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India has secured the sixth spot among major economies in the global generative artificial intelligence (GenAI) landscape, marking a significant milestone in its technological advancements. According to a report by Nasscom, India’s GenAI funding surged sixfold quarter-on-quarter in Q2 FY25, reflecting robust growth and increased investor confidence in the sector.
Q2 FY25 Sees Record Funding Surge
Indian GenAI startups raised $51 million in Q2 FY25, a sharp increase from $8 million in Q1 FY25. The Generative AI Tracker: Tech Industry Activity in Q2 FY2025 by Nasscom highlighted a dramatic uptick in funding rounds, which tripled to a record 20 in Q2, showcasing a strong recovery from the sluggish activity in Q1.
The report noted that year-on-year funding grew 3.4 times, fueled by investments in enterprise applications and Agentic AI. Over 90% of the funding during this quarter was concentrated on three startups—Nurix AI, Dashtoon, and Mihup—underscoring the focus on impactful innovations.
Focus on Early-Stage Investments
Early-stage investments, including angel and seed funding, accounted for 77% of all funding rounds in Q2 FY25. Seed funding rounds typically remained under $12.5 million, while Series A funding stayed below $15 million, primarily due to the absence of large-scale model investments such as Krutrim and Sarvam, which dominated earlier quarters.
Sangeeta Gupta, senior vice president and chief strategy officer at Nasscom, emphasized the transformative potential of generative AI. “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,” she said.
Shift Towards Production and Partnerships
The report highlighted a growing focus on converting proofs of concept (PoCs) into production-ready applications. This trend is also reflected in a 25% rise in partnerships during Q2 FY25 compared to Q1. These partnerships are geared towards enhancing product capabilities, developing joint go-to-market strategies, and supporting government-led skilling initiatives.
Key collaborations include Accenture’s partnership with Unilever to drive efficiency and agility, and Genpact’s alliance with Volkswagen Financial Services. Such partnerships have played a pivotal role in advancing GenAI platform offerings and building global AI alliances.
Revenue Pipelines Strengthen
India’s IT services providers are also witnessing a strengthening GenAI revenue pipeline. Accenture reported $3 billion in bookings, of which $1 billion has been realized. Similarly, TCS recorded $1.5 billion in GenAI-related bookings.
As India continues to advance in the GenAI landscape, the focus remains on strategic innovations, productive partnerships, and scaling impactful applications, setting the stage for further growth in the sector.
