India’s Avataar AI launches a video model that costs $0.005 per second, 27x cheaper than rivals

Bangalore-based Avataar AI has launched Varya, one of India’s first homegrown video AI models. It generates video at roughly $0.005 per second, or 0.48 rupees. Founder Sravanth Aluru, a former Deutsche Bank investment banker and Microsoft and IIT Mumbai alum, says that is 27 times cheaper than comparable open-source video models.

The cost advantage comes from distillation. Avataar started with Alibaba’s Wan 2.2, a publicly available video generation model, and compressed its capabilities into a leaner version that runs in four steps instead of 50. The result is ten times faster generation at a fraction of the cost. Models like Veo, Kling, Luma, and Runway typically charge $0.10 or more per second.

Varya is not trying to compete with US and Chinese frontier models on quality. ByteDance’s Seedance, Kuaishou’s Kling, and Alibaba’s Wan are pushing motion realism and audio generation far beyond what Varya offers. The pitch is scale and accessibility in a market of 1.4 billion people where cost competitiveness matters more than peak performance.

What makes Varya distinct is cultural specificity. Rather than retrofitting a Western-trained model, Avataar used curated data to train Varya to render Indian clothing, food, architecture, festivals, and everyday settings accurately. Global models trained primarily on Western datasets consistently fail at this, producing culturally wrong outputs that limit their usefulness for Indian businesses, education, and public services.

The model is open-weight and will be released on India’s AIKosh portal, the government’s centralised repository for AI models and datasets. Avataar is one of 12 startups selected for the IndiaAI Mission, a roughly $1.2 billion initiative that gives selected companies access to subsidised GPU compute in exchange for releasing their models publicly.

Avataar has raised $55 million from Peak XV Partners and Tiger Global. The company originally focused on creating video tools for e-commerce. Varya is its first foundation model, reflecting a broader trend of Indian startups building sovereign AI rather than renting Western infrastructure. Sarvam and BharatGen launched their own foundational models earlier this year under the same programme.

India’s AI strategy is different from Europe’s or China’s. It is not trying to build the biggest model. It is trying to build models that work for its population at a price its market can absorb. At $0.005 per second, Varya is testing whether a video model optimised for affordability and cultural relevance can gain adoption faster than a technically superior but expensive Western alternative. In a country where AI startups are already building for local needs at scale, the answer may well be yes.