Physical AI startups out to play the big game

The landscape of robotics and physical AI startups in India is experiencing a notable surge in investment, reflecting a growing confidence in this sector. In 2025, Indian startups raised a total of $130 million across 25 deals, marking an increase from $124 million in 2024 and $91 million in 2023, according to data from Venture Intelligence. This upward trend indicates that while the funding amounts may still lag behind those received by startups in foundational or application layers of AI, the momentum in the robotics space is unmistakably gaining traction.

In the first quarter of 2026 alone, physical AI startups secured $42 million as investors increasingly focus on robotics and related technologies. Noteworthy funding deals include $28 million for Unbox Robotics, alongside investments in robotics hardware startup Armatrix and robotics inspection and maintenance company Octobotics, which raised $1.13 million. Additionally, startups like CynLr are actively seeking funding to further their innovations. This growth in India is attributed to several factors, including heightened awareness and acceptance of robotic technologies, a maturing manufacturing ecosystem, and decreasing hardware costs, all of which are fostering industry expansion.

The Current State of Robotics in India

The robotics industry is currently at a pivotal moment, characterized as a key area of interest by Mela Ventures, particularly as AI continues to integrate into this domain. Krishnakumar Natarajan, managing partner at Mela Ventures, emphasizes that AI has simplified the design of complex systems. Furthermore, advancements in the supply chain ecosystem have led to a reduction in the cost of essential components like batteries and motors by 20-30%, despite an increase in the costs of GPUs and memory.

James Davidson, chief artificial intelligence officer at Teradyne Robotics, highlights a significant shift in industry attitudes towards technology adoption. There is a growing willingness among companies to replace manual labor with robotic solutions, particularly in sectors such as automotive and heavy machinery. This trend is evidenced by the increasing presence of robots on Indian shop floors. According to the International Federation of Robots, India had 9,120 robotic units installed in 2024, reflecting a 7% increase from 2023, positioning the country sixth globally behind Germany, South Korea, the US, Japan, and China.

The rise of enabling startups in India is also noteworthy. Companies like FPV Labs and Objectway are focused on data collection for training robots, while infrastructure startups such as AuraML are developing platforms to simulate real-world environments for testing robotic systems before deployment. Ayush Sharma, co-founder of AuraML, explains that their multimodal platform can drastically reduce the time required to create a digital factory from six months to just 10-30 minutes, showcasing the efficiency of their approach. AuraML has successfully raised $1 million in seed funding from investors including DeVC and Indian Angel Network.

Challenges Facing the Robotics Sector

Despite the undeniable momentum in the robotics sector, founders acknowledge several challenges that hinder the growth of robotics companies in India. A Bengaluru-based founder pointed out the lack of foundational AI research and a dense talent pool necessary for the ecosystem to scale and mature effectively. Pranav Pai, managing partner of 3one4 Capital, identifies customer acquisition as a significant hurdle. While sectors like automotive and heavy engineering are investing in robotics technology, larger customers, particularly public sector units (PSUs), are not as engaged. This situation contrasts sharply with the United States, where government agencies are substantial customers of startups and provide large contracts.

Pai further notes that the Indian government lacks a comprehensive grant system for research and development in physical computing, unlike the US. He argues that a more robust public R&D program could help create a more systematic approach to fostering innovation in this field. As the robotics industry in India continues to evolve, addressing these challenges will be crucial for sustaining growth and ensuring the sector reaches its full potential.

In summary, the Indian robotics and physical AI sector is on an upward trajectory, marked by increased investment and a growing acceptance of technology. However, the path forward will require overcoming significant challenges related to talent, customer engagement, and government support to truly capitalize on this momentum.