India’s Technology Ecosystem: Key Trends and What’s Next By Abishek Ravindran W'24
Over the past several decades, we have seen the rapid proliferation of new startups, with new hubs developing across the globe to support these new ventures. This has been especially the case in India, a country that is quickly developing to support thriving technology hubs in cities including Bangalore, Mumbai, and New Delhi. The growth of startups within these cities is enabling rapid economic development and societal change across the region.
The advent of Reliance Jio, and their low-cost internet services, has played a major role in this trend. The company gave millions of Indians access to the Internet to enhance connectivity across the region, allowing for online services analogous to those seen in the United States to be built. This new set of startups ranges from Paytm, a digital wallet and payment service valued at over $16 billion, to Zomato, a food delivery service similar to UberEats that is valued at nearly $5.4 billion.
Additionally, governmental policies have helped support a shift in India’s startup ecosystem. For example, StartUp India offers a host of educational resources and a network of entrepreneurs, investors, and accelerators that prospective founders can tap into as they seek to develop their ventures. Additionally, new tax policies and exemption credits have generally been more favorable towards startups, supporting smaller ventures in a region that is traditionally known for a high costs of starting and doing business. Existing government red tape and restrictions continue to hamper new ventures, but the shifts in these policies have enabled enhanced startup activity the likes of which we have never seen before in the region.
But it is without question that there are still barriers to the growth of these companies. With over 120 languages spoken across the country and diverse and distinct cultures within the country, it can be difficult for companies, particularly within consumer goods and retail, to scale across these various regions. Take Zomato, a key food delivery service in the region with over 11.2 million transacting monthly users. While companies are beginning to see greater homogeneity across the country, startups are still having trouble tapping into smaller, regional markets.
And then there is the question of foreign multinationals (MNCs). The entrance of MNCs with a host of resources is making it difficult for startups with limited capital to compete. However, the ability of regional companies to innovate, disrupt current models, and tailor offerings to regional markets and preferences is enabling their growth. For example, Zomato’s delivery fees range from Rs 16 to Rs 45, the equivalent of $0.22 to $0.61. While there are questions regarding how long companies like Zomato can support such low costs, these costs have enabled rapid scale and growth across a country with a population of over 1.366 billion.
As the country continues to develop at a rapid rate, there is no question as to whether we will see more startup activity and the growth of existing startups within the region. But the continued struggle to innovate internally while also enabling the flow of foreign capital and companies to remain competitive on a global scale remains a pressing issue for India. There is a general consensus that MNCs with vast resources and networks, along with several key regional players, including Reliance Industries, will be able to most effectively capitalize on India’s rapid growth. But with continued innovation and a dynamic economic landscape, there is a lot of excitement surrounding the future of India’s startup ecosystem.
Abishek is a freshman in Wharton studying finance and management. Originally from Long Island, New York, he is interested in the intersection of international capital markets, technology, and strategy. In his free time, he enjoys playing poker, traveling and exploring new cities, and working out.