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Despite the global slowdown, India has maintained consistent macro-economic stability with a moderate growth rate of 6.8% in FY 2018-19. Moving forward, India will spring up to a better growth rate with a strong foundation and proactive policies of the government will play a cardinal role in accelerating economic growth to reach higher echelon and achieve the target of $5 trillion, which has been candidly maintained in the budget speech of Finance Minister(FM).
 
In her maiden budget, FM has proposed Rs 100 lakh crore ($1.5 trillion) investment in PPP model to unleash the faster development and completion of major national-level infrastructural projects including National Highways, Bharatmala and Sagarmala, modernisation of railway infrastructure, development of national grids in gas, water and power and building waterways and airports to push the national connectivity and mobility on fast lane. The one-nation one-grid model will help consolidation of key resources and infrastructure in bringing more equity to national distribution of resources like water, gas, power and e-way. This will help the government in delivering those services to every part of the country by including the less-privileged in the mainstream.
 
For a country like India, which is reflecting the prominence of strong economic parameters across the globe, Foreign Direct Iivestment (FDI) inflows in various industry verticals are required for disruptive growth. It’s quite evident from the fact that during FY 2018-19, India attracted FDI inflows of $64.375 billion, as per United Nations Conference on Trade and Development (UNCTAD). As the stage is already set for the foreign investors, the government is further planning to ease FDI in single-brand retail, aviation, insurance and media, especially in animation, visual effects, gaming and comic, which in turn will help in fulfilling the aspirations of the respective sectors. To strengthen the growth of $280 billion Indian insurance sector, the government is planning to permit 100% FDI from the current 49% for insurance intermediaries. Similarly, increasing FDI limit in the animation sector will bolster this industry by attracting foreign players and creating employment opportunities for skilled talent available in the country.

Another economic reform concerning increasing the statutory limit for foreign portfolio investors (FPI) from 24% to sectoral foreign investment limit will attract more cross-border investments in listed debt securities issued by the infrastructure investment trusts (InvITs) and real estate investment trusts (REITs). Systemic reforms in non-banking financial companies (NBFCs), housing financial corporations (HFCs) and public sector bank (PSB) recapitalisation will reassure robust credit system pushing the entrepreneurship to newer heights.
 
As the government is planning to encourage faster adoption of electric vehicles (EVs) and completely weed out fossil fuel-based transportation system by 2030 and allow automotive sector to comply with FAME-II, it’s essential to create an ecosystem for manufacturing EVs with infrastructure for considerable charging grids so that the transition from the current system will be smooth and effective with visible impact on the ground. A slew of measures like budgetary allocation of Rs 10,000 crore for a period of three years commencing from April 1, 2019 and income tax exemption on loans for purchasing EVS will encourage faster adoption by the public. While such initiatives will initiate demand activation in EV space, it will simultaneously attract foreign investment in setting up manufacturing units of EVs and charging materials leading to the emergence of a sector with tremendous job opportunities. Moreover, with the growing imports of fossil fuel to the tune of $111.9 billion in FY 2018-19, a huge amount of foreign currency reserves is being spent on this. With the adoption of EV, India will achieve the objectives of reducing imports, lowering carbon footprints, safeguarding the nation from dependence on OPEC countries and making future generation secure.
 
One of the key agenda of the government is to lower import bill in electronics eventually to bring it down to net zero import. It’s imperative to focus on manufacturing and improve the trade balance. The recent budget has a sharp focus on high-tech manufacturing in the areas of electronics system design & manufacturing (ESDM), computer hardware and mobile handsets assuring indirect tax incentives to the manufacturers. The government planning to invite global high-tech manufacturers for establishing mega manufacturing plants in the areas of advanced technologies like sem-conductor, solar photovoltaic cells, lithium charge batteries, solar charging infrastructures, computer servers and laptops will not only bolster the manufacturing ecosystem of the country but also create enormous opportunities for the youth in India.
 
