Telangana Aims To Be A National Leader In Web3.0: Telangana IT Principal Sec Jayesh Ranjan

Telangana is among the states in the country which is actively trying to attract and facilitate Web3.0 startups in the country. The state government recently launched Web3.0 sandbox to allow startups to test their products in a live environment.

Besides, the state government has also committed to draft state-level policies to implement findings from the sandbox wherever it deems necessary. It has also deployed blockchain technology for some of its schemes like Dharani, StreeNidhi and T-Chits.

The Web3.0 sandbox is aimed at creating a conducive environment for the startups in the sector and encouraging them to stay in India and not leave the country, Jayesh Ranjan, principal secretary in the department of industries & commerce (I&C) and information technology (IT), Telangana said.

The statement comes at a time when in the absence of regulatory clarity on cryptocurrency, over 70% of Web3 and crypto startups have shifted their base abroad from India.

The Telangana government has been working with Web3 and crypto startups for the last few years to build Web3 ecosystem in the state. In an interview with Inc42, Ranjan talked about the initiatives taken by the state government in the Web3 domain, the efforts to reduce the talent gap in the emerging domain, crypto regulations in India, central bank digital currency (CBDC) and more.

Here are the edited excerpts from the interview:

Inc42: In 2018, the Telangana government announced the setting up of a blockchain district in Hyderabad. It has also implemented blockchain in projects like Dharani, StreeNidhi and T-Chits. However, we have seen multiple projects not going beyond the proof of concept phase. What have been the key challenges, particularly in the e-governance sector?

Jayesh Ranjan: The blockchain district announced in 2018 set the momentum in terms of accelerating the adoption and growth of blockchain technology in the state. We have implemented a number of use cases in the state that addressed certain systemic issues.

I am glad to say that the T-Chits solution has been scaled across the state and is today helping the government monitor the functioning of chit-fund companies and detect anomalies or non-compliance to regulations, thus safeguarding the citizens’ hard-earned money. Regarding Dharani, since we have completely rebuilt a new system, it would take some time for the new system to stabilise before we scale up the blockchain solution.

Inc42: Who are the key partners in Web3.0 Sandbox and what expertise do they bring in? Which are the key issues that you are looking to address through Web3.0 Sandbox?

Jayesh Ranjan: The Telangana government has inked partnerships with Coinbase and Devfolio. There are a few others that are yet to be put on paper.

We have partnered with Coinbase as a knowledge partner for our various Web 3.0 initiatives. Coinbase will also be supporting the government with the technical aspects of the sandbox. We have partnered with Devfolio to bring Web 3.0 events to Hyderabad, yet another step towards making Hyderabad a hub for Web 3.0.

We are also partnering with a marquee blockchain company to develop a permissioned blockchain to restrict the access of the product to a closed community while it is being tested in the sandbox. With the insights gained from closely monitoring the sandbox, regulators will be able to collect evidence that can be used to draft guidelines or modify regulations in the sector.

The major issue that the Telangana government is addressing with this initiative is that many startups are going away from India and setting up their offices abroad due to the lack of clarity in the regulations. This initiative is an attempt to create a conducive environment in India for the Web 3.0 sector to not only encourage startups to be in India but also help them navigate the regulatory landscape

Inc42: These initiatives will require enormous local talent in the future. How are you planning to fill the tech talent gap in the state? 

Jayesh Ranjan:

The Telangana government has set up TASK (Telangana Academy for Skill and Knowledge) that focuses on training youth in the latest technologies that are in demand in the industry. It enables a collaborative platform between the government, academia, and industry.

TASK runs technology skilling programs in collaboration with Oracle, Google, Infosys, IBM on cloud computing, AI, ML, data sciences, etc. and is now heavily focusing on blockchain courses to cater to the growing Web 3.0 landscape. These programs are open and taken up by youths across Telangana with the aim of developing 21st-century skills and improving their employability.

Apart from TASK, even T-HUB runs several sensitisation and masterclass sessions every month to those that are part of the ecosystem. Several Web 3.0 meetups are organised at T-HUB that also create a platform for knowledge sharing and learning for the up-and-coming Web3.0 developers. Our WeHub, an entrepreneurship platform for women, also runs Web3.0 sessions for women entrepreneurs.

Inc42: A lot of blockchain startups are shifting abroad despite India being an attractive investment destination over the last few years. Is the country slowly losing its charm due to the lack of regulatory clarity in the country? What can be done in this regard?

Jayesh Ranjan: New waves of technologies that bring about major changes, especially in the way financial transactions function, will always require some time for governments to adapt to them. Very few countries have been quick to capitalise on this…we are also working in that direction to put together the right regulations to both enable startups to function in India and to empower citizens to safely access them. The objective of creating the sandbox is to address these problems.

Through the sandbox, we along with the respective regulators and other ecosystem partners see if the solutions and products are adhering to the existing regulations or if there is a need to modify or frame new regulations and make suitable recommendations on the same.

We are also partnering with various organisations to bring more Web3.0 talent into Telangana. The government is also bringing major flagship Web3.0 events into the state to increase awareness amongst the people. Stitching these initiatives together we are building an ecosystem conducive to the adoption of Web3.0 in the country.

