India Now a Strong AI Market with Large-Scale User Appetite: Report
According to the report, three or more AI-native services companies built in India could scale to over USD 1 billion in revenue within the next five years
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India’s depth in data, thanks to its large demographic, combined with low user acquisition costs, is creating a powerful foundation for scalable AI products across segments, according to a report by Arkam Ventures.
The report said that the first consumer AI application to reach 200 million users in India will likely be voice-led rather than prompted in English, owing to the country’s linguistic diversity and mobile-first user base.
According to the report, three or more AI-native services companies built in India could scale to over USD 1 billion in revenue within the next five years, and AI-native lending platforms will originate more consumer credit than all private banks combined in the next decade.
India has over 850 million digital users in India and is one of the largest developer ecosystems in the world. “India has moved beyond early adoption. It now represents a structurally strong Al market, with large-scale user appetite driving strong growth for global Al platforms,” said the report.
India is also one of the largest user bases for global AI platforms such as OpenAI (India being its third largest market), Gemini (20 percent of its global user base being Indians), Anthropic (India as its third largest market), and ElevenLabs (India is second largest enterprise revenue contributor).
Bala Srinivasa, Managing Director at Arkam Ventures, said, “AI represents one of the most important technological shifts of our time, and has the potential to exponentially expand the benefits of digitization at a population scale. Challenges in terms of GPU supply, cost of compute, and lack of indigenous AI infra are in fact opportunities being addressed by founders, which is also creating fertile ground for a new generation of India-focused AI consumer and enterprise start-ups.”
“We have a rare combination of deep engineering talent, a large domestic market, and structural cost advantages compared to Western counterparts. What is particularly exciting is that Indian founders are no longer just adopting global technologies; they are increasingly building original products and platforms that can compete globally,” Srinivasa added.
The Report also outlines structural challenges and opportunities, including limited access to high-end GPUs, dependence on global cloud providers for compute infrastructure, and gaps in AI-optimised data centre cooling.
Rahul Chandra, Managing Director at Arkam Ventures, said, “We believe the most interesting AI companies from India will emerge at the intersection of deep technology and large real-world problems. With India now home to the second-largest developer ecosystem in the world, founders have an unprecedented opportunity to build enduring technology companies from India, across population-scale consumer applications, AI-driven enterprise workflows, and sovereign infrastructure.”
Arkam’s AI portfolio includes Anuvaya Labs (conversational AI agents for professional services), AI Se (low-cost personalised education), Ringg AI (voice AI platform for enterprises), Spotdraft (AI CLM platform for enterprises), Hyperbots (AI agents for CFO office), and KuhlTherm (thermal management for sovereign data centres).
India’s depth in data, thanks to its large demographic, combined with low user acquisition costs, is creating a powerful foundation for scalable AI products across segments, according to a report by Arkam Ventures.
The report said that the first consumer AI application to reach 200 million users in India will likely be voice-led rather than prompted in English, owing to the country’s linguistic diversity and mobile-first user base.
According to the report, three or more AI-native services companies built in India could scale to over USD 1 billion in revenue within the next five years, and AI-native lending platforms will originate more consumer credit than all private banks combined in the next decade.
