Affordability and lack of credit holding back India’s digital economy – but not for long

Nitin Jain is CEO and principal fund manager at Kotak Mahindra Asset Management (Singapore)

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.

Author: Stephen Manallack

Former President, Australia India Business Council, Victoria and Author, You Can Communicate; Riding the Elephant; Soft Skills for a Flat World (published by Tata McGraw-Hill INDIA); Communicating Your Personal Brand. Director, EastWest Academy Pty Ltd and Trainer/Speaker/Mentor in Leadership, Communication and Cross Cultural Communication. Passionate campaigner for closer western relations with India. Stephen Manallack is a specialist on “Doing Business with India” and advisor/trainer on “Cross-Cultural Understanding”. He is a Director of EastWest Academy Pty Ltd which provides strategic advice and counsel regarding business relations with India. A regular speaker in India on leadership and global communication, his most recent speaking tour included a speech to students of the elite Indian university, Amity University, in Noida. He also spoke at a major Federation of Indian Chambers of Commerce and Industry (FICCI) global summit, the PR Consultants Association of India in Delhi, the Symbiosis University in Pune and Cross-Cultural Training for Sundaram Business Services in Chennai. He has visited India on business missions on 10 occasions and led three major trade missions there. He provides cross-cultural training – Asia and the west.

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