Open-source powers rapid growth in India's AI market

New research from the Linux Foundation and Meta frames open-source software as a key driver of India's fast-growing artificial intelligence market, finding that most Indian startups already use open-source AI tools.

The report is based on a literature review and qualitative interviews. It estimates that 76% of Indian startups use open source AI, linking adoption to lower costs and greater scope for customisation.

Researchers also project that India's AI market will grow from USD $6 billion in 2024 to nearly USD $32 billion by 2031. The report ties that expansion to startup activity, demand for Indian technical talent, and public investment in nationwide digital public infrastructure.

"India is leveraging open source to define its own unique trajectory in the AI revolution," said Hilary Carter, Senior Vice President of Research and Communications at the Linux Foundation. "This report highlights not only the scale of India's AI opportunity, but why the country is well positioned for long-term success - thanks to its talent base, startup ecosystem, and commitment to open innovation."

Market Drivers

The research points to structural factors that make India a strong environment for the adoption and scaling of AI, it says. These include an IT services industry valued at more than USD $200 billion, deep ties to the global digital economy, a young and digitally fluent population, and a government track record of rolling out digital public infrastructure at a national scale.

Open-source AI is presented as a practical approach for local firms to build and adapt systems for Indian languages and operating conditions. The report argues that this flexibility lowers barriers to entry for startups and small businesses and positions open-source as central to both public-sector deployments and private-sector product development.

Secondary figures in the report underline the pace of change. India's AI market is estimated to have risen from USD $3.2 billion in 2020 to USD $6 billion in 2024, and is projected to reach nearly USD $32 billion by 2031. India is also reported to have more than 200,000 startups, and a 2024 report ranks the country fourth globally in terms of newly funded AI companies.

On labour market dynamics, the report notes that India has the highest year-on-year AI hiring rate globally, signalling an expanding role in the global AI workforce.

"We are witnessing a shift where India is utilising its massive talent pool to solve real-world challenges at speed and scale that few other regions can match," said Arpit Joshipura. "With a supportive government mandating open source for critical infrastructure and a startup culture that is increasingly reliant on open AI tools, India is the ultimate sandbox for innovation."

Workforce Pressures

The report also identifies risks of disruption from automation. It estimates that 45% to 69% of jobs in manufacturing, customer service, and retail could be impacted by 2030, linking that exposure to the size of those workforces and the growing use of AI in routine tasks.

At the same time, it highlights countervailing trends in skills and training, including investment in AI education and skilling platforms, as well as government-backed initiatives to widen access to training and employment opportunities as AI spreads across industries.

One example is the Skill India Digital Hub, which includes an AI assistant that lets users ask questions, find training centres, and discover jobs in a local language.

Recommendations focus on workforce development, reskilling, and applied training, as well as a national vision for open-source AI. The report calls for procurement of open models and tools, multilingual and low-connectivity infrastructure, and research into secure and responsible AI. It also recommends incentives for small and medium-sized businesses to adopt AI tools and monitoring frameworks to measure economic impact.

Social Use Cases

Beyond economic metrics, the report emphasises "AI for social good." It argues that open-source models give local developers greater control over language support and cultural context and highlights applications in the justice system, healthcare, agriculture, and public services access.

Examples include Adalat AI, which applies open source AI to courtroom transcription and documentation. The report links this to efforts to reduce judicial backlogs and improve access to timely information.

It also cites Farmers for Forests, which employs AI-based monitoring and computer vision to support smallholder farmers transitioning to agroforestry. The report states that incomes can increase by three to five times, alongside carbon sequestration and improved climate resilience in rural areas.

In healthcare, the report references Caze Labs' MeTProAI. It describes locally hosted open-source models used for clinical decision support and states that the approach keeps sensitive patient data private and secure.

Language access is another theme. The report highlights Bhashini and Sarvam AI as multilingual models that support more than 20 official languages in India, thereby expanding access to digital services and public infrastructure for groups affected by language and literacy barriers.

"India is already at the forefront of AI adoption, with its vibrant startup ecosystem creating innovative solutions tailored to the country's unique needs," said Rob Sherman, Vice President of Policy at Meta. "Open source AI coupled with pro-innovation regulation can supercharge India's AI ambitions - empowering local talent to build, adapt, and scale technologies not just for India, but for the world."

The study is part of a broader Linux Foundation Research series examining AI adoption and use across regions, including APAC, Africa and the Middle East, Türkiye, Latin America, Canada, and global markets.