The Competition Commission of India (CCI) has raised concerns over significant entry barriers faced by Indian AI startups, underscoring the need for open data and affordable compute access to foster a competitive ecosystem.
The CCI’s newly released Market Study on Artificial Intelligence and Competition reveals that most Indian AI startups operate in the application layer, with only a small fraction developing foundational AI models. While these startups drive innovation across sectors, their growth is hampered by limited access to high-quality data, expensive cloud compute costs, and funding shortages.
The study, which surveyed 106 stakeholders including 50 startups and researchers, found that 76% rely heavily on open-source technologies to overcome infrastructure constraints. However, only 16% have access to next-stage funding, leaving most startups struggling to scale effectively.
A key finding pointed to the dominance of a few global firms controlling the AI stack—from cloud infrastructure to critical datasets and foundational models—creating an uneven competitive landscape. Indian startups face high training costs and dependency on foreign hyperscalers such as AWS, Google Cloud, and Azure, which restricts their ability to compete fairly.
On anti-competitive practices, the CCI noted growing concerns among startups around AI-facilitated collusion (37%), price discrimination (32%), and predatory pricing (22%) driven by algorithmic decision-making.
To address these challenges, the CCI recommended policy measures to expand access to AI infrastructure and data, increased transparency and self-audits of AI systems by enterprises, and enhanced regulatory coordination. The commission also plans focused workshops and international cooperation to promote responsible AI competition compliance.
“Removing barriers to data and compute access is imperative to level the playing field, encourage new AI entrants, and stimulate innovation,” the report said.
This study marks an important step in shaping India’s AI ecosystem towards being more inclusive, competitive, and aligned with the country’s goal of becoming a global AI powerhouse.
