SUMMARY
Digital sphere bound to be a significant part of India’s growth story: MoS Rajeev Chandrasekhar
Contracts that can be easily fulfilled domestically would be limited to Indian innovators, startups and companies: MeitY MoS
Final call on MDR will be taken after considerable discussions: Rajeev Chandrasekhar
Minister of State (MoS) for Electronics and Information Technology (MeitY) Rajeev Chandrasekhar on Wednesday (September 21) said that the government is looking at aiding bootstrapped startups through policy decisions and by infusing capital.
Speaking on the third day of the Global Fintech Fest (GFF) 2022 in Mumbai, he also said that the government is also mulling providing preferential market access to enable nascent-level startups to scale up and grow their businesses.
Noting that the Centre is crystal clear on its approach, Chandrasekhar said that the digital sphere is bound to be a significant part of India’s growth story. Delving deeper into the policy aspect, the MoS highlighted that the opportunities that can be easily fulfilled domestically would be limited to Indian innovators, startups and companies.
In the same breath, he added that the policies will not be exclusionary and will have space for both Indian innovators and global companies. He also put thrust on the ‘collaborative model’ envisaged by the government that aims to create an open space for academia, industry, global companies and startups to interact and address issues.
Answering a question from CRED’s Kunal Shah, Chandrasekhar said that the government is focused on spurring joint intellectual properties (IPs) and joint ownerships between foreign and Indian startups, especially in deeptech areas.
On MDR, Innovation, Web3.0
On the question of merchant discount rate (MDR), Chandrasekhar said that the Ministry of Finance would take a final call on the matter. He, however, noted that a decision on the matter would be taken after considerable consultations.
“…Most policy decisions that we take are a consequence of consultations. There are multiple views on this (MDR). If we choose to move in a different direction, it will after considerable consultations and stakeholder input,” added the MoS.
As against a majority of digital payment systems in the country, a zero merchant discount rate is currently levied on UPI and RuPay transactions. In turn, the government subsidises a portion of that lost revenue via various grants and other allocations.
With UPI apps struggling to turn a profit amid these strict norms, reports emerged of talks earlier this year that appeared to be discussing a move to increase MDR to 1.5%. What followed was fierce opposition from the general public and, subsequently, FM Sitharaman issued a clarification that there were no plans to charge MDR for UPI.
Speaking about the overall fintech system, Chandrasekhar said that his ministry is focused on several outcomes and not just innovation.
“We are focused on innovation but we want this to be smelling, talking, looking and feeling less and less like a sandbox and more and more like a dynamic, aggressively growing and an easily accessible fintech ecosystem that has inoperability, has orderly growth and has choice. All of these areas ought to be built into it (the fintech sector) as much as innovation,” the minister said.
Saying that the country is at an inflection point, Chandrasekhar urged the youngsters and entrepreneurs to leverage the momentum created by enabling policies of the government. He also called on startup founders to explore opportunities beyond consumer tech and look at prospects in India’s emerging tech and data economy.
On Shah’s question about Web3.0, Chandrasekhar said that the government wants to lead the charge into the future of the internet. “We want to be on the roundtable where we talk about standards, shape the future in a leadership role rather than just be a consumer internet that we have been for Web1.0 and Web2.0.”
Reiterating his stance on the role of cryptocurrencies in the Indian economy, he said that the Ministry of Finance and the RBI will take a call on the matter. However, he added that the ‘dark clouds’ around crypto are likely a result of their impact on macroeconomy, and not due to tech and innovation.
