Funding & Infra Gaps Persist as India's GenAI Ecosystem Accelerates: Report The data indicates that startups in this space raised USD 990 million in the first half of 2025, a 30 per cent year-on-year increase.
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India's generative AI (GenAI) ecosystem is in the midst of rapid expansion but faces a widening funding gap at scale, according to The Nasscom GenAI Startup Landscape Report 2025, launched at FutureForge 2025 with Hitachi Digital Services.
The data indicates that startups in this space raised USD 990 million in the first half of 2025, a 30 per cent year-on-year increase.
According to the report, the funding growth, however, is concentrated at the early stage, with late-stage rounds continuing to shrink as investors remain cautious. Founders cite high compute costs and infrastructure challenges as the top reasons why larger rounds remain elusive, even as startup activity surges.
Rajesh Nambiar, President, Nasscom, said that GenAI startups have the potential to shape the future of AI innovation for emerging markets and beyond.
"The next leap will depend on how effectively the ecosystem can come together to unlock capital, scale compute access, and nurture world-class talent. With collective action, India can transform its GenAI momentum into a lasting global leadership position, creating AI solutions that are trusted, inclusive, and transformative for billions worldwide," said Nambiar.
The ecosystem now counts over 890 GenAI startups, a 3.7X jump in the past year. The total number of ventures has risen 2.8X in 12 months, while patents filed have increased 1.7X. More than 83 per cent of startups are application-focused, building vertical AI and SaaS solutions for regulated sectors such as BFSI, healthcare, and legal.
The funding lag behind global peers underscores a critical need for structural interventions. Nasscom report recommends a national GenAI strategy, including co-funding models, tax incentives, subsidized compute infrastructure via a National AI Compute Grid, and regulatory sandboxes. A "government as first customer" approach, it argues, could help de-risk innovation and accelerate commercialization.
With Agentic AI emerging as the next big frontier, driving orchestration, workflow automation, and enterprise AI agents, India's startups have a chance to build global leadership. But to achieve it, the ecosystem must close the funding gap and overcome infrastructure bottlenecks that currently hold back scale.
