Two of the world's leading artificial intelligence companies are increasing their presence in India. OpenAI, with its ChatGPT, and the AI search engine Perplexity, are targeting India's large, young, and cost-aware consumer base. Their goal is to gain new users and use the country as a testing ground for expansion into other developing markets.
This strategic move highlights India's importance in the global AI landscape. The country's vast population and increasing digital adoption make it an attractive market despite challenges in monetization.
Key Takeaways
- OpenAI and Perplexity are expanding into India with localized products.
- India is seen as a crucial market for user acquisition and a test bed for other emerging economies.
- AI app downloads in India have increased by over 500% this year.
- ChatGPT leads AI app downloads with 125 million users in India.
- India offers significant data advantages for training AI models.
- The Indian government aims for a pro-innovation environment before extensive regulation.
Global AI Companies Expand in India
OpenAI's ChatGPT and Perplexity launched specific plans and products for India this summer. These initiatives aim to attract the country's huge number of young consumers. India has a population of 1.4 billion people, making it the world's most populous nation.
In August, ChatGPT introduced a monthly plan for Rs399, which is about $4.50. The company also announced the opening of its first office in the country. This shows a clear commitment to the Indian market.
"We have to be selective on which markets we go to understand deeply . . . with the hope that we learn things that can translate elsewhere," Nick Turley, head of ChatGPT, told the Financial Times.
ChatGPT has also worked to make its service more accessible. It now offers support in a dozen Indian languages. This helps the platform reach users in rural areas. The app is also being adapted to function effectively in areas with low internet bandwidth.
India's Digital Footprint
- 1.13 trillion: The number of hours Indians spent on apps in 2024.
- 24.3 billion: The total number of apps downloaded by Indians in 2024, leading the world.
- Over 500%: Increase in AI app downloads in India this year compared to 2024.
Multi-Language Strategy and Data Advantages
The multi-language approach helps ChatGPT train its AI models more effectively. This allows for deeper market penetration in India. The knowledge gained can then be applied to other regions globally. This strategy makes India a unique learning environment for AI development.
"I think it’s a really unique opportunity for India to lead the way," Turley added.
Following OpenAI's lead, Perplexity offered its annual $200 Pro service for free in July. This offer was for subscribers of Airtel, India’s second-largest telecom provider. Aravind Srinivas, co-founder and CEO of Perplexity, stated that this decision was based on the curiosity of Indian users.
India's Market Dynamics and Monetization Challenges
India is already a major market for Meta's AI-powered services. These include WhatsApp, Instagram, and Facebook, which together have 1 billion users in the country. Additionally, about 95% of smartphone users in India use Google Android devices. This gives Google's AI platform, Gemini, a significant advantage.
While India's large population offers scale, monetizing the market can be challenging. According to Sensor Tower, a digital market research firm, Indians downloaded 24.3 billion apps in 2024. They also spent 1.13 trillion hours using these apps. However, India's app spending was less than $1 billion, placing it outside the top 20 globally.
"The sheer volumes make India a market which cannot be ignored," said Mahesh Makhija, technology consulting leader in India at EY. He noted that India remains a low-revenue market per customer.
India also provides an inexpensive market for AI companies to train their models on large datasets. This offers "very significant data advantages," according to Makhija. This data is crucial for developing AI agents that can help users with various tasks, which is a key goal for these companies.
Local Competition and Regulatory Landscape
Global AI companies are also benefiting from a lack of strong local competition in India. While some government-backed startups, like Sarvam AI, are developing domestic models, they have not yet released consumer products that can compete with platforms such as ChatGPT, Gemini, Perplexity, or China's DeepSeek. DeepSeek's recent advancements have served as a wake-up call for many in India.
Government's Approach to AI Regulation
The Indian government plans to establish a robust regulatory framework for AI. However, it wants to allow local companies time to innovate. This approach supports the growth of India's nascent AI ecosystem before implementing strict rules.
Jibu Elias, an AI researcher and governance expert, explained, "Our ecosystem is very nascent, and the players we have are all mostly start-ups, young entrepreneurs." He added, "I think the government has made it very clear that it wants to have a pro-innovation ecosystem, and jumping into regulation early on will give these big guys an unfair advantage."
In the absence of established domestic competitors, ChatGPT and Perplexity are using their early market entry to attract many young users. Elias noted that once users adopt a specific AI tool, they tend to remain loyal to it. This creates a "lock-in" effect.
Rising AI App Adoption
Sensor Tower data confirms the rapid adoption of AI apps in India. Downloads of AI applications have increased by more than 500% this year compared to the same period in 2024. This shows how quickly consumers are embracing these new platforms.
ChatGPT is currently the most popular AI app in India. It has recorded 125 million downloads this year. This is more than four times the downloads of Perplexity, which has 26 million, and Google's Gemini, with 23 million.
Nick Turley called India an "absolutely incredible market" for ChatGPT. He stated that India is now its second-largest market by user count. Turley also expressed confidence that India would soon become ChatGPT's biggest market globally.