Karnataka’s decision to hand a voice AI pilot to a US startup has triggered sharp backlash from Indian founders who argue the state just boxed out the very companies best equipped to serve its citizens.
The controversy centers on a memorandum of understanding between ElevenLabs and the Karnataka Innovation and Technology Society. The deal explores deploying Kannada-language voice AI across citizen services, skilling programs, and grievance systems. Users who have lost their voices could obtain free lifetime licences for synthetic speech replicas, including Kannada versions.
For ElevenLabs, the arrangement opens a formal channel into public-sector work in one of India’s most tech-dense states. India already ranks as the company’s second-largest market outside the US. More than 250 businesses use its technology, and Indian firms logged 100 million conversations on ElevenAgents in the past year. Over 70% occurred in Hindi, Kannada, Tamil, or Telugu.
However, the state’s embrace of a foreign vendor follows an earlier partnership with Anthropic on Claude certifications for AI skilling. Domestic startups view the pattern as a direct threat.
“When government services rely on foreign AI platforms, we’re potentially exposing sensitive conversations between Indian citizens and their government to entities operating under foreign jurisdictions,” said Dheemanth Reddy, CEO of voice AI startup Maya Research.
Raoul Nanavati, CEO of Navana.ai, framed the stakes bluntly. A government contract, he said, represents the most valuable reference an Indian AI company can earn. Foreign firms don’t need it. Local startups do. Losing such deals strips domestic companies of the credibility required to win private customers.
Cost comparisons fuel the frustration. Sarvam AI charges roughly ₹3 per 1,000 characters for text-to-speech APIs. ElevenLabs’ discounted v4 model ran about ₹2.11 per 1,000 characters until October 12, with standard pricing closer to ₹7.66. Its Turbo model costs ₹1.05 on discount versus ₹3.83 at full price.
Meanwhile, Indian providers like Sarvam AI, Gnani.ai, and CoRover.ai already support 22 official languages, regional accents, and enterprise deployments for clients including Swiggy, Razorpay, Tata Motors, and Bank of Baroda. Sarvam AI also works with the Maharashtra government on voice-led public services.
Sasank Chilamkurthy of JOHNAIC offered two theories for Karnataka’s behavior: either a bias toward foreign brands perceived as more reliable, or an effort to persuade companies like Anthropic and ElevenLabs to establish offices in Bengaluru.
Either way, local founders want open evaluations and clear benchmarks, not blind protectionism. The deeper concern remains data sovereignty, long-term pricing control, and whether India builds its own AI stack or rents intelligence from abroad.