Most of the domestic companies in India are having a turnover of not more than Rs 400 crore and those companies require regular support from the government for delivering services and products to their clients in a cost-effective manner. As these companies are providing enormous job opportunities and contributing to the economy of the country, it is pertinent to make them competitive and cost advantageous. In this context, the government has capped the turnover of the companies from Rs. 250 crore to Rs 400 crore to bring them under 25% tax bracket so that 99.3% of domestic companies can avail the tax benefits.
 
For disruptive growth in all industry verticals by leveraging the emerging technologies such as AI, IoT, AR & VR, Robotics, 3D Printing, Data Science and Blockchain, there is a strong requirement for the skilled manpower. Apropos a report titled “The Future of Jobs 2018” by World Economic Forum, 54% of global workforce needs to be re-skilled and up-skilled to align themselves along with the evolution of disruptive technologies. Government is also considering this aspect and looking for facilitating industry verticals to fill the skill gap. As in the case of agro-rural industry sector, the government is setting up 80 Livelihood Business Incubators and 20 Technology Business Incubators in 2019-20 to develop 75,000 skilled entrepreneurs in this sector.
 
We are living in an era where the youth of the country may be looking for opportunities to create job opportunities for others. We have already witnessed such momentum in the last few years in the country. Last year, around 7,700 startups were working in niche areas and creating wealth and a lot of job opportunities. Government is also working to facilitate such an ecosystem and has taken measures like an exemption for investment by Category II alternative investment fund, relaxation for scrutiny of investors in angel tax, an extension of sunset clause till March 31, 2021, and reduction in shareholding voting rights from 50% to 25%. These measures will attract more investors to invest in Indian tech startups and help them transform into global unicorns, contribute significantly in the economy of the country and motivate them to work for innovation and IPR creation. The aspirations of the government to become $5 trillion economy can be accomplished by leveraging the strong foundation provided by the IT industry. This industry stands at $177 billion out of which $136 billion pertains to IT services exports from the country. Harnessing the 4.1 million talent pool deployed in IT industry, which is fast transforming into a product industry, other industry verticals can also leverage the services and skills of the tech talent pool for automation, increasing productivity & optimisation, which, in turn, will create an ecosystem wherein the talent pool can act as a catalyst to accelerate the startup movement in a massive way in the country.
 
The vision of $5 trillion Indian economy by Prime Minister asserts the government’s intent to make India one of the fastest-growing global economies with a two-digit growth rate for the next five years. The government has been regularly taking significant reforms in the ease of doing business, easing of FDI, promotion of manufacturing, focus on digital transformation across the social demography, promoting startups, digital governance, projects through public-private partnership and massive public investment in rapid infrastructural development. All these measures combined with support from all the stakeholders in consolidating resources and improving the living standards of citizens will unquestionably contribute towards the realisation of $5 trillion goal by 2025.
 
(The writer is Director General, Software Technology Parks of India)

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India is making great strides in digital revolution. While advanced technologies such as Artificial intelligence, Internet of Things and blockchain are making Indian IT behemoths ambitious, the Government is more concerned about putting the tier-II and tier-III cities on the IT revolution map. Metro cities in our country have attracted big domestic and international players from the IT field by leveraging pro-active policies of the Government, huge engineering talent pool and IT grade infrastructure. The success is evident from the growth of the IT industry — its turnover in 1991 was just $1 billion and two and a half decades later, in 2019, it stands at $177 billion.

While the IT industry has seen phenomenal growth during the last three decades, unfortunately, it was limited to leading metropolitan hubs like Delhi, Mumbai, Bengaluru and Kolkata. Consequently, these cities witnessed a spurt in urbanisation as massive populations from the countryside and smaller towns migrated to these cities in search of jobs. This unchecked migration resulted in mounting significant pressures on infrastructure and sustainability of bigger cities. While migrating labourers could secure a job in metro cities, they were not able to cater to the family needs in a holistic manner.

