SUMMARY
India's Open Network for Digital Commerce has revolutionised the retail and manufacturing sector: Sitharaman
Sitharaman added she envisions plenty of scope for collaboration in the digital sector between India and the US
The finance minister also said that India Stack is making a big buzz in the financial sector and several countries are interested in
it
India’s digital revolution and initiatives such as the Open Network for Digital Commerce (ONDC) present investment opportunities for US investors, Finance Minister Nirmala Sitharaman said on Wednesday (September 7).
“India’s Open Network for Digital Commerce has revolutionised the retail and manufacturing sector,” Sitharaman said addressing a conference organised by the US-India Business Council (USIBC).
ONDC is India’s ecommerce equivalent of the much-celebrated United Payment Interface (UPI) in the sense that it is an open network of entities, technology and stakeholders to facilitate digital commerce in India.
The network is expected to increase digital commerce penetration in India as a rising number of internet users drives the demand. The government expects ONDC to reach 100 cities by next month (October 2022) and generate 3 Bn orders per month after a pan-India rollout over the next few quarters.
Along with ONDC, Sitharaman also talked about the India Stack, stating that it is making a big buzz in the financial sector.
“…and now I’ve heard several countries talking to us whether the India Stack can become the global stack,” Sitharaman said. She named several countries which are talking with India about the fintech stack which, according to the finance minister, “would ease out a lot of cross-border payments”.
India Stack is the name given to a set of open APIs and digital public products that include identity, data and payments at the population scale. These include Aadhaar, UPI, Digilocker, e-KYC and most recently, the account aggregator framework.
Sitharaman also addressed the issue of data privacy. She said that Telecom Minister Ashwini Vaishnaw is working diligently and the country will soon have a new data privacy bill which will address every concern regarding privacy.
Talking about foreign portfolio investors, the finance minister said, “We’ve given particular attention to the fiscal concessions [that] can be made for large sovereign funds. We’ve also engaged with them in the last few years. But sectorally, I think we have engaged with investors who are keen on some sectors and facilitated in easing on policy so that they can come over.”
Sitharaman noted that the government has taken many steps to address the requests of the investors, either sectorally or across the board. “We shall keep that engagement going to remove the other obstacles as well,” she added.
This comes at a time when Union Minister for Commerce and Industry Piyush Goyal is currently on a trip to the US and is meeting investors there. He met with venture capitalists in the San Francisco Bay area on Tuesday to discuss investment opportunities in Indian startups.
Goyal noted that the Bay area is very bullish about the potential that India and Indian startups have to offer.
Many large international portfolio investors are active in India. The likes of Sequoia, Tiger Global and Softbank, among others, have hundreds of Indian startups in their portfolios and have played a key role in the growth of India’s startup ecosystem.
The finance minister had also assured the investors in April that the government will address any possible pain points to encourage investments in the country.
The Reserve Bank of India recently announced its updated rules for overseas direct investments to ease the process of receiving investment from foreign entities. The revised ODI rules reduce the need to seek specific approvals, compliance burden and costs.
The move is set to benefit the startup ecosystem as foreign investors will find it easier to invest in Indian startups. Further, it also clears some of the regulatory hurdles regarding mergers and acquisitions with foreign-based entities.
