In a recent video interview titled “Peak XV’s Rajan Anandan on Frugal and Local AI, Exits and More,” published by The Economic Times, Rajan Anandan, Managing Director at Peak XV Partners, outlined a pragmatic and distinctly local approach to the development and scaling of artificial intelligence in India. The seasoned investor and former Google executive underscored the necessity for AI solutions that are not only technologically robust but also economically viable and contextually relevant to the Indian market.
Anandan emphasized the significance of frugality in the AI development process, particularly in emerging economies. He pointed out that while AI innovation has been heavily concentrated in advanced Western economies with substantial capital and computational resources, Indian startups must navigate a more resource-constrained environment. According to Anandan, this necessity is driving a unique form of innovation—one that values efficiency, affordability, and immediate applicability over purely high-end technological aspirations.
The interview touched on the growing proliferation of Indian deep tech and AI startups and the momentum they are gaining in spite of structural challenges. Anandan highlighted the increasing ambition among Indian entrepreneurs to build globally competitive platforms while remaining deeply rooted in solving local problems—ranging from agriculture to education and healthcare. He offered insights into the kinds of startups Peak XV Partners is watching closely, stressing the need for businesses that can demonstrate strong unit economics and scale with sustainability.
Exits, another focal point of the conversation, were discussed in the evolving context of mature Indian startups. Anandan noted a positive trend with respect to merger and acquisition activity, asserting that the Indian tech ecosystem is beginning to offer more credible exit opportunities than in previous years. He linked this to greater maturity in the startup ecosystem and a stronger appetite from both domestic and international acquirers, especially in the SaaS and AI sectors.
Reflecting on broader industry dynamics, Anandan remained cautiously optimistic about India’s position in the global AI race. He acknowledged the country’s robust talent pool and entrepreneurial energy but stressed that real success will depend on building AI systems that are intrinsically designed for Indian realities. “We are just getting started,” he remarked, alluding to the potential for India to become a serious contender in AI if it balances innovation with the practical needs of its vast and diverse user base.
Overall, Anandan’s insights, as captured by The Economic Times, provide a blueprint for how Indian AI startups can thrive—by blending technological ambition with contextual intelligence and financial prudence. His observations point toward a future where innovation is not imported wholesale, but engineered from the ground up to reflect both the constraints and opportunities of the Indian market.