Moreover, metropolitan cities have already reached a saturation point for BPOs because of high cost of infrastructure and civic amenities. Tier-II and tier-III cities, including the likes of Ahmedabad, Patna, Varanasi, Ranchi, Imphal, Nashik Jaipur and Chandigarh among others, have proven their strength for a very long time as an effective alternative to already developed metropolises such as Bengaluru, Mumbai, Kolkata, Chennai, Pune, Hyderabad and Delhi. A demographic shift is required to plug the digital gap between the metro cities and smaller cities.

In order to resolve the underlined issues and challenges faced by the youth, the Government envisaged two BPO schemes — the India BPO Promotion Scheme (IBPS) and the North East BPO Promotion Scheme (NEBPS) — under the Prime  Minister’s Digital India programme.  With a total budget outlay of Rs 543 crore, the two BPO schemes envisage employment of 1,50,000 youth in tier-II and tier-III cities.

Under the above mentioned schemes, the Government provisioned various incentivisation strategies such as financial support towards capital and operational expenditure, special incentives for employing women and differently-abled people, additional incentive for employment beyond target and wider dispersal within the State beyond the capital cities to attract the local entrepreneurs. Such strategies have in turn encouraged local entrepreneurs to leverage associated benefits and join the bandwagon of dispersal of the BPO industry to smaller towns.

In addition to this, the provision of joint venture between two or more companies has also lifted the spirit of local entrepreneurs to participate in such schemes and reap benefits so as to generate employment opportunities in their respective regions.

After three-and-half years of their launch, the schemes are thriving successfully. The nodal agency in charge for implementing them has left no stone unturned in achieving the Government’s vision. Today, 52,972 seats have been allocated out of a total of 53,300 seats. Around 42,830 seats are operational across 120 cities by employing over 28,579 local youth, including 9,340 women being employed. As a result, small cities like Muzaffarpur, Deoghar, Vidisha, Balasore, Unnao, Siliguri, Hazaribagh, Sopore, Tumkur and Guntupalli are getting their rightful place on the IT map.

Employment opportunities for the local youth, too, have been created in smaller towns. Moreover, through such schemes, a significant number of women have been employed. In some companies, the percentage of women employment is even more than 50 per cent.

Currently, these BPO units are providing services in 16 languages like Arabic and Spanish in around 18 domains, including but not limited to healthcare, KPO, e-commerce, e-learning, technical support, medical transcription and digital marketing to international clients from the US, the UK and Canada.

Once such BPO centres are set up in small towns and cities and they start operations, they will not only create direct employment for the local youth but also generate further opportunities for ancillary sectors to operate and create indirect employment. Eventually, BPO centres are creating a holistic ecosystem for economic growth of the locality, which is the core objective of the such schemes.

Moreover, the strong foundation laid by the Indian IT industry is also being leveraged for an all-inclusive growth of smaller/mofussil towns through such schemes. With employment and economic dividend to regional players, these programmes have been significantly reducing the rural-urban divide, alleviating the load of migration to metros and paving the way for a resurgent India that echoes inclusive development for all citizens.

(The author is director-general of Software Technology Parks of India)

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According to a report published by Accenture, a technology consulting company, artificial intelligence or AI has the potential to add $957 billion — or 15 per cent of the current gross value — to the Indian economy by 2035. AI can provide large incremental value to sectors such as agriculture, education, healthcare, manufacturing, retail and energy. That will, of course, also mean the creation of jobs in all these sectors, both for AI experts and others.

To leverage these opportunities, Indian IT companies and tech startups should first upgrade technologies and build up AI skills at enterprise level. Right skilling is the most critical factor for success in technology adoption. And given the rapid adoption of AI in industry, about two lakh jobs in the sector are expected to be created by 2020.

What gives India the edge is the country’s large technology and engineering talent pool. Around 2.6 million Indians graduate every year with degrees in science, technology, engineering and mathematics (STEM). This is more than the total number of such graduates produced by all the G7 countries put together.

