From Start-up to Scale-up

THE ROLE OF DIGITAL INDIA AND OPPORTUNITIES AHEAD

Impact of Digital India on the start-up ecosystem in India

• Digital India is a program launched by the Government of India to provide electronic access to  government services, improve online infrastructure, increase internet connectivity, and promote digital empowerment and literacy
• Digital India boosts businesses and start-ups through its focus on three core components: digital infrastructure, e-governance, and universal digital literacy
• Actively driven by MeitY, the Digital India programme shows significant progress across the 9 pillars with most initiatives partially or fully implemented
• Governments at the national and state level are key stakeholders of Digital India while others include start-ups, citizens, private sector, NPO’s & others
• Proactive policies, PPPs, digital infrastructure, start-ups, training programs, and inclusion initiatives like Jan Dhan Yojana, Aadhaar, & UPI drive the growth of Digital India
• The Indian start-up ecosystem is the 3rd largest in the world with a total of 1.14L recognised start-ups; 30.4K+ start-ups were added to the ecosystem in CY23 (as of Oct 2023)
• India stack and the JAM trinity together have created a conducive environment for start-ups to use public digital goods (like APIs and open networks) and cater to a large serviceable market
• o Start-ups directly benefit from the India stack and JAM trinity due to easier verification, convenience of digital mobile transactions; Open networks are being increasingly adopted
• Plethora of start-ups utilize India Stack APIs to enable cardinal functions of verifying users, enabling payments, lending & tax compliance
• Digital Global Goods contribute to building open network tech stacks and benefit start-ups participating in the Indian digital ecosystem
  • o Digital global goods, with their specific functionalities, foster open networks that create a level playing field, facilitating the active participation of start-ups
  • Start-ups are increasingly exploring and embracing open networks, with ONDC leading the way in the adoption
• Start-ups also benefit from the immense potential of India's young population along with the largely untapped rural Indian market
  • Within a projected rise in urbanization, start-ups can leverage rural India (~70% of population) and the ancillary benefits of its steady urbanization
• India's 4G infra covers >98% population, enabling a larger user base for internet services by start-ups and the government; India has the world's 2nd largest internet user base which is continuing to rapidly grow - majorly benefiting online-first start-ups
• Affordable mobile data and rising mobile data usage also create a highly conducive environment for online-first startups in India
• World Bank’s latest ‘Doing Business 2020’ report showcases how India’s ease of doing business bettered placing it at the 63rd easiest country to do business in the world from 142 in 2014; Since then, India has taken proactive measures to enhance ease of doing business by simplifying and digitalizing processes, reducing time requirements, and creating a favorable business environment

Start-ups powering Digital India

• Start-ups are transforming their business models and operations to leverage digital ecosystems and redefine value propositions; Social commerce and sharing models are examples of business model and operational transformation among start-ups
• Start-ups power Digital India with cutting-edge innovations, job opportunities, empowered skills and game-changing digital solutions for inclusive growth
• Start-ups unlock the potential of Tier 2 / 3 cities through tech adoption, lucrative market prospects, entrepreneurial spirit, skill development & digital literacy
• In turn, Tier 2+ cities play an important role along with start-ups and supercharge Digital India through tech adoption, lucrative market prospects, entrepreneurial spirit, skill development & digital literacy
• Start-ups and companies have directly and indirectly interacted with the pillars of Digital India, leveraging technology, empowering communities, and driving innovation
• Start-ups have dynamically contributed to empower Digital India with cutting-edge innovations, job opportunities, empowered skills and game-changing digital solutions for inclusive growth

Emerging areas of focus

• Key opportunities for start-ups lie in leveraging government support, tapping the underserved rural India market and digitizing operations
• o Going forward, start-ups must leverage telecom investments, inclusive initiatives, data abundance, and ethical considerations to succeed
• Emerging opportunities:
  • Healthtech: Healthtech opportunities lie in sustained rural India focus, continuous monitoring, and emphasis on women's health
  • Edtech: Edtech opportunities lie in creating vernacular content for Tier 2+ cities and gamifying the learning interface
  • Logistics tech can enhance rural logistics by filling digital and physical infrastructure gaps with IoT and telematics
  • Agritech: Agritech start-ups can optimize value chains for various types of agriculture and facilitate agri-inputs for farmers
  • Drone industry: India is witnessing a surge in domestic drone players, due to government support & adoption of emerging drone applications across various sectors like agriculture, construction, real estate, utilities, public safety, logistics and more
  • ONDC leads open networks in enabling start-up market entry, shared resource utilization, and platform interoperability
• ‘India’s Techade’ – the goal to have India reach a US$ 1T digital economy by 2026 – will be driven by focus on user experience, innovation ecosystem, modernized cybersecurity, sustainability, workforce enablement, and supportive policies
• Government, businesses, and citizens will embrace digital innovation, adapt to disruptive models, & acquire digital literacy for a thriving digital landscape