India’s first GenAI unicorn shifts to cloud services as AI model ambitions face reality

Krutrim, India’s first GenAI unicorn, is shifting from AI model development to cloud services after months of relative silence on product updates – a move that reflects the tougher economics of building large-scale AI systems.

On Tuesday, Krutrim said it was moving toward cloud services, adding that the shift follows a business overhaul in late 2025 that involved reallocating capital and talent and halting chip design efforts. The update comes over a year after the Bengaluru-based startup released its Krutrim-2 base model.

The move follows a period of limited public activity from Krutrim, which has made no significant product announcements in recent months. last message on X dating from December. The startup did not appear in any sessions at India’s AI Impact Summit in New Delhi, which was attended by global players such as Anthropic, Google and OpenAI.

Competitor Sarvam, on the other hand, took part in multiple sessions during the six-day AI event, where it presented new open source models, hardware developments and commercial partnerships.

The changes also come after a series of layoffs at Krutrim over the past year more than 200 roles deleted according to local media reports over several rounds. Starting up pulled its Kruti AI assistant app from the app stores in April.

Founded by Bhavish Aggarwal (pictured above), who also heads car company Ola and EV maker Ola Electric, Krutrim had initially positioned itself as one of India’s first GenAI contenders, looking to build domestic alternatives to models from companies like Anthropic, OpenAI and Elon Musk’s xAI. The startup raised $50 million in January 2024 at a $1 billion valuation, reflecting early investors’ enthusiasm for India’s own AI ambitions, even as AI funding in the country remains much smaller than in the US.

Krutrim said it generated about ₹3 billion (about $31.52 million) in revenue in fiscal 2026, a threefold increase from a year earlier, along with first annual net profit and margins above 10%. The startup didn’t disclose how much of that revenue came from third-party customers versus parent company Ola’s ecosystem. Previous reports had already indicated this approximately 90% of sales in FY25 came from group companies.

However, Krutrim said it is seeing growing demand for its AI cloud services, with more than 25 enterprise customers in industries such as telecom, financial services and healthcare. It added that most of the GPU compute capacity is already deployed for remote workloads.

Sanchit Vir Gogia, chief analyst at Greyhound Research, said the move to the cloud made commercial sense, but warned that Krutrim’s profitability claims would need to be tested. “The standard of proof must rise with the claim,” he told TechCrunch.

As Krutrim shifts to cloud infrastructure, rivals like Sarvam have continued to release new AI models and sign partnerships, including a recent one with space technology company Pixxel to develop an AI-powered orbital data center.

As Gogia notes, infrastructure may play the most viable role in the Indian AI market in the short term, even as the longer-term ambition to build competitive models remains.

Krutrim did not answer questions about the exact revenue mix, corporate customer base and recent restructuring.