While our universities and premier technology institutes are carrying out research in AI, tech startups and enterprises are taking the research further — and creating jobs — to come up with innovative solutions and products based on AI. Today, India is home to 7,700 tech startups. During the last five years, more than 400 AI software product startups were incorporated in India. This reflects how Indian tech startups are focused on AI product development.

According to another Accenture report, in 2016 India ranked third among G20 countries on the basis of the number of AI startups. Indian IT behemoths have already started delivering AI solutions to their global clients. In addition, most Fortune 500 companies working on research and development in AI have their bases in India. Anyone studying AI or incidentals is, therefore, assured a job.

Innovation and R&D (research and development) will be the mainstay of the Indian IT industry in coming years. Going by Nasscom figures, ER&D or engineering R&D brought in $26.9 billion revenue in 2018. By 2025, ER&D revenue is expected to reach $70 billion.

AI also has the potential to solve numerous challenges in the education sector. As the Indian government aims to connect 2,50,000 gram panchayats through broadband, schools in rural areas can be augmented with last-mile connectivity to enhance the learning experience of students using augmented reality and virtual reality. With the help of AI solutions, learning elements can be customised, based upon the assessment of students.

While the opportunities are huge, India needs to leverage the capability and domain competency of a mature IT industry to achieve the goals.

According to a report by Frost & Sullivan, a market research company, the AI-driven healthcare market is expected to reach $6.6 billion by 2021 from $600 million in 2014, with an annual growth rate of 40 per cent. From patient care to diagnostics to robotic surgery and drug discovery, AI can help reduce healthcare costs drastically. If AI can be used to understand ailments, early-stage diagnosis can also save millions of lives.

The government has launched various initiatives to encourage AI. Last year, it asked the NITI Aayog to establish the national programme on AI to augment research. To introduce school students to AI and develop a young talent pool, the CBSE has decided to introduce it as an elective subject.

The synergistic collaboration among government, industry, R&D institutions, startups and academia can further bolster innovation in AI, revving up GDP (gross domestic product) and job creation and leading to a manifold increase in per capita income in times to come.

The writer is the director-general of Software Technology Parks of India under the Union ministry of electronics and information technology.

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Ruling over software services exports for two-and-a-half decades globally, India is synonymous with the new normal of technology disruption. Now the time has come to shift focus from software services to software products, to capitalise on the dynamic global trends in technology adoption. Against the backdrop of a high performing IT-BPM industry, the country needs to reinvent itself as a products superpower. The advent of emerging technologies has disrupted business processes and global enterprises are sprinting towards faster adoption strategy to leverage the benefits. While outsourcing the IT services of an organisation to a trusted Indian technology partner was the standard practice for MNCs to optimise the cost arbitrage, rapid evolution in Industry 4.0 technologies has necessitated companies to relook at the strategy. Now, the technology priority is much of a core business strategy and the initial adopters are unequivocal winners.

According to a recent report, the global software products market was $515 billion in 2018, with 7.4% growth. The overall growth of global software products in 2018 was driven by intelligent solutions based on Industry 4.0 technologies, cloud, connected infrastructure and cybersecurity products. At the same time, the market size of Indian software products industry in FY19 is $8.2 billion, of which $5.5 billion is from the domestic market and $2.7 billion from exports. Although Indian software products industry just accounts for 1.6% of the global market, given the global opportunities in this segment, India can strive to capture the largest pie of the global software products market.

India has successfully established a matured IT ecosystem comprising 18,000 IT enterprises, 7,700 technology start-ups, 4 million IT talent, robust R&D institutions, policymakers and academia. The Indian IT industry, which clocked $177 billion revenue in FY19, is expected to reach $350 billion by 2025. The large technology and engineering talent pool is an advantage to India’s technology leadership. The country produces 2.6 million graduates every year with STEM degrees. It’s not far when many of the budding tech start-ups would transform themselves into tomorrow’s global unicorns, and not just in value, making India a superpower in innovation and entrepreneurship.

