The growth of the Indian economy may be increased by the better utilisation of resources with new technologies and industries of startups. Startups may contribute to improved economic vitality and can support economic openness and skills improvement based on technological and business innovation.
In 2018, trends shaping the startup ecosystem in India were consumerism and digital adoption. The average age of startup founders is 28 years and more than 9% of founders are women. In the next decade GDP of the country may be doubled. There is an increasing trend of contribution of domestic consumption to GDP. Urban-rural aspirations and behaviours are blurring. Indians are willing to spend on goods and services that assist them in their work, improve their education or take them up the value scale.
India’s close to 500 Mn internet users is the second largest online market behind China. Similar to the global trend, the country is also expected to witness a digital transformation in the next few years. About 59% of countries population is expected to have internet access by the year 2021. The trend driven by government push towards digital initiatives and affordability of smartphones is expected to continue in both rural and urban areas.
The Industries which saw momentum in 2018 and which will see higher growth may include:
The industry may expect an implementation of blockchain across sectors and of evolving technologies such as brain-computer interface, quantum computing, smart robots to bring efficiency in business processes. Costs and inadequate governance could be a challenge to developments of blockchain projects.
Blockchain will require new expertise and skillsets. As the technology matures over time, standards may be changed to keep pace with the technology. Technology will further evolve for balance between scalability, decentralisation and security. As a decentralised platform for innovation, blockchain technology may have the potential to revolutionise every industry.
Data is becoming increasingly commoditized and companies will think more critically about monetising their data, as well as using data innovatively to create value for customers and the business.
Data monetisation may correlate with better performance including adding new services to existing offerings, developing entirely new business models, and partnering with other companies in related industries to create pools of shared data.
Algorithms driving business decisions may treat all stakeholders fairly and in the year 2019, building ethics into algorithms may offer risk management for business practices.
India ranks among the top 10 destinations for analytics with over 600 analytics firms. While more than 50% of them are startups, Indian data analytics market is estimated to grow even further due to an increase in efficiency of tools and products specializing in data processing.
Data analytics cater to various sectors including Finance and Banking, which continues to be the largest sector being served by analytics in India. It accounts for an overall revenue of 37% or $756 Mn in revenues.
Artificial Intelligence may evolve from narrow AI to broad AI. AI will be characterised by the ability to learn and reason more broadly across tasks, to integrate information from multiple domains while being more explainable, secure, fair, auditable and scalable. Risk management practices such as standard workflows and benchmarking frameworks may gain adoption for mitigating against privacy encroachments and socioeconomic biases.
AI’s economic impact will come from the consumption side, through higher-quality, more personalized, and more data-driven products and services. The global AI market would be as big as $ 15.6 trillion by 2030, of which India could get $3 trillion as per an analysis of Business Line by The Hindu.
Internet of Things
The industry may witness the emergence of an IoT run market to help manage, monitor, and operate the fragmented array of IoT networks, devices, and assets. Blockchain can be used within the context of an IoT solution, providing an alternative to cloud-based systems and enabling device-level automated commerce.
Electronics chips may allow connected devices and equipment to complete transactions on their own and create contracts that are recorded on a blockchain based on rules and procedures set by their operator. Deployment of customizable 5G networks may increase the efficiency of IoT networks.
As per a report by Nasscom, The IoT market in India is poised to reach USD 15 billion by 2020, accounting for nearly 5 per cent of the total global market.
Apps and Platforms
The rise of emerging technologies like voice, immersive reality, connected devices, and 5G will alter consumer behaviours in the year ahead. Offering of unique VR content, such as social VR, should captivate consumers in 2019, which will drive consumer awareness of VR headsets and adoption at scale. Visual elements will add value to voice apps to engage consumers.
These startups have been witnessing adoption across industry verticals along with mobile first consumption, digital twin for the digital representation of a real-world entity to measure response to change using operational data, internet users of Indian languages, social and content-based commerce, robotics and digital payments.
The investment in Indian startups increased 110% annually from $2 Bn in the first three quarters of the year 2017 to $4.2 Bn during the same period in 2018. Bengaluru is followed by Delhi-NCR for deal value and volume for start-ups. Mumbai is third in the ranking both in terms of value and volume. Chennai and Pune are in top five in terms of volume. 40% of start-ups are formed in tier two and tier three cities in country.
India is poised to be a market where you can test the innovations given its diverse geography and population. Affordable and accessible technology will provide opportunities to entrepreneurs to scale their innovations and positively impact industries.
Upcoming Trends In 2019
In 2019, the startup ecosystem may further evolve from challenges such as regulations, fundraising, lack of mentoring, scaling correctly, managing cash flow and even finding the right employees. Indian consumers have changed behaviour in different regions and fragmented markets may be a roadblock to market strategies.
India risks squandering the demographic opportunity if it cannot create quality employment opportunities at scale. Investment in both human and physical capital, R&D and innovation, ease of doing business may increase economic activity in the country and may improve its global innovation ranking.
Without an appropriate enabling environment, there will be an inappropriate emphasis on near-term commercial viability leading to lack of scale for startups. Higher incentives for investment across sectors, macroeconomic indicators for stability and structural reforms will improve the business ecosystem.
Innovation efforts could sustain financial performance. Innovation program integrated with business strategy, culture and focus on the end user to meet market expectations may transform the customer experience. Startup ecosystem will progress with Government initiatives such as Skills India and Startup India.