New Delhi, Feb 19 (IANS): India’s artificial intelligence (AI) startup ecosystem is witnessing unprecedented growth, driven by the rapid adoption of AI-powered software-as-a-service (SaaS) solutions, according to a new report released on Wednesday. The government has committed ₹2,000 crore to the IndiaAI mission and increased funding for AI Centres of Excellence by 82%, reinforcing its push toward AI infrastructure development.
SaaS has emerged as a dominant force in India’s AI landscape, with enterprise AI spending surging sixfold year-on-year from $2.3 billion in 2023 to $13.8 billion in 2024. Nearly 66% of AI startups in the country are focused on AI-powered applications, with Enterprise AI SaaS leading the sector, as highlighted in SenseAI’s InvestAI 2025 report. These AI-driven companies are transforming the software industry by shifting away from traditional subscription models to pricing structures based on outcomes.
“AI SaaS firms are already trading at twice the multiple of non-AI SaaS companies. AI-first startups are scaling faster than ever before,” said Rahul Agarwalla, Managing Partner at SenseAI. An analysis of 849 AI startups confirms that India is emphasizing AI applications and tooling, setting the stage for the next wave of AI innovation.
A key emerging trend is the rise of Edge AI, which enables AI to run directly on devices rather than relying solely on cloud computing. Investments in Edge AI are projected to increase from $21 billion to $143 billion by 2034 as AI-powered applications in smartphones, wearables, and IoT devices continue to expand. This shift is making AI more accessible and unlocking new revenue streams in consumer technology.
The media and gaming industries are also undergoing a transformation, with generative AI reshaping content creation and entertainment experiences. Additionally, AI tooling startups, which focus on optimizing and scaling AI deployments, are gaining traction and now make up 22% of India’s AI startup ecosystem.
The next five years will be crucial in shaping India’s role in the global AI landscape—not just as a user but as a creator of AI-first businesses. With strong government support and a thriving startup ecosystem, India is well-positioned to become a key player in the future of AI innovation.
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