For decades now, India has been the preferred outsourcing destination for IT and ITeS for many global organisations. However, the scenario today is rapidly changing, with India becoming one of the fastest growing economies in the world. Today, international trade accounts for 54% of India’s GDP, and its annual growth rate is expected to hover around 8% for the next eight years. These positive numbers have prompted the biggest brands to invest in India’s booming business sector.
Luxury brand Louis Vuitton expressing interest to invest in ‘desi’ Patanjali is the most interesting business news we’ve read so far in 2018. Chinese conglomerate Alibaba investing nearly $300 Mn in the Indian grocery startup BigBasket with the intention of rivaling global giants Amazon shows India’s consumer economy going strongly digital.
Additionally, the “Make in India” initiative has incentivised companies to build top-notch businesses in all major sectors here in India.
The Smartphone Boom
It is no coincidence that India’s rise to global prominence in business coincides with the Smartphone revolution. The internet has changed the world and nowhere is this effect more pronounced than the country with the second-largest number of Smartphone users in the world.
The digital industry in India has leapfrogged in the past few years, with the number of smartphone users in the country estimated at 530 Mn in 2018, and phones accounting for 73% of all internet consumption. Increased internet penetration allows global brands to reach the doorsteps of customers in remote places, adding to the value of investing in India.
With an increased number of Indians now exposed to global businesses by the internet, market demands have been constantly uphill. A big chunk of the growth in Smartphone usage is from rural areas, where companies are now finding the job of accessing previously untapped markets much easier and extremely promising.
The Great Indian Startup Revolution
India is fast becoming a startup hub on a global scale. Already termed the Software Capital of the World, Bengaluru is leading the way with tech entrepreneurs making it big in the digital market.
Northern regions like Delhi and Gurugram are emerging as the most lucrative place for manufacturing industries. Gujarat is attracting industries from various sectors, Kolkata has ushered in an era of technological prowess and a burst of entrepreneurs and other places are also quickly establishing themselves as leaders in the startup revolution.
The Acceleration of India’s Digital Economy – Bharat FinTech
India is moving towards a digital age powered by smartphone and nearly ‘free’ cost of internet connections offered by TSPs. Endeavors by the government to promote a “cashless economy” have shown positive signs, with the implementation of UPI for fund transfers and transactions, demonetisation move made millions experience digital payments.
Combined, these moves have contributed to a marked shift in consumer behavior – Indians are purchasing goods from ecommerce websites, hailing cabs via aggregators, transferring money via PayTM or Google Tez and using their smartphones to control more elements of their lives.
There has also been an effort to make digital payments simpler and easier using Quick Response Codes, as introduced by Bharat QR code payments, where the NPCI (National Payments Corporation of India) and companies like Visa and MasterCard have come together to allow payments based on QR codes.
The number of smartphone users and internet users in the country is ever-growing and projected to go beyond 500 Mn by the end of 2018. This has been a major catalyst for foreign interest in Indian consumers and Indian industry. The world’s largest contract manufacturer, Foxconn, has declared plans to enter the Indian mobile phone market with its handset wing InFocus. An initial investment of $10 Mn is planned, with much of the brand’s outreach and marketing strategies being digital.
Softbank, one of the world’s leading telecommunication companies, has invested heavily in Indian ventures PayTM and Flipkart, both entirely digital platforms of e-wallet and ecommerce respectively. Other major foreign players also have their foot in the Indian market in sectors like insurance, banking, retail, pharmaceuticals, and manufacturing.
The World’s interest in Indian startup ecosystem has only scratched the surface and as the story will unfold, we can surely expect more foreign brands, institutions, investors making a beeline to get a slice of Indian startup pie.