AI giants Anthropic, OpenAI, and Perplexity are rushing into India. It could be the 'next billion users' era again.

• OpenAI, Anthropic, and Perplexity are deepening their presence in India.
• Both India's government and American tech companies are investing in the country's AI ecosystem.
• Investors view India as a global leader in AI, while some technologists caution about past mistakes.

By 8:30 a.m. on a crisp morning in early October, a rooftop in Indiranagar, a leafy Bengaluru neighborhood that is home to some of India's most prominent startups and venture firms, was already overflowing.

More than 200 founders and developers packed into Lightspeed Venture Partners' office for an early morning session with Anthropic executives Chloe Ho, Guillume Princen, and Daniel Delaney, who were being interviewed by Hemant Mohapatra, a partner at the firm. Some people watched on a screen from an overflow room nearby.

When Mohapatra asked how many in the audience had used Anthropic's chatbot, Claude, nearly every hand in the room went up.

Anthropic was drawn to India's technical talent, its CEO Dario Amodei had announced days earlier in a blog post, saying that the company will open its first India office in Bengaluru early next year. The country, he said, would "play a central role" in how AI develops "globally and democratically." Later in the month, Amodei would meet with India's prime minister, Narendra Modi, to discuss the future of AI for "over a billion people."

Anthropic isn't alone. In recent months, American AI companies, such as OpenAI and Perplexity, have also steadily expanded their footprint in India, the world's largest open internet market outside the US. The race isn't just for users. It's for engineers, enterprise customers, and a chance to shape how AI is built and governed in one of the world's largest democracies.

OpenAI, whose leader, Sam Altman, has already met with Modi several times over the past two years, plans to open its first office in India by the end of the yearand has already made several hires, including heads of government relations and social media. This week, it announced that it would make an India-specific ChatGPT plan free to everyone in the country for a year, starting in November.

In July, San Francisco-based AI search startup Perplexity announced it would give away a free year of its Pro plan to all 360 million customers of Airtel, one of India's largest telecom giants.

These AI companies follow the footsteps of Western tech giants such as Google, Meta, and Amazon, which have invested billions over the past decade to target what they refer to as the "next billion users." They aimed to get hundreds of millions of Indians coming online for the first time hooked on their products by wooing them with free internet, low-cost Android phones, and data-light versions of their apps.

For the big AI companies, however, "India is not the 'next billion users' market. It's the 'first billion users' market," Rajan Anandan, managing director at VC firm Peak XV Partners and previously the head of Google in India, told Business Insider.

This year, India is expected to have more than 900 million internet users, according to a report from the Internet and Mobile Association of India and research firm Kantar. For Western AI companies, that scale can become a strategic advantage. OpenAI describes India as its fastest-growing market outside the US. Anthropic says that India ranks second globally in the consumer usage of Claude.

It's a level of engagement that echoes an earlier era of Silicon Valley's expansion beyond the US. By the time Anadan left Google in 2019, he said that India was the single largest market for all the company's largest products.

"If you want to build a global consumer technology company today, you have to be in India," Anandan said. "If you're not, it's highly likely that five years from now, it'll be too late."

10 years after Big Tech first started expanding in India, it's a vastly different market. This time, the main customers aren't just first-time internet users. They're also established local companies and experienced developers. Global AI firms are "re-evaluating India's role" in their own growth strategies, says Prayank Swaroop, a partner at Accel, which also hosted an Anthropic event in Bangalore.

"It's a community that's far more mature now, " Swaroop said.

India's AI infrastructure

Western tech companies are also racing to build the infrastructure needed to power AI in India.

Earlier this month, Alphabet announced it would spend $15 billion to build a data center campus in the country, its largest single investment in India to date. Bloomberg reported that OpenAI is scouting local partners in India for a facility as part of its global Stargate data center expansion, a project that could become one of India's largest AI data centers.

The investments show how India's push to build its own computing backbone is converging with Western AI firms that increasingly see the country as both a market and a strategic hub.

This isn't just a land grab among American firms. India has entered the chat. In March 2024, the government approved a five-year plan, known as the IndiaAI Mission, backed by $1.2 billion, to develop its own AI ecosystem from the ground up.

The ambitions are vast: to create a state-backed computing network with more than 10,000 GPUs for startups and researchers, to bankroll homegrown AI models trained on India's 22 official languages, and to dramatically scale up the country's AI workforce.

Already, Indian startups are churning out their own language models, such as Sarvam-1, which supports 10 Indian languages, and Project Indus, which can handle 40 dialects of Hindi.

"India is becoming the place where AI gets operationalized," Swaroop told Business Insider. "It's where scale meets ingenuity."

Some worry about American tech expansion in India

Some Indian technologies worry that the country is once again opening its doors to foreign tech firms without asking what it's getting in return.

"I don't want to be a country that just gives up data or increases sales for yet another US company," Saurav Agarwal, a Bengaluru-based developer who attended the Anthropic event organized by Lightspeed, told Business Insider. "It feels like a lot of taking and not enough giving."

Agarwal said that what unsettled him the most at the session was that the company's executives spoke enthusiastically about policy partnerships and business deals, and not enough about hiring engineers in India.

"They mentioned legal, partnerships, and policy," he said. "But nobody mentioned developers."

That absence, to him, underscored a familiar imbalance: global firms eager to tap into India's user base — not necessarily to build technical capacity within the country.

"When I see companies like Anthropic entering India, I see that they want to get access to our data, our culture. They're here to do business. But if they're not contributing to GDP either through jobs or real R&D, it doesn't make sense," Agarwal said.

India is the only large, unfettered internet market where Silicon Valley companies can grow beyond the US. India's YouTube is YouTube; its Instagram is Instagram; and its Google is Google. Unlike China, there are no meaningful homegrown alternatives.

Without stronger policy guardrails, Agarwal worries that India is putting itself at risk by supplying raw materials and labor to Western models instead of building its own with a genuine commitment.

Western tech companies have a history of moving fast and breaking things in India. In the last few years, people have been killed in mob lynchings fueled by rumors on WhatsApp, and hate speech has flourished on X, deepening political and religious divides in the country.

As AI companies scale up in India, they're bringing new forms of risk with them. A recent investigation by MIT Technology Review found that OpenAI's GPT-5 model exhibited widespread caste bias, choosing stereotypical answers 76% of the time. OpenAI's image generator, Sora, showed similar bias, producing caste-coded imagery that reflected long-standing social hierarchies, the report said.

"If companies like Anthropic enter India and actually hire good people, that could shift us from a services economy to an AI development economy," said Agarwal. "But if it's just offices and partnerships, it's not wealth creation — it's extraction."

Anandan, the former head of Google in India, doesn't share these worries. He added that the leader of digital payments in India is a homegrown payment infrastructure called Unified Payments Interface (UPI), which processes more transactions than Visa does worldwide. To Anandan, it's proof that India doesn't always follow Silicon Valley's playbook. Sometimes, it writes its own.

He said that India's largest startups have top talent and that AI will follow a similar pattern: mass adoption driven by affordability and local innovation.

"We have world-class talent now — product managers, engineers, growth marketers — who came up at companies like Flipkart, Google, Blinkit, and ShareChat," Anandan said. "We didn't have that 10 years ago."

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