Instead of trying to build the next ChatGPT, Indian tech startups are using AI to solve and automate industry-specific problems…
For the last two years, all the tech giants have been locked in a race to build the next big foundational AI model like ChatGPT, Claude or Gemini. But not Indian startups…
They’ve been in a different race altogether. Instead of focussing on a general-purpose AI model, Indian tech startups are set on vertical AI – these are specialised AI systems that are designed for specific industries and business workflows.
According to a 2025 report by startup accelerator Upekkha, this strategy could be India’s biggest AI opportunity.
Solving Industry Problems Instead of Building General AI
Vertical AI refers to tailor-made AI systems that are focussed on specific industries such as healthcare, finance, manufacturing, logistics or energy. Instead of answering general questions, these systems are built to automate real world business processes.
The Upekkha VIBE50 Vertical AI Report estimates that global enterprise spending on vertical AI will grow from USD 5 billion in 2024 to USD 47 billion by 2030. This represents an annual growth of more than 40%. According to the report: “The next $10 billion outcomes in AI will come from companies solving real workflow problems in specific industries.”
Indian startups are already building such solutions. Credgenics uses AI to help lenders automate loan recovery while DeepTek reduces radiology turnaround times in hospitals. Another startup called VaultEdge helps in processing mortgage documents for financial institutions.
The Economics Make More Sense
To build a general AI model, enormous amounts of investments are required in terms of computing infrastructure, data and research talent. Companies like OpenAI, Anthropic and Google have spent billions of dollars to develop and train their LLMs.
Indian startups just cannot compete at that scale. So, it makes perfect sense that they are harnessing AI to solve problems within specific sectors. According to the Upekkha report, training costs have fallen dramatically, with workloads that cost around USD 100,000 a year ago now achievable for roughly USD 10,000. This makes vertical AI significantly more affordable and commercially viable.
India’s Unique Advantage
India’s rise in vertical AI is not by chance. The last two decades have been spent training and building a global IT service industry that creates a huge workforce that understands enterprise operations across industries.
India currently has over 100,000 engineers with experience in both US enterprise workflows as well as Indian operating realities. This gives Indian startups a unique ability to build specialised AI solutions at significantly lower costs.
Many companies are focusing on building AI solutions in India that can be sold globally to international enterprise customers.
Investors Want ROI, Not AI Hype
This shift towards vertical AI has been due to enterprise demand and investor expectations.
Investors and businesses have stopped looking at AI demos and pilot projects. Now that the initial AI wow factor has died down, they want systems that reduce costs, improve productivity and automate workflows.
According to the VIBE50 report: “The next $10 billion AI outcomes will come from systems that automate end-to-end workflows and deliver measurable ROI, not from general-purpose tools.”
This focus is helping Indian startups to attract customers and investors in sectors like healthcare, manufacturing, finance and logistics.
The Last Word
This is a smart strategy as far as Indian tech startups are concerned. Instead of competing against the billions of dollars of OpenAI and Google, they are prioritising industry-specific problems where expertise, customer relationships and execution matter more than raw computing power.
In the process, India is building its own AI success story – not of building the world’s biggest AI models but about solving the world’s most valuable business problems.
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