Given this growth trajectory, the government must visualise a new India with initiatives that will propel the success story further. Keeping a tab on the past successes and a bright future, the government has initiated many niche programmes such as Make in India, Digital India, Atal Innovation Mission and Start-up India, which are focusing on the creation of indigenous products and a digitally-empowered society. Software products are central to India’s mission for digital transformation with social inclusion. Today, sectors like healthcare and education are grappling with the challenges of uneven access to the citizenry. Universal accessibility to education and healthcare will be possible when the last person in the queue would avail the benefits without any discrimination. The role of software products for enabling these two sectors to become digitally inclusive is paramount. Digital platforms like IndiaStack and National Health Stack can lead to a paradigm shift in government-to-citizen (G2C) service offerings. While the government is foreseeing a trillion-dollar digital economy in next 4-5 years, it’s imperative for the IT industry and start-ups to leverage the humongous opportunities available in the digital transformation journey of the country. The drive of innovative software products companies will make all the difference to the government’s vision by delivering superior software products that can be integrated with software stacks. When public digital platforms are coupled with groundbreaking software products, it will result in adding hundreds of billions in economic value.

The National Policy on Software Products 2019 is an impetus to transform India as a software products nation and drive the country as a global leader in conception, design, development and production of intellectual capital-driven software products and accelerate the growth of the entire spectrum of the IT industry. Industry expects collaboration for the purpose of tech products creation in the country. To achieve these objectives, the NPSP 2019 envisions a 10-fold increase in the share of global software products market by 2025. The policy also envisages the creation of a cluster-based innovation-driven ecosystem by developing 20 sectoral and strategically-located software product development clusters with integrated ICT infrastructure, incubation facility, R&D/test beds, and mentoring and marketing support. It targets nurturing 10,000 technology start-ups, including 1,000 such start-ups in tier-2 and tier-3 cities, to generate direct and indirect employment for 3.5 million people by 2025. Policies like these will definitely rev up the growth of the IT industry by promoting software products business ecosystem, stimulating entrepreneurship and innovation for employment, building skills, and improving access to domestic and international markets.

As India has embarked on leveraging the potential of frontier technologies—AI, AR/VR, IoT, robotics, 3D printing—a strong IT industry base and demographic dividend will play a disruptive role and change the IT landscape. In the times to come, we will see more start-ups, entrepreneurs and product companies that not only create world-class products using cutting-edge technologies, but will also develop products that can resolve societal issues, bridge the digital divide and augment inclusive growth.

We need a collaborative approach amongst all the stakeholders including industry, academia, R&D institutions, government agencies and state governments. Indian IT behemoths have already started shifting their mandate from software services to software products development. With the focus on technology start-ups and R&D, India can make a stride in software product development space, continue its brand as a global IT leader, and become a wealthy nation, eventually bringing prosperity to all.

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Artificial intelligence (AI) promises impelling potential for the growth of society and economy in today’s times. As India is moving on the trajectory of digital transformation, the growing penetration of digital technologies in the lives of Indians and the generation of huge volumes of data at every interaction point projects a germane use-case for an AI-driven economy. However, for making the ocean of data points work in synergy to transform India as the AI leader, we require the power of AI to address the complex challenges that the country is facing across its demographic diversity.

According to an Accenture report published in December 2017, AI alone can add $957 billion, or 15% of the current gross value added, to the Indian economy by 2035. The economic value can be unlocked primarily through three ways: augmentation delivered through human and machine collaboration, intelligent automation and productivity that comprise $597 billion, $83 billion and $277 billion, respectively. The report further chalks out the transformative potential of AI-driven opportunities in three major areas, including mobilising intelligent automation for complex physical tasks requiring adaptability and agility, empowering existing workforces by complementing and enhancing the skills and abilities, and driving innovation for broad structural transformation of the economy.

