India has seen incredible economic growth in the past decade. From being the 11th largest economy in the world, it rose to fifth, behind only the United States, China, Japan, and Germany. The Indian government managed to enact policy reforms to improve the ease of doing business in the country and remove bureaucratic obstacles in setting up new companies.
Last year, India ranked 40th in the Global Innovation Index, a 41-rank leap from seven years ago. The country also leads the world in ICT services exports. Digital transformation adoption has seen a higher penetration among local enterprises. The growth of the digital economy in India has also contributed a lot to the country’s non-digital sectors by driving forward linkages.
According to the Reserve Bank of India, the country’s digital economy grew 2.4 times faster than the overall economy, indicating strong productivity and recovery amidst global macroeconomic headwinds. High internet penetration and the government’s thrust on building digital infrastructure enabled India to produce strong digital outputs. This led to a vibrant startup ecosystem and the rise of entrepreneurship among the younger population.
India's digital transformation led to the rise of new business models that enabled innovations in e-commerce and fintech. Financial inclusion paved the way for small businesses and unbanked individuals to access credit and formally join the economy. Digital payments made it easier for India’s digital economy to grow, as consumers utilize pay later and embedded installment payments for products and services.
Mobile broadband usage has also surged in recent years, accelerating the growth of online marketplaces in India. On average, the country’s Gen Z population spends eight hours online. Smartphone adoption is also on the rise in rural areas of India. Projections indicate that the country will have the second-largest number of online shoppers by 2030, at 500-600 million.
Business and technology have become interdependent in India. To further drive the country’s digital economy, IT service providers in India must also become leaders in providing integrated business solutions. As explained by Auctus Advisors’ co-founder Abhisek Mukherjee in a recent column, IT firms will be able to add more value by integrating data engineering, data analytics, customer experience, front-end design, and back-end cloud mechanics.
Public-private partnerships also play a key role in conquering the challenges in India’s digital economy. By increasing access to public services and financial assistance through the country’s biometric digital identity program, India can leverage the country’s digital transformation through support for growing businesses. Investments in advanced technology like AI, machine learning, cloud computing, and blockchain technology will also set the country up for strong growth in the next decade.
Adopting the latest innovations, analyzing the latest data, and using the right channels will allow India’s digital economy to thrive and establish the country as an economic powerhouse in a few years’ time. These investments will put the country in the position to become a competitive marketplace, outpacing other economies through digital transformation.
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