- India’s Digital Public Infrastructure expands beyond Aadhar and UPI, creating impact across sectors including eCommerce, Gaming, Fintech, Banking, and MSMEs
- Aadhar has streamlined eGovernance, helped achieve 1 billion COVID vaccinations in 9-10 months, and enabled Income Tax Filings
- EKYC procedures have brought down the time required to create demat accounts, and facilitated 75% of loan applications from deeper pockets of India
- 70% of the UPI user base hails from outside Tier-1 demographics and 90% of the payments are expected to be UPI-led by 2027
- DPIs have a symbiotic relationship with the startup ecosystem adding over $100 bn in value across multiple sectors of the Indian Internet Economy
- The evolution of DPIs extends beyond Aadhar and UPI, presenting opportunities for the development of new/ innovative startups
Redseer Strategy Consultants in collaboration with Nandan Nilekani launched a report titled ‘The Impact of DPIs on the Indian Internet Economy‘ during their flagship event ‘Ground Zero 9.0‘ held on 7th December 2023. The report chronicles the inception of India’s Digital Public Infrastructure since its Aadhar days, details its impact on multiple sectors of the economy, and outlines the way forward for the technology. India’s current DPI landscape has provided 97% of the population with a digital ID, facilitated Direct Benefit Transfer (DBT) to the effect of 900 million beneficiaries to date and has even given 40% of the 1.2 billion strong population access to banking facilities.
The landscape is currently expanding beyond the JAM trinity (Jan Dhan, Aadhaar, Mobile) with properties such as Ayushman Bharat Health Account (ABHA), DigiLocker 2.0, Open Network for Digital Commerce (ONDC), Account Aggregator (AA), Digital Infrastructure for Knowledge Sharing (Diksha) among others. The strengthening of DPIs is critical to bringing more members of underserved demographics within the banking and Income Tax systems while also equipping startups and MSMEs with a foundation for growth. Here are a few key findings of the report.
DPIs have not just impacted governance, but also the private sector, especially startups. It has a symbiotic relationship with the startup ecosystem adding over $100 bn in value across multiple sectors of the Indian Internet Economy.
Aadhaar’s impact on effective governance has been remarkable and resulted in substantial government savings by plugging the leakages in the system. The next game-changer was the Universal Payments Interface (UPI). UPI democratized digital payments at a speed and scale that was unimaginable even 10
years back. This led to the rapid digitization of small businesses and the mass proliferation of online
payment among consumers. The stupendous success of Aadhaar and UPI has spurred the launch of several DPIs at different stages of development. These include Digilocker, Fastag, ONDC, AA, and Diksha, amongst others.
DPIs have not only transformed governance but have also ushered in a plethora of new opportunities for the private sector including startups. There exists a synergistic relationship between the startup ecosystem and the Digital Public Infrastructure. DPIs such as eKYC and UPI have been critical to the growth of Indian startups across several sectors by enabling customer onboarding, verification, and payments. Redseer’s analysis suggests that DPIs have already created over $100 Bn of value in the Indian consumer internet ecosystem spanning sectors like financial services, eCommerce, gaming and entertainment, logistics, mobility, and e-subscriptions.
The availability of zero Merchant Discount Rates (MDR) has boosted the popularity of UPI in the Ecommerce space. Mobility accounts for ~65% of the eCommerce payments with Foodtech following closely at ~50% and eTailing at ~35%. Emerging platforms such as ONDC are also seeing a greater degree of popularity in the MSME space owing to their open architecture and affordability. Open Network for Digital Commerce (ONDC) itself could generate a Gross Merchandise Value (GMV) ranging from USD 250-300 billion by 2030.
DPIs are critical to the growth of the startup ecosystem across sectors as they help in the creation of new business models. The three sectors that are expected to make the most out of DPIs are Healthtech, Agritech, and Insuretech. The secure and centralized storage of data through DPIS will play a critical role in providing timely access to insurance, sharpening diagnostic capabilities in healthcare and promoting the linking of documents. On the agricultural front, DPIs can pave the way for the strengthening of the overall value chain, secure market linkages, predict weather changes, and foster an ecosystem of farmer education. Linking patients to ABHA IDs will also enable faster health assessments.
Additionally, the evolving DPI landscape has also boosted gaming monetization by 20-25%, bringing in USD 27 billion in transaction value to the online gaming industry. The launch of UPI Autopay in 2021 has also revolutionized payment collection for subscription-based platforms like OTT, insurance, financial services, telecom, and media.
DPIs have seamlessly integrated themselves into multiple aspects of the business lifecycle and the day-to-day routines of the general public. India is home to a vibrant startup ecosystem with a total of 108 startups in the unicorn club and 40% of the entities nearing profitability. The continued democratization of DPI technologies can efficiently aid startup growth and support the MSME sector at large.
To read the full report, kindly click the following link: Impact of DPI on the Indian Internet Economy | Redseer Strategy Consultants.