India’s AI Growth: Capital & Talent Gaps Hinder Global Ambitions

Bengaluru – India’s burgeoning artificial intelligence sector is poised for significant growth, with projections indicating a market value of $126 billion by 2030. However, a recent gathering of top startup executives at the Inc42 AI Summit 2026 in Bengaluru underscored persistent challenges in capital, talent, and infrastructure that are hindering the nation’s ability to become a core AI technology developer, rather than just a consumer.

Mohit Saxena of InMobi highlighted that India lags behind global leaders like the US and China due to insufficient capital depth, limited access to advanced chip technology, and a lack of long-term ecosystem investment. This disparity positions India primarily as a consumer of AI technologies, rather than a creator of foundational infrastructure.

Conversely, Rahul Chari of PhonePe emphasized the increasing importance of data distribution and AI-driven engineering in the evolving tech landscape. He suggested that future engineers will transition from coders to architects, focusing on system design and hardware integration.

The summit also shed light on how AI is transforming operational efficiencies within startups. Rapido reported that AI now generates two-thirds of its code, significantly shortening software development cycles. S45, a fintech platform, has adopted a policy of hiring human employees only for roles that AI cannot perform.

Further insights into AI’s impact came from Zepto and ElevenLabs. Zepto is leveraging AI to accelerate experimentation in its operations, while ElevenLabs is using AI to enhance customer interactions by processing voice and intent to reduce friction and improve service resolution.

From an investment perspective, venture capitalists are becoming more discerning. Archana Jahagirdar of Rukam Capital and Ashwin Raguraman of Bharat Innovation Fund noted that investors are moving beyond AI buzzwords, focusing on critical metrics such as adoption rates, profit margins, compute costs, and demonstrable customer usage.

The overarching sentiment from the summit indicated a shift in focus from the relevance of AI to the practical ability of teams to translate AI leverage into sustainable business advantages.

In related news, the gig economy in India faces scrutiny over worker safety, with ongoing discussions about platform accountability and the need for a clearer regulatory framework. In the financial sector, TBO Tek reported a modest 2% year-over-year profit increase despite significant revenue growth, attributing the flat performance to rising expenses and macroeconomic headwinds. Semiconductor startup C2i secured $16.7 million in a Series A funding round, aiming to develop power management solutions for AI data centers. On the digital payments front, PhonePe continued its dominance in the UPI market, processing over 1,033 crore transactions in April. Meanwhile, Zomato launched a “Healthy Subscriptions” feature to capitalize on the growing demand for healthy food delivery.