As the Gulf pours USD bns into AI, Indian startups are becoming its go-to build partners

The UAE and Saudi Arabia have spent the past two years pouring USD bns into AI infrastructure, sovereign AI, and digital transformation. Indian AI startups are increasingly emerging as key partners in that push, gaining enterprise customers across sectors from banking and healthcare to retail and energy.

The Gulf has become a strategic growth market for Indian AI companies as the region is one of the world’s fastest-growing buyers of enterprise AI.

“The US continues to be one of the largest markets for Indian startups. What we are seeing is that the Gulf, particularly the UAE, has emerged as a strategic growth market over the last few years,” Shivendra Singh, vice president and head of global trade development at Nasscom, tells EnterpriseAM.

Strong enterprise demand, progressive AI policies, regulatory sandboxes, and the UAE’s role as a gateway to the wider MENA region make the Gulf an increasingly attractive market for Indian AI startups, Singh says.

“Governments in markets such as the UAE and Saudi Arabia are also major buyers and early adopters of AI,” Vijay Gopalakrishnan, partner at Deloitte India, tells us. Combined with sovereign AI funding, business-friendly regulation, and strengthening India-GCC trade ties, these factors have created prospects particularly in financial services, retail, energy, and government services.

India’s AI ecosystem comes of age

India now has more than 3.1k AI startups and ranks third globally in AI capability, up from seventh last year, according to a report (pdf) by Zinnov, Indiaspora, and Activate. A growing number of mid-stage companies have already proven their technology and are now looking to scale internationally, creating a pipeline of firms ready to tap overseas demand.

The trend is already visible on the ground. Companies including Fractal, Yellow.ai, Uniphore, Kore.ai, Gnani.ai, Observe.AI, Whatfix, and MathCo have established customers or operations across the GCC, while Abu Dhabi’s Hub71 has emerged as a preferred landing pad for Indian AI startups.

Beyond capital

“The first reason why Indian AI startups are eyeing Gulf expansion is the availability of high-quality, systematic data,” Shravan Bhati, co-founder and CEO of SatLeo Labs, tells EnterpriseAM. “The second reason is the region’s willingness to adopt new technologies.” That combination allows startups to build better AI models while finding customers willing to deploy new solutions faster than in many mature markets. “This is why many Indian AI companies choose the Middle East as their first international market,” he says.

All in on AI: Concurring that the GCC has emerged as one of the world’s most forward-looking regions when it comes to AI adoption, Dhruv Bhatia, head of international business at healthcare AI startup 4baseCare, tells us that Gulf governments have made AI a national priority, and there is a genuine willingness to adopt technologies that improve patient outcomes.

Healthcare providers have continued investing in AI despite geopolitical uncertainty because technologies that improve clinical outcomes remain a priority. “For bBaseCare, the decision (to expand to the Gulf) was driven by a clear healthcare need rather than market expansion alone. We saw [a window] to combine our genomics expertise, AI-driven clinical decision support, and laboratory capabilities to address that gap,” he says.

“The combination of bottom-up enterprise demand and top-down government mandate is what’s pulling Indian AI companies into the region right now,” Ahshad Jussawala, CEO of Reliance-affiliated AI company Jio Haptik tells EnterpriseAM.

For Haptik, the pivot to the Gulf was inbound; when UAE and Saudi enterprises asked Haptik to solve problems they already solved for India’s consumer-scale market, Jussawala adds.

Challenges remain

Although the GCC region has significant financial resources, buyers can still be price-sensitive, cautions Gopalakrishnan.

“Clients in the region are also highly demanding, and Indian AI startups must be prepared to manage these expectations. Besides, the need to provide AI solutions that address local Arabic-language requirements, along with geopolitical uncertainty and associated security concerns, are key challenges for Indian startups,” he says.

The next Gulf corridor?

The India-GCC AI corridor is likely to continue booming over the next three to five years, experts say, with Gulf establishments increasingly looking at Indian AI startups for their strong engineering capabilities, speed of execution, and the ability to build scalable AI solutions.

“For many Gulf enterprises, Indian startups are innovation partners who understand emerging markets and can support long-term digital transformation. While cost competitiveness remains an advantage, the bigger differentiator today is the ability to co-innovate and deliver AI solutions at scale,” Singh says.