A wave of optimism raced over India’s startup scene between 2012 and 2015. Many people thought that its tech hubs, not the US, would produce the next Google or Facebook. By 2025, American entrepreneurs are still at the forefront of important developments in artificial intelligence. Despite having a well-known linguistic model, India received a lot less venture capital funding in 2024 than the US. American AI startups raised almost $109 billion, compared to around $780 million for Indian startups.
Investment Gap: A Chasm, Not a Cliff
The numbers are very clear. By 2024, private AI investment in the US is expected to reach $109.1 billion. In contrast, India’s AI ecosystem raised between $560 million (per one source) to $780 million (per another). Even at the higher end, that’s barely 1% of U.S. funding. Globally, India ranked 12th in AI funding.
Can India Still Compete? Not All Is Lost
India is improving. With government support, Indian companies like Sarvam AI are creating simple language models for Indian languages. They were selected by India’s IT Minister to develop the nation’s first autonomous language model, and they were given infrastructure and GPU access. Simultaneously, finance rises. In 2024, Kore.ai, Atlan, and Krutrim received significant funding.
Additionally, the larger AI ecosystem is growing. Industries like BFSI, healthcare, automotive, and telecommunications are seeing an increase in the number of early- and late-stage startups. Although this is a roadmap rather than the final destination, it does indicate heightened investor confidence and strategic expansion.
The Significance of the AI Deficit
This isn’t just about capital. It reflects deeper challenges in R&D infrastructure, global talent access, and ecosystem maturity. Without a home-grown blockbuster AI model, India’s contributions remain niche and underrepresented. Put simply, while we haven’t “lost” the AI race entirely, we’re clearly trailing far behind, and need a quantum leap in investment, innovation, and execution to catch up.
India’s AI Journey Future
India’s strengths lie in its vibrant developer culture, diverse languages, and growing digital infrastructure. With concerted government initiatives like the IndiaAI Mission, its presidency in the India–U.S. iCET collaboration, and growing private interest, India has momentum, but needs scale. Building India-centric models like Sarvam’s LLM, empowering local AI startups, and forging global consortiums could turn the tide.
Also Read: Sarvam’s Superpower? Building an AI That Speaks Your Language
