Avataar AI launches Varya to cut video generation costs in India

India’s AI model output has been slow compared to other major regions, including the U.S., Europe, and China. To address this, Avataar AI, a startup backed by Peak XV, has launched a new video generation model called Varya. The model is built to understand local context and operate at a fraction of the cost of existing models.

Rather than building the model from scratch, Avataar AI started with Wan 2.2, a publicly available video generation model released by Alibaba. The startup applied a technique called distillation—which compresses model capabilities into a leaner, faster version—to optimize it. This allows Varya to run in four steps instead of the 50 steps required by Wan 2.2, producing video 10 times faster.

To compare Varya’s performance and pricing against competitors:

• Generation speed: Varya can generate a five-second 720p clip in 45 seconds, compared to 1,230 seconds for Wan 2.2.
• Pricing: Avataar AI plans to charge ₹0.48 ($0.005) per second of video on its hosted service. Competitors typically charge $0.10 or more per second, representing roughly a 20x price difference.

This cost reduction is critical for the local market. Rajan Anandan, managing director of Peak XV, noted that India is a video-first market where video wins over text across large consumer internet products. He stated that current AI video models are too expensive for population-scale use, and that cost is the biggest unlock for AI adoption in India. Additionally, while existing image and video generation models often miss cultural nuances and produce stereotyped or generic outputs, Avataar AI trained Varya to recognize local details like festivals, food, and clothing.

Varya will be released as an open-weight model—meaning its weights are accessible for modification—on AIKosh, the Indian government’s repository for AI models. Avataar AI is one of 12 startups selected last year for the India AI Mission, a roughly $1.2 billion government initiative providing compute subsidies. This program is part of a broader push by the government to boost local development. Earlier this year, IT minister Ashwini Vaishnaw stated that India aims to attract $200 billion in AI investment by 2028.

Why it matters

Avataar AI’s Varya addresses the high cost of AI video generation in India, aiming to make the technology accessible for population-scale use. By leveraging distillation and local cultural training, the model provides a blueprint for how the Indian market can adapt open-weight models to serve local economic needs.