Artificial intelligence (AI) is the new elixir. Everyone is talking about it. Everyone wants to know what we can do with it. But before we talk about the future of AI in India, let us understand the current scenario and the factors at play
AI startups can be divided into four main buckets to understand the Indian landscape better:
AI-first companies: These are companies that exist only because they have an AI solution — for instance, those developing self-driving cars/ Alexa-type systems. Their algorithms are decently mature to create fully automated data-driven systems but there are just a handful of them as the talent pool is still limited.
Human-Assisted AI companies: These are companies that use AI to automate part of a solution but typically require a human in the loop to complete the work. Most of these systems are driven by natural language processing (NLP) engines. The use cases in this category range from customer support/engagement to security alert systems to automated credit risk analysis etc.
AI-second companies: These companies are applying AI to improve parts of their solutions for their customers to significantly improve efficiencies. For example, most logistics automation platforms use rule-based allocation engines. Most of the startups we meet are in the third category.
AI infra companies: All the above three categories are in the space of applied AI and are solving vertical use cases using AI. Then there are horizontal AI companies or AI infra companies that are creating solutions to make the development/monitoring of AI systems easy and practical. Most of this work in India is in the early stage and there are only a handful of startups in AI infra.
What Is Changing?
Now, let us look at what factors are changing in India and are likely to play a large role in shaping the AI scene in 2025.
Data laws: While data privacy is super important, data laws need to balance the need of privacy with easy data usage for research and development purposes. If the laws become too difficult, they can stifle innovation and growth in AI.
AI is becoming horizontal and more available: Eventually, every product will have an AI layer. With many off-the-shelf tools available, it is becoming easy for people with minimal exposure to AI to experiment with the technology.
Understanding of where to use AI is improving: Currently, everyone is jumping on the AI bandwagon irrespective of whether or not their solution needs it. But, as our understanding of where AI can really make a difference increased, stronger and deeper use cases will emerge.
Local buyers are opening up: Indian businesses are becoming increasingly open and willing to buy from startups. This is crucial as startups can work with local customers and mature their solutions at much lower price points.O
AI’S FUTURE IN INDIA
If, at present, our regulatory framework continues to remain open and back innovation, we have a great story building for the future. In a country, where there’s a big mismatch in demand and supply, technology can play a huge role in closing that gap. We believe most products will be using AI in future and many AI-first companies will emerge across sectors. Here’s a look at them:
Robotics: AI has breathed new life into robotics. Progress in core AI in the next few years will give robots an ability to understand human speech and vision. Robotics will develop in three main areas — industrial robotics; remote-assisted robotics; and social robotics. Drones and AI-enabled hardware will enable robots to replace humans in dangerous jobs like sanitation, construction, electric linemen etc.
Agriculture: Developments in computer vision and satellite imagery will cause a mini-revolution that can potentially rival the green revolution. Completely autonomous farms are a possibility in the near term and robotics used in agriculture can greatly reduce the use of human labour and wastage, bringing down prices.
Real Estate: One of the key reasons for the high cost of real estate is lack of transparency in pricing and shortage of labour. AI, along with blockchain, can potentially increase transparency in pricing. Real estate construction time and costs will come down due to increased use of robotics.
Supply Chain: AI in supply chain will help companies discover vendors, price purchases, optimise inventories, scale logistics seamlessly, and forecast demand better. In the near term, we are bullish on AI’s ability to create tangible benefits in supply chain management and financing.
Utilities: Consumer consumption of utilities like gas/power/water can be regulated efficiently using AI. Switching between power sources or water sources and demand forecast can also be managed more effectively by AI.
Government Work: AI is the best resource allocator, free of human error and biases. AI also works round the clock and can be corruption free. Licenses allocation, public distribution systems, subsidy management, workflow optimisation can all be managed quickly and efficiently by AI.
To conclude, I would say that we are on a strong path towards adoption of AI in India in the coming years. There are a few pinch points along the way in terms of the regulatory environment and growth of talent.