Why Is Karnataka Dominating India’s GenAI Boom Startups?

India’s Generative Artificial Intelligence (GenAI) ecosystem is expanding at record speed, and Karnataka has emerged as its undisputed leader. According to the Economic Survey 2025-26, the state hosts nearly 39% of India’s GenAI startups, underlining its role as the country’s deep-tech powerhouse and a global innovation hub.

India’s Exploding GenAI Startup Ecosystem

• India’s technology startup ecosystem is now the third-largest globally, and GenAI is its fastest-growing segment.
• In just one year, the number of GenAI startups jumped sharply, reflecting rising demand for AI-driven solutions across healthcare, finance, manufacturing, defence, and consumer services.
• According to Tracxn data, GenAI startups attracted $76.4 million in funding year-to-date, spread across 18 funding rounds, highlighting growing investor confidence despite global funding volatility.

Why Karnataka Leads India’s GenAI Revolution

• Karnataka’s dominance is driven by a unique combination of talent, infrastructure, and policy support.
• The state leads India in deep-tech concentration, supported by a strong academic base with 43 State Public Universities, the highest in the country.
• This ensures a continuous pipeline of skilled engineers, researchers, and AI professionals.
• Bengaluru, in particular, provides dense networks of startups, global tech firms, venture capital, and research institutions, making innovation faster and more scalable.

From Back-Office to ‘AI Front Office’

• The Survey highlights a strategic shift in India’s technology journey from being a global back-office services provider to becoming an AI front office for the world.
• While many regions remain technology adopters, Karnataka is transitioning into a global AI innovator, building core AI products, foundational models, and advanced applications rather than just implementing imported technologies.

Funding Push & National Deep-Tech Support

• This transformation is supported by strong national backing.
• India is leveraging the ₹1 lakh crore Research, Development and Innovation (RDI) initiative, including a dedicated Deep-Tech Fund of Funds, to finance cutting-edge research in AI, semiconductors, space, and advanced manufacturing.
• This complements the existing startup fund of funds framework, strengthening India’s position in global technology value chains.

Growth Beyond Bengaluru

• The GenAI and deep-tech surge is no longer confined to Bengaluru alone.
• The Economic Survey notes increasing spillover into tier-2 and tier-3 cities of Karnataka.
• Regions like Belagavi are emerging as aerospace and advanced manufacturing hubs.
• This decentralisation helps spread innovation, employment, and industrial growth more evenly across the state.

Key Summary at a Glance

Question

Q. According to Economic Survey 2025-26, which state hosts the highest share of GenAI startups in India?

A. Maharashtra
B. Tamil Nadu
C. Telangana
D. Karnataka