India’s AI boom pushes firms to trade near-term revenue for users

The landscape of artificial intelligence in India is undergoing a significant transformation, as major tech companies prepare to phase out free promotional offers in a bid to convert the growing user base into paying subscribers. With India emerging as the world’s largest market for generative AI app downloads in 2025, surpassing the U.S. by a notable margin, the stakes have never been higher. Market intelligence firm Sensor Tower reports that app downloads in India soared by an impressive 207% year-over-year, prompting leading firms such as OpenAI, Google, and Perplexity to introduce extended free trials to capture a price-sensitive audience. The recent AI summit in New Delhi, which saw participation from industry leaders like OpenAI’s Sam Altman and Alphabet's Sundar Pichai, underscores India’s escalating significance in the global AI arena. As promotional strategies come to a close, companies are keen to determine how many of their newly acquired users will transition into paying customers. For instance, Perplexity recently terminated its bundled Pro offer with Airtel, while OpenAI has halted free access to ChatGPT Go in India. Despite a remarkable increase in downloads, India still accounts for only about 1% of global AI app revenue, presenting a challenge in monetizing one of the industry's fastest-growing markets. The acceleration in generative AI app adoption in India was particularly notable in September and October 2025, with downloads experiencing year-over-year growth rates of approximately 320% and 260%. However, this surge did not translate into revenue gains, as in-app purchase revenues for AI apps dropped by 22% and 18% in November and December, respectively. The revenue for ChatGPT, which dominates the Indian market with over 60% of the in-app revenue, fell even more dramatically during this period. Factors contributing to the rapid adoption of generative AI apps include the launch of new platforms like DeepSeek and Grok, as well as upgrades to existing chatbots such as ChatGPT and Gemini. Viral interest in AI-generated content has also played a crucial role, with content creation tools becoming some of the most downloaded apps in the country. In 2025, India represented nearly 19% of the global user base for leading AI assistant apps, significantly outpacing the United States at 10%. While ChatGPT remains the most downloaded generative AI app, competitors like Google’s Gemini and Perplexity are quickly closing the gap. Despite the promising growth in user numbers, engagement levels in India still lag behind more established markets. According to Sensor Tower, users in the U.S. engaged with AI chatbot apps for about 21% more time weekly than their Indian counterparts in 2025. Analysts predict that as users become more integrated into these platforms, AI in-app revenues will gradually improve, although pricing pressures in India are expected to persist due to the country’s young and budget-conscious demographic. With 180 million monthly active users, ChatGPT continues to lead the market entering 2026, trailed by Google’s Gemini and Perplexity. This scenario illustrates both the vast potential of India’s AI market and the challenges firms face in turning rapid user growth into sustainable revenue streams. Tech giants like Google, OpenAI, and Perplexity have not yet commented on these developments.