Most AI systems used today suffer from AI hallucination, a flaw in which the technology generates incorrect or misleading outputs. Deep-tech company Vexoo Labs directly addresses this challenge by creating AI models that focus on real-world reliability rather than flashy performance. At the recent Super AI exhibition, company leaders emphasized the importance of accuracy for India’s small and mid-sized manufacturers, especially those operating outside big cities.
According to Vexoo Labs, the dominant approach in the AI sector today prioritizes scale and speed while sacrificing trust and factual correctness. The company’s alternative model uses compact models and local execution to support manufacturing hubs in Tier-II and Tier-III cities like Coimbatore, Tiruppur, and Rajkot, where accurate data interpretation can directly impact operations and revenue.
AI Hallucination Remains a Core Flaw
Ajay Kumar, Senior Business Leader and AI Evangelist at Vexoo Labs, stated that the biggest threat to businesses using AI today is not poor performance, but hallucinations in output. “Most platforms are built on general-purpose models designed for a showcase. They hallucinate, and that’s not just a bug—it’s a liability,” he said.
He stressed that AI hallucination becomes especially dangerous in India’s MSME sector, where operational decisions often hinge on real-time insights. Many of these businesses are navigating increasing data complexity without the support of robust, reliable AI tools. “Every time an AI makes a confident but wrong suggestion, the cost is borne by a factory owner in Ludhiana or a textile unit in Tiruppur,” Kumar added.
Vexoo Labs Builds AI for Industrial India
Unlike many startups focusing on scale, Vexoo Labs has built its tools from the ground up with industrial use in mind. “We didn’t build a shinier chatbot. We went after the core flaw—AI hallucination,” said Aditya Vardhan, Co-founder of the company.
The startup’s architecture is reasoning-first, meaning it prioritizes logic and traceability over vague, fast responses. This approach helps eliminate misleading suggestions while ensuring that AI systems remain grounded in verified data.
Their models are designed to run locally using compact models, enabling deployment in manufacturing-heavy regions without requiring heavy cloud infrastructure. This makes their technology accessible and relevant to MSMEs in cities that often lack the resources or bandwidth for large-scale AI deployment.
Compact Models, Big Impact
Vexoo Labs uses compact models as a cornerstone of its solution. Unlike massive language models that are resource-heavy and prone to hallucinations, compact models process essential data with precision.
“Manufacturers don’t need poetic responses. They need clean, accurate outputs that help them act fast,” Vardhan explained. By stripping AI down to what matters—reasoning, accuracy, and speed—Vexoo Labs is ensuring its tools meet real users’ needs in real environments. The approach also gives MSMEs better control over data privacy and operational uptime since models can run directly on local hardware without constant server calls.
The Future Lies in Trusted AI, Not Flashy Demos
As India aims to become a $5-trillion economy, the next digital leap must include dependable AI tools embedded deep within its industrial backbone. Vexoo Labs believes this won’t come from billion-parameter models or big tech showcases—it will come from trust-first innovation designed for India’s real-world challenges.
At events like Super AI, dozens of platforms boast of their capabilities, but Vexoo Labs warns that many of them hide an inconvenient truth: they still hallucinate. The company’s vision is different—one that brings clarity, not confusion. Vardhan concluded, “The factories in Surat, Bhiwadi, and Rajkot deserve better than guesswork. We’re here to give them AI that thinks clearly and delivers fast.”
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