India is developing as an important player in the worldwide generative artificial intelligence (GenAI) ecosystem, currently rated sixth behind the United States, which leads the global list among major nations for its startup ecosystem in this area. Other regions ahead of India include the United Kingdom, Japan, Israel, and the European Union.
Nasscom's GenAI Tracker: Tech Industry Activity report shows significant improvement in investment, with 20 funding rounds recorded in the second quarter (Q2) of 2024-25 (FY25), representing a fast recovery from a lackluster first quarter/Q1 ($8 million).
According to the report, GenAI funding increased to $51 million in Q2FY25, roughly sixfold from $8 million in the first quarter.
Total funding increased 3.4x year on year. In the second quarter of 2023-24, a total of $15 million was funded over nine rounds, largely for enterprise applications and agentic AI.
More than 90% of Q2FY25 funding was focused on three startups: Nurix AI, Dashtoon, and Mihup. Early-stage investments, such as angel and seed finance, accounted for 77% of total funding rounds. Individual fundraising rounds remained below $12.5 million for seed-stage and $15 million for Series A, owing primarily to the absence of major model investments such as Krutrim and Sarvam, which dominated the previous two quarters.
Nasscom's senior vice-president and chief strategy officer, Sangeeta Gupta, stated, "Providers are reevaluating strategies and increasing investments in technology and talent. Future success will be dependent on strategic ideas, pilot project outcomes, and lessons acquired along the way."
The survey also looked at how the IT industry is advancing its GenAI efforts. Following significant work in developing use case portfolios, product connectors, and GenAI platforms, suppliers are now focusing on putting active proof of ideas into production.
This trend is evident in an increase in partnerships, with 25% more partnership-related activity reported this quarter than in Q1. These collaborations are focused on improving product capabilities, developing cooperative go-to-market strategies, forming global AI alliances, launching government-led skilling efforts, and increasing GenAI platform offerings.
Accenture and Unilever, for example, are collaborating to use GenAI to increase productivity and business agility. Similarly, Genpact has partnered with Volkswagen Financial Services, among others.
The GenAI revenue pipeline for information technology services is also growing. According to the report, Accenture booked $3 billion and realized approximately $1 billion, while Tata Consultancy Services booked $1.5 billion.
