The Indian Artificial Intelligence (AI) landscape is experiencing a significant uptick. Currently valued between $7 to $10 billion, it’s a dynamic field dominated by approximately 3,000 startups. Leading forecasts predict a more than triple increase, with the market reaching a colossal $17 billion by 2027. This growth, representing a Compound Annual Growth Rate (CAGR) of up to 35%, is a testament to the burgeoning AI ecosystem in India.
Despite a general slowdown in venture funding in 2024 that affected ‘mega deals,’ Indian AI startups managed to secure approximately $780.5 million across various funding rounds. This represents a robust 39.9% increase from the previous year, a clear indication of sustained investor confidence. Bengaluru, in particular, continues to hold the top spot as the primary AI hub, attracting a significant portion of this funding.
Understanding the Factors Driving Growth in the Indian AI Market
Numerous factors are propelling India’s thriving AI ecosystem. One such factor is the substantial increase in funding of India’s deeptech sector, which includes AI. The sector experienced a remarkable 78% surge in funding in 2024 compared to the previous year. The top 10 deeptech funding rounds in 2024 accounted for approximately $600 million of the total deeptech funding of $1.6 billion, with nearly all of them being AI-powered software platforms addressing a variety of use cases.
Fractal’s Funding: A Testament to the Bright Future of AI in India
Among the promising AI startups in India, Fractal stands out. This AI firm, which is gearing up for an Initial Public Offering (IPO), recently secured a massive $170 million in funding, bringing the company’s total valuation to $2.44 billion. This significant capital infusion will undoubtedly bolster the firm’s Research & Development efforts and scale product deployment.
The Role of Language AI in the Indian Market
One of the unique aspects of the Indian AI market is the need for a language AI stack designed for India. The country’s diverse languages present a challenge and an opportunity for AI startups. The new capital will be used to strengthen language AI, which is specifically built for the Indian market, providing a unique selling proposition for AI companies in the country.
The Future of AI in India: A Bright Horizon
The future of AI in India looks promising. According to research, the market was valued at $6.8 billion in 2024 and is projected to skyrocket to $27.7 billion by 2032. This represents a double-digit CAGR of 19.2%. The new deal wins for the quarter were pegged at $1,812 million, further emphasizing the potential of this market. Factors such as the rise of deeptech and the increasing demand for AI propositions are contributing to this growth.
In conclusion, the AI landscape in India is ripe with opportunities. The growth projections for the market indicate a bright future for AI startups in the country. If you are an investor looking to tap into the potential of AI in India, now is the time to act. With the right investment, you can contribute to this dynamic growth and be a part of a future shaped by AI.
Originally published on https://m.economictimes.com/tech/funding/ipo-bound-ai-company-fractal-bags-170-million-at-2-44-billion-valuation/articleshow/122455396.cms
