NSIM

India’s next UPI moment is consumer AI

Just over a decade ago, India revolutionised payments with UPI, transforming lives at scale. Millions of people—small shopkeepers, farmers, and everyday consumers across urban and rural India—could now send, receive, and manage money instantly from their smartphones. Put simply, UPI democratised finance and created opportunities for entrepreneurship across the country. 

India now stands on the brink of a similar metamorphosis with consumer-first AI.

AI is democratising access to everyday services

Artificial Intelligence promises to be a great equaliser, bringing personalised intelligence into everyday life, making it as accessible as payments on your phone. Just as UPI spurred new ecosystems in lending, credit, and insurance, AI can unlock entirely new solutions while making existing ones more affordable. 

The scale of this opportunity is immense: a recent NITI Aayog report estimates AI adoption in India could generate over $1 trillion in economic value by 2035, highlighting the vast potential for entrepreneurs building for everyday life.

The consumer impact of this is profound. A child in a Tier II city can learn from an AI tutor in her mother tongue; a first-time borrower can receive guidance on building a credit score; an elderly citizen can converse with a digital companion to ease loneliness; and a young parent can receive advice on nutrition and child development without paying for expensive consultations.

What was once reserved for the affluent few is fast becoming available to the masses—and entrepreneurs are already seizing the moment.

Falling costs make unit economics work

The timing is not accidental. Over the past year and a half, the cost of running large language models has plummeted by more than 85% in some cases. Startups that once considered AI integration unaffordable now find the economics working in their favour. This cost collapse has unlocked experimentation and given Indian founders the confidence to build scalable businesses.

The cost of building has fallen so sharply that AI applications can now be made affordable for value-centric Indian consumers. By driving down costs, AI enables startups to deliver expert-led services—in education, healthcare, financial advisory, and beyond—at a scale and price impossible for human experts to match.

Two tracks of consumer AI

Customised AI solutions in India are emerging along two clear tracks:

Outcome-driven AI: Applications designed to improve decision-making and deliver tangible outcomes. AI startups are unlocking personalised credit advice to help individuals take control of their financial health, while AI-driven learning platforms are offering tailored coaching in regional languages, reaching students beyond the traditional education system.

Even centuries-old practices like astrology are being reimagined through technology to deliver individualised experiences for every Indian. These developments show that consumer AI is a tangible reality, creating value and reshaping consumer behaviour across India.

Interaction-driven AI: It addresses emotional and social needs in highly personalised ways. Loneliness—and its associated psychological and physical effects—is rising. Studies show that a significant number of Indians, across youth and seniors, report feeling lonely. Startups building AI companions can adapt to user preferences, empathise, and offer support that feels unique to each individual.

India’s entrepreneurial advantage

An entrepreneur could build an AI health coach or an AI personal tutor that works in low-bandwidth rural areas, making the service far more accessible. These innovations show how personalisation, combined with accessibility, can deliver superior value to consumers.

Further, India’s diversity of languages, cultures, and consumer needs provides a natural sandbox for building AI companies at scale, addressing use cases unique to millions of Indians while setting global benchmarks in localised innovation. 

This wave of entrepreneurship is also unique because it is not metro-centric. With mobile penetration deepening and digital literacy rising in Tier II and III towns, the real unlock comes from affordability.

To be sure, challenges remain. Startups need to consider how to build defensibility and add value beyond what global horizontal players provide. Solutions need to be tailored to local customer needs and cultural contexts. Merely wrapping existing LLMs is unlikely to differentiate a business; real impact comes from building features and experiences that address uniquely Indian needs.

But the momentum is here to stay. AI is set to transform education, finance, and social support across India. Solutions that adapt to each user’s language, needs, and context can make intelligence an everyday resource. With falling costs and abundant talent, entrepreneurs must act fast to bring this vision to life for all.