While predicting rapid growth, Nitin Jain of Kotak Mahindra Asset Management (Singapore) says there might be one catch – the India digital economy has to overcome one big hurdle – affordability. This is matched by a shortage of consumer credit.
Nitin Jain explains:
With per capita incomes of about $2,000 and large infrastructural challenges, to offer a value proposition at a mass level is extremely challenging, and requires large capital.
2021 has been a breakout year with more than $20bn in funding so far this year and almost $10bn in July 2021 alone. Prior to this the average was just $8bn-$10bn per year.
The future is looking bright for India to become a credit-rich country enabled and backed by data. Fintechs with buy mow pay later (BNPL) businesses will help fuel the data backed credit boom.
With one of the youngest economies with about 1.4 billion people, the highway to growth is long.
India already have more than 100 million users on Amazon, and travel, transport, ed tech, food tech, gaming, SaaS in enterprise and mass, are seeing millions getting added every month.
Traditional businesses tend to grow in an algebraic way, but digital businesses are growing at geometric scale and some potentially at logarithmic scale.
We as investors are keenly analysing these changes and investing in upcoming opportunities and remain hawk-eyed on potential disruptions.
A vibrant digital ecosystem throws in immense possibilities of large capital coming to India.
Tens of billions have been invested by global investors in Chinese internet businesses and India is at a similar stage and with the recent chaos, potential realignments can accelerate the flows.
Y2K was a watershed moment for India IT services and 20 years later, Covid-19 will likely be a watershed moment for the Indian digital economy.