CHENNAI: India has more consumer artificial intelligence (AI) startups than the United States, according to Rajan Anandan, managing director at venture capital firm Peak XV Partners, who said the country must significantly increase research and development (R&D) spending and ease regulatory hurdles to build globally competitive companies.

Speaking at a fireside chat in Chennai on Thursday, he said India’s growing consumer AI startup ecosystem presented an opportunity, but the country needed to strengthen its innovation capacity to translate entrepreneurial activity into larger businesses.

“India invests about 0.65% of GDP on R&D, both private and public sector,” he said, comparing it with 2.5% in China and 3.5% in the US. He called for India to raise its annual R&D spending from around $18 billion to $100 billion over the next few years, arguing that both government and industry had a role to play.

Anandan said private-sector R&D spending, in particular,needed to increase substantially, while public investment and stronger endowments at leading IITs could support research and innovation.

He also flagged the time and regulatory effort involved in starting and closing businesses as constraints on entrepreneurship.

Anandan said shutting down a company in India could take two years, even though many startups do not succeed. “Most startups don’t work, and then the entrepreneur is trying to spend two years to shut down a company. It makes no sense,” he said. He argued that delays of this kind could hamper businesses that need to test ideas and build physical operations before scaling

Referring to the ease of doing business in different States, Anandan said Chennai was “a little better” than Karnataka, while describing the process of securing approvals to establish a factory in the latter as difficult.