Falling AI token costs positive for India, corporate spending likely to decline: Zoho's Sridhar Vembu

The rapid decline in artificial intelligence (AI) token costs is a positive development for India, further growing affordability of the technology is expected to reduce corporate spending on AI tools in the coming years, said Zoho co-founder Sridhar Vembu.

The rapid decline in artificial intelligence (AI) token costs is a positive development for India, further growing affordability of the technology is expected to reduce corporate spending on AI tools in the coming years, said Zoho co-founder Sridhar Vembu. Addressing the launch of the World Development Report 2026, Vembu highlighted that AI costs are declining rapidly, even as companies continue to invest heavily in the technology, particularly for software development.

“Token costs are falling rapidly and intelligence is actually commoditizing rapidly…and that's a good trend for India,” he said. Explaining the economic value of AI, Vembu said much of its current commercial application comes from software development, where large language models (LLMs) generate code that can be verified, tested and improved through continuous feedback.

“An LLM generates code, software code, that goes through a verification layer, then an execution or testing layer. So, there are four blocks there, LLM, to code, to verification, and testing,” he said. He further noted that this process creates a continuous feedback loop, allowing AI systems to identify errors, correct themselves and improve their output. “This is the loop…all of the economic use of AI is coming from this loop today. So, anything intelligent AI is doing now…it is coming from a software language called Lean.”

Vembu further highlighted, the real power of artificial intelligence (AI) lies in its massive computing capacity and ability to learn from feedback. While ordinary computers operate at billions of computations, AI systems are operating at trillions. Citing a report, he said Microsoft is spending around USD 1 billion on AI for software development, while Zoho's own annual expenditure on such tools has increased to approximately USD 25 million from almost negligible levels a year to a year and a half ago.

“Microsoft is paying about a billion dollars for this, for AI in their software development,” he said, adding, “A company like us is spending about USD 25 million a year on AI for software development, up from close to zero a year ago, a year and a half ago, insignificant year ago, to USD 25 million in one year.” He further noted, the prices are “now starting to fall.”

“I don't think we will have to spend that much in the future. It drops.” (ANI)