India invested just $15 billion in AI against $757 billion in US: Why private capital matters

India's artificial intelligence (AI) ambitions face a significant funding challenge, with private investment in its AI economy exceeding $15 billion between 2013 and 2025, compared with $757 billion in the US and nearly $132 billion in China, according to Stanford University's AI Index Report cited by Bloomberg News.

The gap highlights the scale of investment required for India to build a globally competitive AI ecosystem, even as the government steps up spending on computing infrastructure, datasets and domestic AI models. Private investors, including billionaire family offices, venture capital funds and large conglomerates, are expected to play a crucial role in financing the sector's expansion.

IndiaAI Mission seeks to build public infrastructure

The government's ₹10,371-crore IndiaAI Mission focuses on expanding computing capacity, improving access to datasets, developing sovereign AI models and creating supporting public infrastructure.

However, public investment alone may not be sufficient to finance the broader AI ecosystem, which includes startups developing AI applications, enterprise software, coding tools and industry-specific solutions.

India's relatively limited AI investment also reflects constraints in computing infrastructure, specialised research talent and access to capital. Addressing these gaps will be important if domestic companies are to develop and scale products that can compete internationally.

Family offices and investors increase AI bets

Private capital is showing signs of gaining momentum. Funding from Indian family offices and angel investors into AI companies, both in India and overseas, rose nearly 50% so far in 2026 to around $760 million, according to data provider Tracxn Technologies, Bloomberg reported.

Premji Invest, the investment firm associated with billionaire Azim Premji's family, and Claypond Capital, the family office of Manipal Group chairman Ranjan Pai, are among the investors backing AI-related businesses.

Premji Invest participated in a $27 million funding round for AI verification platform Pramaana Labs in June. Claypond Capital backed coding platform Emergent's $130 million funding round in July and participated in content startup Flam's $40 million round in September.

The investments reflect growing interest in businesses developing AI models and applications for commercial use. However, investors are entering a sector that requires sustained funding before many companies can achieve scale.

“AI needs patient capital, which is scarce, and the investing universe is still at a very early stage,” Riddhiman Jain, head of investments at Waterfield Advisors, told Bloomberg.

Corporate investment adds to India's AI push

Large Indian conglomerates are also committing substantial capital to AI-related infrastructure, including data centres and semiconductor manufacturing. Gautam Adani, Mukesh Ambani's Reliance Industries and the Tata Group are among the major corporate players investing in the sector.

These investments could help expand the computing capacity required by AI businesses, while government-backed infrastructure could support startups that cannot afford to build their own systems.

India may also have a cost advantage in developing AI applications and software services for global customers. However, narrowing the investment gap with the US and China will require sustained private funding alongside government support.

The challenge for policymakers is to ensure that public infrastructure spending attracts additional private capital, enabling Indian AI companies to grow beyond early-stage development and compete in global markets.