The role of AI in the broader economic perspectives of India entails the participation of the government, large enterprises, MSMEs, start-ups, young entrepreneurs and society at large, and this can make AI a game changer. According to a PwC report, AI could contribute $15.7 trillion to the global economy by 2030, of which $6.6 trillion is likely to come from increased productivity and the rest $9.1 trillion would be generated from consumption-driven economy. Similarly, a Gartner report suggests that, globally, AI-derived business value will reach $2.9 trillion by 2021 from the projected $1.9 trillion in 2019. Another report by McKinsey suggests that AI could provide additional economic output of around $13 trillion by 2030, boosting global GDP by about 1.2% a year.

The economic opportunities through AI that India can achieve are huge. Innovation in AI can help us lead to numerous solutions to address societal issues. For example, India’s linguistic diversity is a major opportunity for developing AI solutions to unify communication across various digital platforms. AI has a potential to address the challenges of demographic diversity of India. A billion-plus population, and hundreds of languages and dialects open up enormous opportunities for AI-powered solutions in the areas of language, vision, translation, speech, machine reading and comprehension. Localisation of technologies using AI can play a critical role in not only unifying a billion-plus people in resolving social challenges, but will also add value to the economic growth of the country. For instance, intelligent digital assistants like Alexa, Google Assistant, Siri and Cortana are enabling people to use local languages and fetch the desired online services without any hassles. AI can play a major role here as a codec for seamless communication across language diversity.

Today, the agricultural and allied sector contributes around 18% to the $2.97-trillion Indian economy. With 50% of India’s working age population employed in agriculture, it’s pertinent to modernise agricultural workforce to improve their productivity and ameliorate farmers’ incomes. The opportunities for AI in the farm sector are undoubtedly massive. According to a report by Accenture, digital and connected farm services can empower 70 million Indian farmers to add $9 billion to their income by 2020. AI can also support SMEs and make them competitive at a time when the government is planning to increase the GDP share of the manufacturing sector to 25% by 2022. According to the World Economic Forum, AI can build additional value up to $3.7 trillion through Industry 4.0 technologies by 2025.

While the opportunities for AI in India are vast, leveraging these opportunities is the key to transform India as a global leader in AI. Indian information technology (IT) services industries are ferrying exceptionally well in executing R&D projects of global technology companies, but the R&D for own products is not equally impressive. The Indian IT industry can leverage collaborative R&D to produce more home-grown technology products for domestic consumption. Every sector in India, be it agriculture, education, healthcare, transportation or communication, has tremendous potential for AI applications to improve the ecosystem and economic output. Indian IT behemoths have already started delivering AI-based platforms to empower clients transform business processes, automate technology maintenance and execute mundane tasks through AI bots.

As the entire world is looking forward to harness the potential of AI for the growth of the industry and for the betterment of society, India has already taken steps to leverage the potential of AI in all walks of life. To foster AI-led growth across all the sections of the society, the government is taking steps to promote Indian tech talent and skills to achieve national goals. With a unique vision of “AI for All”, India can enhance and empower human capabilities to address the challenges of accessibility, affordability and quality of skilled expertise, which, in turn, can help develop scalable solutions for emerging technologies by leveraging collaborations and partnerships among various stakeholders including industry, industry associations, academia, and state and central governments. Besides collaborations, this segment requires a lot of incentivisation and funding support from various stakeholders. As this technology requires massive R&D and innovation, and a highly-skilled manpower for the creation of world-class products, hence sufficient funding is necessary to exploit this technology to its fullest extent.

Pivoted to the visible success of the IT services industry in India, the legacy of technology prowess can further propel the adoption of emerging technologies in various sectors to boost efficiencies, competitiveness, productivity and quality. The adoption of AI across sectors and industries will not only drive competitive edge and operational excellence, but will also considerably improve the quality of life and ensure prosperity for all. Clearly, AI can bring enormous economic and social benefits to citizens across demographics and also help in transforming the country into an economic superpower.

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The entire world is amazed by the amplest success stories created by startups. Globally, startups are engaged in developing breakthrough innovations, building affordable solutions, generating wealth and creating enormous job opportunities for others. According to Global Startup Ecosystem Report 2019, the global startup economy has created USD 2.8 trillion value between 2016 and 2018, which is a 20.6% spike from the previous period and more than double what it was five years ago.

