India strengthens GenAI startup market, funding up over threefold: Nasscom

India has strengthened its position in the global generative artificial intelligence (GenAI) landscape, ranking sixth among major economies in the share of GenAI startup ecosystems. India’s GenAI funding rose sixfold quarter-on-quarter in the second quarter of FY25, according to a report.

 

Indian GenAI startups raised $51 million in Q2 FY25, up from $8 million in Q1 FY25, stated a report by Nasscom.

 

According to the Generative AI Tracker: Tech Industry Activity in Q2 FY2025 by Nasscom, funding activity gained significant momentum in Q2 FY25, with a record 20 funding rounds, marking a strong recovery after a sluggish Q1. Total funding grew 3.4 times year-on-year, driven by investments in enterprise applications and Agentic AI.

 

Over 90 per cent of GenAI funding in Q2 FY25 was directed towards three startups – Nurix AI, Dashtoon, and Mihup. Funding rounds tripled in Q2 FY25, with early-stage investments accounting for 77 per cent of all rounds, including angel and seed funding.

 

Funding rounds for GenAI startups during this quarter remained below $12.5 million in seed funding and $15 million in Series A funding, largely due to the absence of significant model investments such as Krutrim and Sarvam, which had dominated the previous two quarters.

 

Sangeeta Gupta, senior vice president and chief strategy officer at Nasscom, said: “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. Q2 FY25 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.”

 

The report also reviewed the GenAI efforts of the tech industry in India. After significant activity in building use case portfolios, product integrations, and GenAI platforms, providers are now prioritising the conversion of active proofs of concept (PoCs) into production.

 

This trend is also reflected in the rise in partnerships, the report noted. Diverse but impact-driven partnerships have emerged to enhance product capabilities, establish joint go-to-market strategies, forge global AI alliances, support government-led skilling initiatives, and expand GenAI platform offerings. Partnerships-related activity increased by 25 per cent in Q2 FY25 compared to Q1.

 

Some of these partnerships include Accenture and Unilever, where the latter is adopting GenAI to drive efficiency and improve business agility. Similarly, Genpact’s partnership with Volkswagen Financial Services is among others highlighted.

 

The GenAI revenue pipeline among IT services providers is also strengthening. Accenture reported $3 billion in bookings, with $1 billion realised, while TCS reported $1.5 billion in bookings, according to the report.