Observed Signal · Feb 25, 2026 · Market Trend · Source: techcrunch · Impact: 3/5 · Sentiment: Negative
India's AI Surge: Users Up, Revenue Down
India became the largest market for generative AI app downloads in 2025, driven by aggressive promotional offers from major AI firms to build user bases. Sensor Tower data cited by TechCrunch shows installs jumped 207% year‑over‑year, but India accounted for only about 1% of GenAI in‑app purchase revenue despite ~20% of downloads, highlighting a monetization gap. Companies including Perplexity and OpenAI have wound down extended free premium offers in India (Perplexity ended its Airtel bundle; free ChatGPT Go access is no longer available), creating a near‑term test of subscription conversion. Sensor Tower reported month‑over‑month revenue declines for AI apps in late 2025 and noted ChatGPT still drives a majority of GenAI in‑app revenue in India. Firms are exploring lower‑cost tiers, telco bundles and microtransactions to improve long‑term monetization in the price‑sensitive market.
India is a massive and fast‑growing market for GenAI downloads; the shift from free promotions to paid plans will materially test subscription conversion and long‑term monetization strategies for major AI platform providers.
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Key Takeaways & Evidence Grounding
- Sensor Tower: India became the largest market for generative AI app downloads in 2025; installs rose 207% year‑over‑year.
- India drove roughly 20% of global GenAI app downloads in 2025 but generated about 1% of GenAI in‑app purchase revenue, per Sensor Tower.
- Perplexity ended its bundled Pro offer with Indian telco Airtel in January 2026; OpenAI’s free ChatGPT Go access in India is no longer available.
- AI app in‑app purchase revenue in India fell 22% and 18% month‑over‑month in November and December 2025, respectively; ChatGPT revenue fell 33% and 32% in the same months.
- Sensor Tower: ChatGPT had ~180 million monthly active users in January 2026 in India; Gemini 118M, Perplexity 19M, Meta AI 12M.
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India's App Market Shifts from Downloads to Payments
India's mobile app market recorded $345 million in consumer spending in Q2 2026, a 35% year-over-year increase, according to Sensor Tower. Growth is being driven by generative AI, streaming, and productivity apps rather than gaming, while quarterly downloads have held steady at about 6.3 billion. Wider adoption of digital payments such as the Unified Payments Interface (UPI) and digital wallets has reduced friction for in-app purchases, boosting subscriptions and premium services. Sensor Tower data shows OpenAI and Anthropic accounted for nearly 83% of AI app revenue in India during Q2, and non-gaming apps represented 68% of mobile app revenue in H1 2026. Appfigures notes subscription growth continues but at a slower pace after an AI-fueled surge.
Global Platforms Capture Most Gains in India’s App Boom
India’s mobile app market posted strong growth in Q1 2026, with in‑app purchases surpassing $300 million (up 33% year‑over‑year), driven primarily by non‑gaming categories such as utilities, video streaming and generative AI, Sensor Tower’s data shows. Non‑gaming apps generated over $200 million in Q1 (up 44% YoY). Annual in‑app purchase revenue rose from $520 million in 2021 to more than $1 billion in 2025 and is projected to reach about $1.25 billion in 2026. Downloads have stabilized near 25 billion annually, while time spent on apps and monetization per user are improving — though India’s revenue per download (~$0.03) still lags Southeast Asia and Latin America (> $0.20). Much of the spending and top rankings are captured by global platforms (Google One, Facebook, ChatGPT, YouTube), while domestic players are prominent in video streaming (JioHotstar, Sony LIV).
AI Becomes Billion-Dollar Consumer Market, Says Sensor Tower
Sensor Tower’s “State of AI 2026” report finds generative-AI app usage and consumer spending surged in the first half of 2026. Global time spent in GenAI apps more than doubled year‑over‑year to 36 billion hours while consumer app spend reached about $4 billion. ChatGPT hit 1 billion monthly active users and averaged 215 minutes per user per month, but its cross‑platform True Audience share fell below 50% in March 2026 as competitors gain ground. Google Gemini and Anthropic’s Claude posted rapid engagement growth (Gemini: ~14 → ~100 minutes/month; Claude: ~40 → ~120 minutes/month; Claude reach +452% YoY, U.S. share ~4.4% → ~14%). More than 200,000 apps now advertise AI features (nearly 10 billion downloads H1 2026), AI-related digital ad spend was ~$1.3 billion in Q1, and retailers see measurable referral traffic and conversion gains from AI assistants (examples: Amazon’s Rufus, Walmart’s Sparky).
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