growth Amid Global Downturn

India's Generative AI ecosystem has grown remarkably amid a global downturn, recording an impressive six times growth in quarterly investments driven by business to business and productivity solutions, according to a report by IT industry body National Association of Software and Service Companies.

NASSCOM on Monday released the 'Generative AI Tracker: Tech Industry Activity in Second Quarter Of Fiscal 2025' report that revealed a robust rebound in funding and innovation within India's Generative AI landscape.

"Indian GenAI startup funding, at about $51 million in second quarter of Fiscal 2025, saw over six times rise quarter-on-quarter, led by business to business and agentic AI startups. Funding rounds continued to rise, with the second quarter of Fiscal 2025 registering a record 20 rounds, after a tepid first quarter.

"GenAI applications garnered most funding, however, per-stage funding got capped lower due to no model funding in the second quarter," the report said.

On the contrary, global GenAI startup funding, at about $4 billion in second quarter of Fiscal 2025, hit the lower circuit with a 2.3 times quarter-on-quarter drop from the second quarter, the report revealed.

Most major and mid-sized Indian tech companies have been releasing GenAI platforms since early 2023. These platforms are gradually being offered with multimodal, multi-model data, AI, and cloud integration ecosystems.

With more and more tech providers prioritising partnerships and advanced skilling, partnerships in the industry surged by 25% sequentially, focusing on product enhancements, joint go-to-market strategies, and government-led skilling initiatives.

This strategic pivot has led to improved revenue pipelines and stronger realizations from active Proofs of Concept, the study said.

Companies are moving beyond basic AI literacy to focus on advanced and thematic upskilling that integrates platform capabilities and agentic AI functionalities.

The evolution of the Indian GenAI ecosystem from experimental use cases to scalable, production-ready solutions is reflected in its growing maturity, nasscom said, adding that improved finance inflows, more revenue realisations, and growing applications in customer interaction and enterprise productivity are the main drivers of this expansion.

"The generative AI landscape is evolving rapidly, reshaping technology service providers and unlocking new capabilities. Providers are re-evaluating strategies and increasing investments in technology and talent. second quarter of Fiscal 2025, marked a key shift in India's GenAI space, with funding focused on impactful applications that enhance productivity. Future success will rely on strategic innovations, pilot project results, and lessons learned along the way," Sangeeta Gupta, Senior Vice President and Chief Strategy Officer at NASSCOM, said.