Inc42: In 2022, the FTX saga and Terra Luna crash have shown how opaque many of the existing crypto projects are. In the case of FTX, over 130 affiliated companies have also filed for bankruptcy. In such a tricky scenario, what steps can Indian states like Telangana take without shying away from blockchain technology and innovation, given that crypto could be an essential element of payments in Web3.0 space? 

Jayesh Ranjan: It must be noted that the issues highlighted in the cases of both FTX and Terra Luna stem from human ingenuity and not because they belong to the crypto industry. These were issues that plagued the regular banking system and stock trading during their inception as well.

In fact, with the implementation of DeFi (decentralised finance), blockchain-based financial solutions will be more transparent and will allow users to know what is happening to their resources rather than placing the onus on the owners of the platform. In Telangana, through our Web3.0 sandbox, we aim to best understand the right regulatory checks that should be in place to allow the seamless functioning of DeFi applications and then work with the regulatory bodies to ensure these are implemented.

Inc42: The RBI has launched CBDC in the pilot phase. Can CBDCs be useful for payments in Web3.0? With UPI being such a popular mode of payment here, what’s your thought on CBDC applicability in India?

Jayesh Ranjan: I believe CBDCs will make transactions easier, more secure, and more efficient than the typical physical currency system in general. Unlike a typical cryptocurrency, the RBI’s CBDC is pegged against the rupee and is a government-run stablecoin. While UPI is a very popular method of financial transactions, it still functions on the movement and management of physical currency which takes more time and a high cost to maintain along with the risks that a physical currency will provide.

The CBDC when implemented at scale will significantly lower the cost and time taken for monetary transactions while massively increasing the traceability of funds which would help curb money laundering. The CBDC will also safely expose citizens to digital assets and will help familiarise them with the terms blockchain, digital assets, etc. which can go a long way in improving confidence in Web3.0.

Inc42: It’s been a few years since Telangana formed the Emerging Technologies wing. Which are the key initiatives taken by the wing?

Jayesh Ranjan: We set up the Emerging Technologies (ET) wing in 2018 to make Telangana a national leader in adopting new-age technologies. The objective behind setting up the wing was to develop a conducive ecosystem for the proliferation of these technologies, and to play a pivotal role in the adoption of these technologies throughout the state. The ET wing has played a very crucial role in the acceleration and adoption of emerging technologies in the state and by the government.

Since 2018, the wing has come a long way with five policy frameworks – AI framework, drones framework, spacetech framework, blockchain framework, and cloud framework, which has already been launched, and a couple of more frameworks are currently in the development stage.

To realise the goals of the policy frameworks, it has also set up four technology-dedicated centres of excellence – Telangana AI Mission, National Center of Additive Manufacturing, Cybersecurity Center of Excellence, and E-Waste Center of Excellence. It is currently developing a proposal to set up another one in the coming year. Not only this but the ET Wing has also initiated and worked on more than 35 projects centred around the use of these emerging technologies for the benefit of the people by partnering with many startups and organisations.

These projects have impacted various domains including but not limited to agriculture, law enforcement, healthcare, mobility, e-governance, etc. Some of the marquee projects that have been ET Wing’s initiatives are Medicine from the Sky, T-Chits, E-Voting, Web3.0 regulatory sandbox and pest prediction for cotton crops etc.

Inc42: India as well as global startups are facing funding winter. What’s your thought on this? What steps have you taken to ensure timely funding to Telangana startups?

Jayesh Ranjan: While the funding ecosystem has been slow in India over the last few months, we are noticing that tech-focused startups with good solutions are continuing to raise large rounds of funding. As recently as last month, a Hyderabad-based startup, Keka, raised over $57 Mn in a Series A funding round which is the largest funding round for an Indian SaaS startup.

We are creating an environment that facilitates the growth of these tech startups and are actively engaging with VCs to keep Telangana-based startups on their radar. The government has also set up a state-run investment fund in the name of T-Fund, which invests in promising startups from the state alongside other angel investors and VC firms. Apart from the T-Fund, we also run sensitisation programs with family businesses, small entrepreneurs, and other potential angel investors to sensitise them on the pros of investing in startups as an asset.

Inc42: The Digital Personal Data Protection Bill draft has been released. What’s your view on the existing Bill and its impact on startups dealing with personal data?

Jayesh Ranjan: The latest version of the Digital Personal Data Protection Bill is a very comprehensive one and is along the lines of Europe’s GDPR. The decision to remove mandatory data localisation is beneficial to startups since most startups rely on a lot of data and use US-based cloud services like AWS and Microsoft Azure for hosting data. Mandatory data localisation would have added significantly to their operations cost and deterred scaling up.

However, it is still important to ensure compliance in all other aspects for startups as it is important to have a system with robust foundations which do not fall apart after scaling up. As the Bill has been quite delayed and in order to accelerate the innovation happening in the agritech space, we are coming out with our own agriculture data management policy that will enable sharing of personal and non-personal data with the ecosystem.