Investment in start-ups in India continues to be robust says Indian minister

India’s digital journey is at its nimblest phase yet, with the country’s digital economy racing ahead at full steam towards a $1 trillion target. The Asian giant’s credentials are no more just centred on being the world’s back office. With government and private entities spending considerably more on the tech sector, India’s digital sector valuations are hurtling towards unprecedented highs.

The Digital India push from the central government in 2015 has revolutionised the digital payment infrastructure, provided citizens with a secure digital identity, and empowered them with cashless transactions and easier access to financing. After transforming the financial landscape within the country, this infrastructure, known as the India Stack, is making forays into the global markets.

In an exclusive chat on the sidelines of the recent India Global Forum 2022 in Dubai, Rajeev Chandrasekhar, India’s minister for Electronics and IT, spoke to GN Focus about the country’s digital transformation and its global ambitions.

The so-called tech winter has been wreaking havoc in Silicon Valley and across the world. India being the back office of the world is probably not immune, and we’ve been seeing certain signs already with several layoffs being reported. Do you see this as a transient phase or think it will be long-term pain?

I think two different things are happening here. And people are tending to conflate the two, just because the common theme is tech. The US tech disruption or the structural changes they are going through are for very different reasons. The Facebook restructuring is to do with their gamble or their investment in Metaverse, while Google and the other related large, big tech companies shedding their workforce has to do with the fact that the US economy is now going into a recession. And then the other group of people who are shedding workforce are the crypto guys and they are doing it because they’ve imploded.

So, the US is going through something of a mixed bag of reasons that is causing all of the big tech companies to go through this painful restructuring.

India is not seeing anything remotely close to that. What India is seeing is the initial upcycle of an innovation cycle with start-ups and plenty of capital that has come in over the last two or three years, going through what is a normal part of a start-up ecosystem. Many fail, some succeed, some succeed very significantly, some succeed averagely and then restructure and correct their trajectory, and some fail. So many different things are playing out in the US and India, and I think to conflate the two and to characterise it as a tech winter is not right.

I’m seeing an absolutely unprecedented, accelerated growth and expansion of innovation in India, with start-ups continuing to grow. There is a slowdown in foreign capital flows, and there is a correction in valuation, but the appetite for entrepreneurship, the creation of start-ups, and the investments into that continue to be very robust. I wouldn’t by any stretch of the imagination, characterise it as winter. If anything, it is summer and autumn, with a slight excessive rainfall that has caused people to be a little bit more careful.

So, you are bullish about the tech space in India?

I have said publicly on record, and I say again, the phenomenon of start-ups and innovation that we have seen in the last three, or four years, is the tip of the iceberg. I think what we have seen is only one very small slice, which is the consumer internet tech piece of it manifesting itself in these ventures that we have seen. But in the coming years, you will see Web 3.0, AI, semiconductor design, microelectronics design, high-performance computing, and a large number of such areas, which are going to create innovation start-ups and innovation champions from India.

What the government of India is trying to do is create what we call data, digital and innovation corridors between countries. Start-ups in India can partner with start-ups and innovators in the UAE and create these common corridors of innovation that will then propel the next wave of innovation around the world. So, it’s not just about Indian innovation or Indian start-ups, it’s also about India partnering with and co-building innovation for the future.

The infrastructure called India Stack has revolutionised access to financing in India. Is it where you have envisioned it to be or is there a long way to go?

The India Stack was conceived in 2015 by Prime Minister Narendra Modi to solve a very fundamental problem of governance in India. It was built to address a decades-old problem of trust between the government and citizens. So the identity authentication piece Aadhar was built. Then the UPI payment delivery platform was built. Now, based on that stack, its impact and the ecosystem that it spawned in terms of applications and innovation, various levels are getting built on that — health, education, skills, geospatial authentication etc. And to your central question, whether we are ready, we are not only ready, but I can tell you without breaching any confidentiality, that several countries are very interested in replicating the India Stack model in their governments and for their people.

As the Prime Minister has said during the India G20 presidency, we will offer the India Stack and create an ecosystem in partnership with certain countries who are interested and proliferate this to the Global South. Because the narrative of technology has been so far that the rich and the big have it, and the poor countries don’t have it. India wants to play a role in partnership with some other countries. The UAE has shown a lot of interest to partner in offering the India Stack and proliferating it to many countries in the Global South.

India is looking at being a $1 trillion digital economy by 2025. Are you on track to achieve this target?

I think most assumptions about the global economy have been put into question by the Covid pandemic. I would have argued that we are strongly on course to be a trillion-dollar economy by 2025-2026 if you’d asked me this two years ago. But I think now we are still on course to do a trillion-dollar digital economy, but maybe it’ll take another six to 12 months more. That is not to say that we have slowed down but I think one of the variables that we have to all accept is the fact that there’s a huge question mark over the global economy.

The fact that we live in this global community of nations must wake us up to the fact that Europe is looking very weak and vulnerable as long as this war continues. The US economy looks like it is headed into recession, as more and more experts say, and that can’t be good for anybody who lives in an interdependent global economy. So, it is those issues that raise a little question mark about the endpoint of ‘25 or ‘26. But that we will reach a trillion-dollar digital economy, and that the digital economy will be 20 per cent of our overall GDP, I have absolutely no doubt about. ●

INDIA'S PATH BEING EMULATED BY OTHERS, SAYS UAE'S AL OLAMA

India’s decision to chart its own path with the India Stack infrastructure rather than trying to follow anyone else has been lauded by Omar Sultan Al Olama, UAE’s Minister of State for AI, Digital Economy and Remote Work Applications.

“India did not emulate anyone. They created their own path that many others are emulating,” he said. “That a country the size of India was able to implement something that cutting edge in less than a decade, I cannot state how incredible that is.” During his conversation with India’s Minister for Digital Economy and Entrepreneurship, Rajeev Chandrasekhar at the recent India Global Forum 2022, Al Olama said it is remarkable that India could build the solution from scratch and scale it to a billion people in less than 10 years, something which he said is impossible even for a private company in Silicon Valley.

“It is clear that what we are seeing right now is a snowball that is moving much faster and getting much bigger from India dominating this sphere globally,” the minister added.

Al Olama said the two countries have historically tended to gravitate towards each other thanks to several factors like similarity in cultures as well as geographical advantages. He said this long-standing relationship will make sure that the CEPA agreement is bound to succeed. “We will bring the diversity of talent and access to markets, and India is going to bring the sheer ingenuity of talent and the robustness of the infrastructure that exists there,” Al Olama added.