India emerges as key AI market for Silicon Valley, but

What happened

India is fast becoming a priority market for artificial intelligence (AI) companies in Silicon Valley, with firms moving from simply selling into the country to building products specifically for Indian users, though the country continues to face gaps in frontier AI talent and risk capital.

For innovation-heavy roles, he said, “you want that creativity”, making it important for some teams to work together in person. The conversation changes when AI moves into creative applications, where localisation and cultural understanding become central. Harshit Yadav, founder of AI powered entertainment platform Zingroll, said India became a fast-growing market for the company as users gravitated towards local content.

“It’s going to be the localisation of content that needs to be understood well,” Yadav said. Unlike text and coding applications, creative AI cannot simply be exported across markets because “you really need a taste, kind of a built-in thing”. 25 million to date, with backing from Accel and Network VC. It was also selected for the 2026 Accel Atoms and Google AI Futures Fund cohort.

Zingroll is continuing to work on its AI-generated Mahabharata project, Yadav said, with the quality of AI video expected to improve as the underlying models mature. “I think you’re going to see a lot more high-quality work going forward,” he said.

On the question of whether applications can capture the value being created by foundation models, Das said there was no reason they cannot, but warned that companies dependent on external models face the risk of being squeezed as models become cheaper or providers move into their markets. “They can get priced out and lose all distribution,” he said.

Why it matters

These opportunities and challenges were discussed during the panel, ‘Vibe Coding, Vibe Filmmaking, Vibe Building: The Future of Creativity’, moderated by ET’s Samidha Sharma The shift in how Silicon Valley sees India has been particularly sharp over the past nine months, said Tanay Kothari, founder of Wispr Flow, an AI dictation app.

“India went from a country that people weren’t prioritising building on to being one of the primary markets people wanted to come to,” he said, pointing to companies such as Perplexity, Cursor, and Coinbase. Companies are also beginning to build specifically for India, he said. “You are now starting to see solutions that are built for India,” particularly around multilingual applications and affordability.

However, India’s growing importance as an AI market has not translated into a comparable position in frontier AI. Deedy Das, partner at Menlo Ventures, said the country’s weakness at the foundational-model layer comes down largely to risk capital and talent. “When we invested in the Anthropic round, we put in money on a zero-revenue company,” Das said, highlighting the scale of capital required to build frontier models.

” The talent equation is equally difficult, he said, as Indian researchers with frontier AI expertise have strong incentives to join established US labs. “If you joined a company like Anthropic or OpenAI three years ago, you’d be worth $100 billion today,” Das said. ” India’s engineering strength is already an advantage for AI companies building globally, Kothari noted.

Wispr Flow, which now has about 90 employees, has teams across engineering, AI, marketing, and sales in India. “The place I found India to have an edge is on the engineering side,” he said. Wispr Flow was valued at $2 billion after raising $280 million in its latest Series B round, led by Menlo Ventures, taking its total funding to $361 million.

The valuation has nearly tripled from $700 million nine months earlier. But the concentration of frontier AI talent in San Francisco remains difficult to replicate. “This is just a unique-to-San Francisco thing,” Kothari said, referring to the concentration of people who have worked at OpenAI, xAI, and other leading AI companies.

What to watch

The pressure on AI economics is making pricing a central concern for startups. “You’re always thinking about pricing, what is the value that we’re delivering to the customers? ” Kothari said. Yadav, meanwhile, said that founders should focus on experimentation and user behaviour rather than competitors. “Just test like there’s no tomorrow. For India, the biggest AI opportunity may ultimately lie outside the race to build another frontier model.

Kothari pointed to agriculture, manufacturing, logistics, and exports. “It’s a lot of unsexy businesses,” he said, arguing that these sectors are “ready to be disrupted” by AI. Yadav similarly said application-layer opportunities have been largely ignored, and a lot could be done there. There’s a lot of potential in the application layer.