A recent study by the Competition Commission of India (CCI) reveals that a significant 67% of Indian AI startups are primarily focused on building AI applications, highlighting a dynamic shift in the nation's business landscape. This focus on application development, rather than infrastructure or data layers, underscores the innovative and practical approach of Indian AI companies. These startups are leveraging AI to drive efficiency, personalize services, and unlock new opportunities across various sectors.
The CCI's market study, conducted by the Management Development Institute (MDI), Gurgaon, examined the AI landscape in India to identify competition issues and evaluate regulatory frameworks. The study relied on both secondary and primary research methods, including literature review, database analysis, semi-structured and structured interviews, and stakeholder surveys to provide an in-depth and holistic understanding of the various objectives. The findings highlight that AI adoption is accelerating across sectors like banking, financial services, insurance (BFSI), healthcare, retail, e-commerce, logistics, and marketing.
A notable trend is the widespread use of open-source platforms by Indian AI startups, with 76% relying on these technologies for their accessibility and cost advantages. This allows them to innovate rapidly and scale efficiently, fostering a more inclusive and dynamic digital economy. The key areas of work for these startups include Machine Learning (88%), Natural Language Processing (78%), Generative AI/LLMs (66%), and Computer Vision (27%).
The Indian AI market has experienced substantial growth, nearly doubling from $3.2 billion in 2020 to $6.05 billion in 2024. Projections indicate it will reach $31.94 billion by 2031, outpacing many other technology sectors in the country. This explosive growth is driven by advancements in machine learning, natural language processing, computer vision, and generative AI, supported by robust data, infrastructure, and development layers. The global AI market is also expected to rise from $244.22 billion in 2025 to a staggering $1 trillion by 2031.
However, the CCI study also highlights potential competition concerns. These include algorithmic collusion, price discrimination, entry barriers, network effects, and opaque algorithms. About 37% of surveyed startups expressed concerns about AI-enabled collusion, 32% pointed to price discrimination, and 22% flagged predatory pricing. To address these risks, the CCI has suggested that AI companies carry out self-audits to ensure their systems do not unintentionally harm competition.
Despite these challenges, the Indian government is actively promoting the growth of the AI ecosystem through initiatives like the IndiaAI Mission, with a budget of ₹10,300 crore. This mission aims to expand compute access, support AI startups, and catalyze innovation. The government is also focused on upskilling the workforce in foundational, in-demand, emerging, and digital skills.
The CCI's study emphasizes the need for continued policy emphasis on facilitating access to AI infrastructure, removing entry barriers, and building regulatory capacity to ensure fair competition in India's AI markets. Transparent governance frameworks, industry self-regulation, and international cooperation will play pivotal roles in shaping a competitive, innovative, and responsible AI ecosystem.
