Will AI Drive the Next Phase of India’s Edtech After the Boom and Bust?

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India’s edtech sector is at a crossroads. After a boom in 2021, the industry has witnessed a sharp decline in both funding and the number of new startups. 

According to Tracxn, edtech funding fell from $4.16 billion across 379 rounds in 2021 to just $97.89 million across 36 rounds in 2025, reflecting cautious investor sentiment. While 2024 saw some recovery, with $768.36 million raised in 105 rounds, the overall trajectory points to consolidation and a shift toward sustainable, high-impact solutions.

The slowdown is also evident in the number of new companies being founded each year. After a surge in 2021 with 1,877 new startups, the numbers steadily declined: 1,318 in 2022, 1,117 in 2023, 578 in 2024, and a sharp drop to just 55 in 2025. This trend highlights a dramatic slowdown in new market entrants, signaling a phase of maturation and selective growth for the Indian edtech ecosystem.

Yet, amid this funding slowdown, the demand for AI-driven, personalized learning has surged. Schools, parents, and students are increasingly embracing digital education solutions, recognizing that AI is no longer just “nice to have” but is a critical tool for scaling learning and delivering measurable outcomes. 

For many Indian students and their parents, the challenges of personalized learning, measurable progress, and accessibility remain significant. In an exclusive conversation with MIT SMR India, Piyush Kumar, Co-Founder of VEGA AI, the Virtual Entity for Guidance & Assistance, explained how his platform tackles these issues head-on.

“At VEGA AI, we focus on solving the two biggest challenges for Indian students and parents: personalization and measurable outcomes. For students, our platform creates adaptive practice paths, offers AI tutor avatars available 24/7 in multiple languages, and provides instant feedback on questions, helping them learn at their own pace. For parents, we make learning quantifiable. They can see mastery dashboards, error patterns, and progress reports, so they know exactly where their child stands and how they are improving. This combination, personalization for the learner and visibility for the parent, is at the core of what we do.”

Similarly, Deepak Verma, CEO of EnglishHelper, highlighted the impact of AI in building foundational literacy and mentioned that their newly launched Reading and Comprehension Assistant (RCA) provides adaptive and personalized learning pathways for learners to develop all core language skills, listening, speaking, reading, and writing, required for English proficiency. 

“Learners can choose accents, access support in multiple Indian languages, and receive instant feedback. The platform does not depend on human teachers or tutors, enabling learners to progress at their own pace,” he said.

For Arun Prakash M, Founder and CEO of HCL GUVI, Education Administration Programs, bridging the gap between access, affordability, and employability is key. HCL GUVI was conceived with a mission to make sure that no student gets left behind because of access or language-related challenges. 

He said, “We offer employment-centred training and vernacular-centric tech courses. Our community of learners exceeds 3.5 million, providing structured industry-specific courses in multiple Indian languages. Parents look for tangible outcomes, so we integrate hands-on coding, real-world projects, and AI-driven assessments to ensure career readiness.”

Accessibility, Affordability, and Personalization

The platforms are making measurable impacts in three crucial areas. VEGA AI focuses on accessibility by reaching students across tier 2 and tier 3 cities without requiring metro-based one-on-one tutoring. Affordability is addressed through digitized workflows that reduce costs, and personalization ensures every student receives a tailored learning journey. 

According to Kumar, “Today, we already serve 80+ customers in India, including test prep institutes, coaches, and schools, showing that these problems are being solved in real learning environments.”

EnglishHelper addresses infrastructure challenges, offering offline lesson completion and multilingual support, while keeping costs below $1/month/student for government and affordable private schools. HCL GUVI has expanded access to over 3.5 million learners in 1,000+ towns, offering courses in 20+ Indian languages and affordable skill-based programs to ensure learning isn’t limited to the privileged.

Rising Demand and Shifting Adoption Patterns

Over the past few years, the demand for AI-driven learning has grown dramatically. VEGA AI noted that students now actively engage with interactive AI avatars and adaptive tests, while parents increasingly demand data-driven insights into their child’s performance. Schools and test prep institutes have embraced AI for grading, content creation, and engagement.

“India is ready not just for digital education, but for AI-native education — and VEGA AI is at the center of that shift,” said Kumar.

EnglishHelper observed a major mindset change regarding English language learning. Ten years ago, English was not universally considered necessary; today, it is recognized as essential for professional advancement. Their RCA platform is now poised to reach millions of students via partnerships with state governments and K12 publishers.

HCL GUVI has witnessed a similar evolution. Initially catering to college students and freshers, their platforms now serve K-12 students and professionals, with a focus on AI, ML, and cloud computing. Parents have embraced online learning post-COVID, valuing vernacular courses and placement-linked programs. Schools and colleges are integrating hybrid learning approaches aligned with NEP 2020, highlighting the growing relevance of AI-personalized education.

What’s Next?

India’s edTech market, now worth $5.13 billion, is riding a strong growth wave. The boom is powered by deep internet penetration (over 800 million users), affordable smartphones, and government initiatives like Digital India and the NEP 2020, which have pushed digital tools into over 100,000 schools. Platforms such as SWAYAM and DIKSHA have already reached 33 million learners, with demand for upskilling, reskilling, and test prep further fueling adoption.

What’s striking is that online learning is no longer just an urban trend—tier 2 and 3 cities are fast joining in, aided by rising rural internet penetration (now 38%). Bengaluru leads the charge with giants like BYJU’S and Unacademy, while Hyderabad and Mumbai act as strong innovation and investment hubs. Together, they’re shaping an ecosystem where digital education is becoming mainstream across India.

India’s edtech sector is no longer about hype; it is about measurable outcomes, accessibility, and personalized learning. AI, vernacular learning, and skill-based programs are redefining the way students learn and parents assess progress. While funding and new company formation have slowed, platforms like VEGA AI, EnglishHelper, and HCL GUVI show that impactful, outcome-driven education is here to stay, empowering learners and reshaping India’s future workforce.