Startups have brought new magnetism to the narrative of entrepreneurship. Successful enterprises in the world are tapping the potential of startups to leverage their expertise and R&D to transform their vision into reality. The world has already witnessed a first-generation startup growth. The companies those started their journey with few people and nominal seed capital are now global giants and valued more than USD 1 trillion, for instance Microsoft and Apple those started on a garage mode in 70’s are the global tech giants today. Even though we joined late in this movement, India, today, is not far behind in this race.

With over 20,000 startups, India is the second largest startup ecosystem in the world having 7,200-7,700 tech startups, expected to witness 10-12% year-on-year growth. Despite global slowdown, Indian startup ecosystem is raring to surge. Low cost of doing business, proximity to customers and vendors, availability of large consumer market, 7 million graduating students per year, 4.14 million professionals in the IT services industry and 627 million internet users are the key drivers for the rapid surge of tech startups in India.

To further bolster the growth of startups, Government of India launched the Startup India programme in 2016 by bringing proactive policy measures for hand holding, funding support & incentives, building industry-academia partnership and incubation support. In the last three years, Department for Promotion of Industry and Internal Trade has already recognised 22,128 startups, which are leveraging a host of tax benefits, easier compliance and IPR facilitation. 264 startups have also been funded by SIDBI Fund of Funds. Under Scheme for Facilitating Startups Intellectual Property Protection (SIPP), around 1,800 startups have availed the benefit of 80% fee rebate and more than 150 patents have been granted.

Many such initiatives by various government departments, private players, startup accelerators, academia and industry associations in the country are in place to further buoy the growth of startups. I would like to cite one of such initiatives undertaken by my organisation STPI for supporting the startup ecosystem by way of creating Centres of Entrepreneurship (CoEs) in emerging technologies such as AI, IoT, Blockchain, AR & VR, FinTech, MedTech, Data Analytics, Agri IoT, Automotive, ESDM, Gaming & Animation, HealthTech and LegalTech. The uniqueness of these CoEs lies in a collaborative model in which various stakeholders such as government, academia, industry, industry associations and mentor pool pitch in to build world-class startups focused on R&D, innovation and IPR creation.

As opportunities for the startups are enormous in India, still there are certain challenges, which need to be addressed timely. Although few have become unicorns over the years, the majority of the startups have been fledgling due to lack of infrastructure, funding and mentorship support, market access, talent and inexperience in transforming an idea into a successful product or business model.

In the 12th edition of Global Innovation Index (GII) India has ranked 52nd in 2019 by rising 29 positions from 81st in 2015. One of the many reasons that put India lower in GII is the R&D spending in India with respect to its GDP. It’s conspicuous that R&D spending in India is 0.8% of GDP, while the countries like Israel, Republic of Korea, USA and China spend 4.3%, 4.2%, 2.8% and 2.1% of GDP respectively and the private spending in R&D in India is even more dismal. Even though, the number of Intellectual Property Rights (IPR) filed by Indian organisations in 2017-18 stacks at 47695, it is not commensurate with the potential and need of the country.

Recent announcement made by the government for expanding the scope of spending of CSR funding for incubators those are engaged in facilitating startups, which are working in the domain of R&D in science, technology, engineering and medicine, is a laudable step. According to reports, CSR spending has jumped from Rs 10,066 crore in 2014-15 to Rs 13,327 crore in 2017-18.

This initiative will give much needed impetus to the incubators in providing risk capital to the startups for the purpose of innovation and R&D for creating world class products. This step will also provide an opportunity for the companies to witness the success of incubators in real term and motivate them to invest more in R&D. As we know, India is already a preferred R&D destination for so many MNCs, these reforms taken by the government will further improvise the sentiments of the industry at national & international level and encourage them to think for expansion of their R&D setups in the country.

