The Indian Web3 and crypto industry is determined to build its competitive edge to lead the current internet revolution globally. By doing so, it will be able to generate over $1 trillion. India must harness and reward the industry that can support the nation in achieving its goal of becoming a $5-trillion economy.
India on the cusp of transformation
As the country prepares to be a $5-trillion economy, its economic growth story has been inspiring. Just a decade ago, India’s GDP was the 11th largest in the world. This year, India became the world’s fifth-largest economy, overtaking the UK and is now behind only the US, China, Japan and Germany. This brings in much optimism, especially when the global situation remains precarious due to various macroeconomic conditions.
The World Bank’s report, ‘Navigating the Storm’ published in December 2022 further assures that the Indian economy is relatively well positioned to weather global spillovers compared to most other emerging markets. Besides, policy reforms and stable FDI inflows sheltered India from volatility in foreign portfolio flow. At the same time, robust demand for information technology and financial services kept the services trade surplus high at around 3.7% of GDP.
The groundwork for more sustained and long-term growth has been driven by investment in infrastructure, digitalization, penetration of internet and smartphone, combined with a wave of consumption led by millennials and Gen Z, among others. Not to forget, one of the critical factors of India’s growth engine is our broad and talented young workforce. The median age is now 28.4 years, compared to China, Japan and the US, which stand at 37, 48.6, and 38.5, respectively. India is definitely headed to be a talent powerhouse.
Another factor contributing to this phenomenal story is India’s ability to develop/build tech innovations. It is essential to emphasize the role of sectors like IT/ITes, cloud services, big data, AI, and the IoT for their robust contribution of over $200 billion to the nation’s GDP.
Fostering Web3 technology in India, which could contribute $1.1 trillion
India is currently going through another revolution powered by innovative blockchain technology. Over the last few years, the Web3 and crypto industry has witnessed stellar growth, with much increased opportunities and investment avenues. As per the Chainalysis Report, India is among the top five countries in crypto adoption and ranks sixth in DeFi adoption. The evolution of Web3 is happening at a pace much faster than anticipated.
Interestingly, a report, “India’s $1 Trillion Digital Asset Opportunity”, published last year by US-India Strategic Partnership Forum (USISPF) mentioned that embracing and fostering Web3 technology in India could contribute $1.1 trillion of economic growth to its GDP over the next 10 years.
The Indian IT industry is a fantastic success and an outstanding example that reinforces that if technologies are adopted and supported through the right policies to motivate entrepreneurs, histories can be made. The IT and emerging technologies sectors have generated 4 million jobs and provided indirect employment to 10 million.
The early signs of a similar momentum are being witnessed for the VDA industry. Several reports have reinforced and asserted this view. For instance, the NASSCOM report, “The India Web3 Startup Landscape”, mentioned that venture capital funding of $30.5 billion flowed into the blockchain & crypto market in 2021. This amounts to 15X growth in VC funding for crypto and blockchain startups since 2015. The report states that the country is now home to more than 450 Web3 startups and employs about 75,000 professionals. The market size is estimated to grow 25X by 2028 and will create 50,000+ jobs by 2025.
Most of these startups are building in decentralized finance (DeFi), NFT, metaverse space, etc., which have a huge demand globally, which will eventually lead to India becoming a Web3 powerhouse.
In this context, it is essential to acknowledge the role of technology in nation-building. Apart from the economic value it brings, the value it brings to any society and business is far more impactful.
Web3 presents an unprecedented opportunity for India
Web3, including blockchain and crypto, present an unparalleled opportunity to India, and their potential will be fully realized post their mainstreaming. These innovative technologies and assets have the potential to deliver an array of services—some for the first time—to India’s vast population. For instance, crypto must be seen as beyond speculative assets. Tokenization of real assets, supply chain, healthcare, agriculture, entertainment & art are some sectors poised to generate the most socio-economic value for India using blockchain technology.
Blockchain can support scaling up this initiative would require expanding and strengthening primary health infrastructure, enforcing quality standards and conducting periodic audits. Just as the internet fundamentally altered the way we live and work, Web3 has facilitated the ownership of data in the hands of the owner.
The Web3 movement is very much aligned with the spirit of Aatmanirbhar Bharat, Start-Up India and Digital India – which promote homegrown, digital-first innovation. This will transform many businesses and will also aid technology adoption. On the funding side, the venture capital industry has poured a record USD 25 bn into crypto investments, as per the CB Insights’ “2021 State of Blockchain” report.
Conclusion
Coming from the debate about whether Web3 is here to stay, the conversation has shifted to a different direction. The new narrative is how it will shape the economy in future, why governments, corporates and VCs need to define their Web3 & crypto strategy now, how we make Web3 a part of our daily life by bringing pathbreaking use cases.
With India assuming the G20 Presidency, we have an opportunity to lead in building consensus and global cooperation for building progressive framework for the VDA industry, addressing the regulators’ key concerns and providing a path for innovation. Regulation is key to this industry’s stability and will eventually pave the way for more innovation in India.
There is concrete evidence of emerging technologies swaying the market faster than expected and being a significant contributor to GDP, and Web3 & crypto will be no exception. This will be only possible if the government introduces measures for the Web3 industry in line with what it did to promote other technology sectors. For instance, for the dynamic growth of India’s software industry, the government in the 1990s announced a slew of measures, including tax holidays on company profits, tax breaks from corporate income, software-technology parks, and special economic zones, among others. With similar regulatory initiatives and support, the Web3 industry will undoubtedly be able to contribute $1 trillion to India’s $5 trillion GDP goal.
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The author is Cofounder and CEO, CoinDCX)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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