Quick Take
- Indian AI startups secured $665M in funding during 2025, representing 50% year-over-year growth
- Ola founder invests $230M in Krutrim as startup targets $1.15B fundraise by next year
- Krutrim-2 achieves 0.95 sentiment analysis score versus 0.70 for competitors
- India launches largest supercomputer project with Nvidia partnership starting March
- Deeptech and computer vision applications drive strongest investor interest
Indian AI startups are seeing remarkable funding growth as specialized applications in deeptech and computer vision capture investor attention.
The artificial intelligence sector in India’s AI startup funding jumps 50 to 665 million in funding throughout 2025, marking a significant 50% increase from last year. This growth reflects rising investor confidence in specialized AI applications designed for local markets, especially in areas needing cultural and linguistic adaptation.
Ola founder Bhavish Aggarwal is putting ₹1,900 crores ($230 million) into AI startup Krutrim through his family office. The investment sets up Krutrim to compete directly in India’s developing language model market while pursuing specialized AI development for Indian languages and applications.
Krutrim plans to raise ₹9,600 crores ($1.15 billion) by next year as part of its bold expansion strategy. The startup has chosen an open-source approach, recently releasing its models to encourage broader collaboration across India’s AI development community.
According to Aggarwal, “We’re nowhere close to global benchmarks yet but have made good progress in one year. By open sourcing our models, we hope the entire Indian AI community collaborates to create a world-class Indian AI ecosystem.”
The startup recently launched Krutrim-2 with 12 billion parameters, showing significant performance improvements over its predecessor. In sentiment analysis testing, the model achieved a 0.95 score compared to 0.70 for competitors, while maintaining 80% success rates in code generation tasks.
Krutrim developed BharatBench, an evaluation framework specifically designed for Indian languages. This addresses a key market gap, as existing benchmarks primarily focus on English and Chinese applications, leaving regional language processing underserved.
The system uses a 128,000-token context window for processing, enabling more effective handling of longer texts and complex conversations. Additional performance metrics show high scores in grammar correction (0.98) and multi-turn conversations (0.91).
The company plans to deploy India’s largest supercomputer through its Nvidia partnership, with implementation beginning in March and continued expansion throughout 2025. This infrastructure development will significantly support local AI capabilities while reducing dependence on foreign cloud services.
Krutrim’s cloud service began offering DeepSeek on Indian servers, showing its commitment to local infrastructure development. The focus on Indian languages creates specialized market attention that international competitors often overlook in their global strategies.
Krutrim-1, launched in January as India’s first large language model, established the foundation with its 7-billion-parameter system. The company continues expansion plans throughout 2025 with ongoing Nvidia collaboration supporting infrastructure scaling.
India seeks to establish itself against U.S. and Chinese AI dominance, with the government recently praising DeepSeek’s progress in AI development. Local firms receive increased government support for developing homegrown talent and technology solutions tailored to regional needs.
Deeptech, generative AI, and computer vision attract the strongest funding flows from investors. The focus centers on specialized applications with high commercial potential, emphasizing real-world value creation over purely theoretical capabilities.
The funding surge reflects collective ambition among Indian startups to transition from followers to leaders in AI solutions for local markets. Collaboration and innovation increasingly determine competitive advantages in this rapidly evolving sector.
Startup founders should recognize the increasing investor appetite for AI applications with clear business value propositions. The emphasis on collaboration opens partnership opportunities, while specialized sectors demonstrate the strongest investor interest patterns.
India’s AI ecosystem gains momentum through targeted investments that address unique consumer demands effectively. Localized technology development creates significant market opportunities, particularly in language processing and cultural adaptation areas.
The transition toward leading AI solutions in local markets signals a broader shift in how investors evaluate potential returns, prioritizing practical applications over purely technological advancement.
