Building blocks: Starting a start-up in India

From a mere 20,000 startups in 2014 the number has grown exponentially and will touch 75,000 by end of 2021, the Indian ecosystem has come a long way.

Speaking at the Nasscom Summit on 18/02/2021, PM Modi said “Technology has empowered the regular citizen in the country and connected him with the government. We've democratised data as well and last-mile service delivery has also been effective.” This is so true in the India of today.

Digital India and the road ahead

The DI programme has roots in the vision that Prime Minister Narendra Modi laid out in mid-June 2014. The aim of DI is that the use of technology at speed and scale will rapidly increase the reach of education, content and services, to solve problems.

He said that while cities in the past were built on riverbanks, they are now built along highways. But in the future, they would be built based on the availability of optical fibre networks and next-generation infrastructure.

DI’s vision is to empower a billion Indians who are living in villages across the country and speak their native language. This is being done by bringing together three fundamental frameworks:

1. Digital infrastructure, high speed data connectivity and easy access to affordable devices and data.

2. Creating a software foundation with biometrics-based Aadhaar services as the basis, and add-ons like mobile payment gateways, e-KYC via digital payments lockers and secured cloud lockers. This is the basic India Stack available to everyone.

3. And finally, are the destinations like e-governance, tax administration, direct benefit transfers and the creation of the start-up eco-system.

The DI map it is about the hardware foundation, software foundation and, to top it up, destinations like e-governance, payments and the start- up ecosystem. This has kick-started a major disruption.

This technological revolution also belongs to Bharat, with 70 per cent of the country’s population residing in villages, which is an equal stakeholder and beneficiary of the digital revolution. At present, 155,739 gram panchayats have laid down optical fiber and this number is to touch 2.5 lakh.

Underthe Common Services Centres (CSCs) 2.0 scheme, over 370,000 lakh centres across the country haveprocessed 10 crore crop insurance applications, made 269,000 Ayushman Bharat cards, registered 30,55,000 workers for the unorganized sector pension scheme and on-boarded 10.84 lakh Wi- Fiusers.

UPI – the kid in the stack

In the last six years, since the launch of the DI, about 1.25 billion Indians have the Aadhaar identity system available to them. The UPI framework in FY20 clocked 12.5 billion transaction worth Rs 21.31 trillion, and the digital locker has become the go to app for digital issuance and verification of certificates and documents. Since its inception in 2015, the DigiLocker has digitized over 430 million insurance policies and the Income Tax Department has provided PAN verification records to over 365 million citizens. The amalgamation of the Aadhaar and software layer of India Stack allowed the creation of over 350 million Jan Dhan accounts. Jan Dhan, Aadhaar and DI have started a disruption in the banking and payment industry, the success and uptake of which has been appreciated and adopted by global technology giants like Google and WhatsApp. This shows India is no longer simply following the innovation of others.

Ease of business

The Goods and Services Tax (GST) was the first step towards ease of doing business for the micro, small and medium enterprises (MSME) segment. In just one move, 17 national and state taxes that had been impeding trade and business in the country, were replaced by a single nationwide tax.

While the initial deployment of the GST was hampered by excessive complexity and other challenges of execution, the uptake of the new system has nonetheless been rapid and widespread. As of now, 1.26 crore taxpayers have registered on the GST website. GST has amplified seamless and hassle-less taxation process in the country.

If I have to do some crystal gazing, it is my opinion that the future will see major breakthrough and innovation in the access to credit for the Indian masses. Under the DI umbrella, policy enablement also gives value to the data output layer, which is the cause for the Personal Data Protection (PDP) bill coming up. India is one of the only countries that recognises the need for a balance among innovation, regulation and privacy.

For instance, with the PDP bill becoming law, the micro-credit and credit facilities that have been mentioned so far like credit on the fly and credit for all, will become a reality. From the MSME perspective, be it a small manufacturer or a Kirana shop, the whole gamut of services around inventory management, analytics, reducing their working capital, knowing their customers better, etc. will ease up.

The road ahead

As a technology entrepreneur, I feel that policy makers need to keep up with the pace of technology innovation. While regulation becomes an enabler, it also does not keep track of technology. Regulation lags technology, and hence innovation happens in a grey area. I feel that the forward-looking policies in India should be enabling in their nature.

All of this has created a digital start-up ecosystem within India which is today the cynosure of all global eyes. From a mere 20,000 startups in 2014 the number has grown exponentially and will touch 75,000 by end of 2021. With overall funding skyrocketing between 2014 toend of 2020 around $ 75 billion, India has seen the entry of 38 startups in the Unicorn Club having a combined valuation of close to $ 125 billion.

We are starting a new six-weekly series with Bhaskar Majumdar who is an expert within the ecosystem. He will cover different aspects of what it takes to succeed in the start-up environment in India.