The startup journey in the country has just begun. Government initiatives, policy impetus, entrepreneurial drive in today’s youth and a vibrant ecosystem for tech startups can together fuel the startup growth story. Imbibing the culture of innovation and entrepreneurship early in the life of students will drive their passion to build tomorrow’s enterprises. With the desired ecosystem combined with support from the government and participation of academia and industry will rev up the startup momentum in the country.

It’s not far from today that many of the budding tech startups, young entrepreneurs and innovators would transform themselves into tomorrow’s global unicorns, not just in value, but making India a superpower in innovation and entrepreneurship, thereby creating immense economic value for the nation both in terms of creating enormous employment opportunities, eradicating the root problems of society, and playing the role of catalysts to achieve the $5 trillion economy in times to come.
DISCLAIMER: The views expressed are solely of the author and ETGovernment.com does not necessarily subscribe to it. ETGovernment.com shall not be responsible for any damage caused to any person/organisation directly or indirectly.

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The financial services sector has witnessed a massive shift towards digital technology. First it was the convergence in the financial services business, and now we are witnessing the advent of AI, ML, blockchain, data-driven insights and analytics. Several start-ups have emerged with path-breaking ideas that make fintech one of the fastest growing areas within the broader banking and financial services sector.

The financial services domain consists of many verticals: robo advisors and personal finance, regtech, digital/open banks, payments and remittances, insurtech and alternative finance.

India’s payments landscape is growing faster than the global average. Mobile wallets, smart devices, quick response (QR) and near-field communication (NFC) have increased digital adoption and impacted the way customers transact and interact with payment partners. Growth factors include emergence of mobile payment service providers, evolving business services by incumbents, inclusive government policies and literacy programmes, robust payment infrastructure, high consumer acceptance and strong regulatory support, and all these are helping India transition into a cashless economy. In fact, India is forecasted to see the fastest growth in digital payments transaction value between 2019 and 2023, with a CAGR of 20.2%, ahead of China and the US. With over 560 million Indians online, the transaction value of the Indian fintech sector is growing hugely and is estimated to reach $73 billion by next year.

Digital platforms are a crucial mechanism for engaging with both existing and potential customers. These facilitate banks’ and financial institutions’ global operations, regardless of their geographic location, via cutting-edge software and automation systems.

Fintech disruptors are fast-moving companies, often start-ups, focused on a particular innovative technology or processes, in all areas from mobile payments to insurance. With over 3,000 fintech start-ups, India bags the second spot globally in terms of the number of start-ups. Fintech in India also offers a platform to start-ups for them to evolve into billion-dollar unicorns. The recent India Fintech Opportunities Review Report by YES Bank notes that ‘payments’ and ‘lending’ dominate the landscape, and ‘analytics’, ‘digital wealth’ and ‘process automation’ are also gaining importance. According to venture intelligence firm CB Insights, fintech start-ups in India received venture capital investments to the tune of $286 million for the first quarter of 2019. In 2018, Indian fintech start-ups registered the highest number of equity deals, at 144. Also, in 76 of these 144 deals, ‘lending’ was the hottest fintech sub-sector in 2018 when it came to attracting investor attention, raising a total of $1.21 billion. From tapping new segments to exploring foreign markets, fintech start-ups in India are pursuing multiple aspirations.

We foresee ample opportunities for fintech start-ups in India in terms of enhancing efficiency in transaction processes, shredding legacy baggage, developing contextual banking applications, enabling instant gratification, and providing efficient, simpler and accurate on-boarding of last-mile customers. The current disruption in the fintech start-up ecosystem will definitely help in improvising the position of India in the Global Fintech Hub Index (GFHI) in the times to come.

Financial sectors are highly regulated in every country, to protect and secure transactions across banking and other financial sectors. As banks and customers are empowered and facilitated through increased digitalisation, they need to be protected at all levels, for which data and IT security are important. Regulatory openness pertaining to fintech laws and overall regulatory environment in terms of ease of doing business, credit availability, taxation policies and presence of regulatory sandbox shall provide a boost to the thriving fintech start-up ecosystem of India.

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