9 September 2021

If Britain wants a slice of India’s digital economy, it should start investing now

By Abhishek Rungta

Right now, India is defined, for many, by its brutal second wave of Covid. In the long-term, however, India will be one of the pandemic’s winners as the global economy becomes more digital-focussed and remote work becomes the norm, creating opportunities for India’s young tech-savvy workforce. As digital disruption is pushed further, India is poised to lead.

The rest of the world’s ‘new normal’ is India’s old normal – the country’s IT sector has been a leading force for digital transformation globally for several years. Post-pandemic, India may become the world’s leading digital economy. Many Indian companies already lead digital transformations for global companies. If Britain wants a slice of India’s digital resilience, it had better start investing in it now.

India is not the only place in the world that has coders, designers and computer science graduates. But it is the only place in the world that has so many of them, with their English language skills as impressive as their technical skills.

They are as needed for its domestic market as they are for overseas clients. India has 560 million digital subscribers, which is second only to China. Indians download more apps than any other country except for China, and spend the most time a week, on average, on social media than any other nation. Even through the brutality of the pandemic, India managed to attract $20 billion in foreign investments over its four month lockdown.

The digital economy is set to make up 20% of India’s GDP in the next five years – more than double that of the US. In the UK, the digital economy contributes £149 billion pounds to the economy per year, and the industry employs 1.5 million people. The digital economy in India is growing much faster, and contributes up to $1 trillion to the economy each year.

If you could design an economy that is Covid-resistant and future-proof, it would be India’s.

So how has India, a country that only stopped receiving foreign aid from the UK in 2018, turned into one of the world’s leading digital giants? Part of the answer lies in the policy reforms of 2015, namely Digital India. India was one of the pioneering leaders in e-governance, and the Aadhar scheme is a key component of that.

The government’s digital model has narrowed the digital divide and brought technology to even the most remote corners of the country – and inspired a new generation of Indians to join the tech sector.

Those young Indians benefit from the educational platform DIKSHA, which has implemented coding lessons in high schools. The country is also home to the world’s highest funded digital education app Byju, which raised over a billion dollars over lockdown. Similarly, India is home to Jio, an all-services tech-platform, that has raised $15 billion during the pandemic from wealthy international investors including Facebook, and aims to bring a digital lifestyle to every Indian.

This joint-public private push means that India is leading the way in becoming a truly digital-first nation, and is predicted to overtake the US as the world’s largest developer population center by 2024. It has already overtaken the UK at a lightning speed.

This digital-first approach was a strength for countries before the pandemic. Now it is a lifeline. Whereas many predicted disaster for India as a result of lockdown, considering that 81% of population are in informal, zero-contract work, the economy is still growing. India’s GDP has grown by 1.6% in the last quarter. This is astonishing when compared with the EU, for example, which has recorded a contraction of 0.4%.

This trend will increase as remote work means that it makes little difference whether an employee is in London or Mumbai. Cheap labour costs, highly skilled workers and deep internet penetration mean that in 2018 India attracted 65% of the world’s outsourced jobs. In India, the remote workplace was not waiting for a pandemic to be normalised.

The post-pandemic world will be more digital, more global and more competitive. Geographical proximity to financial or political centres will no longer be enough to drive economies.

In a world where digital skills, flexibility, and entrepreneurship are all that matters, India’s tech sector could be the digital equivalent of the City of London or Wall Street.

Indian bodies are not yet immune to the virus. But our economy is as resistant to its effects – and as well placed to capitalise on the world it is creating.

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Abhishek Rungta is CEO of Indus Net Technologies

Columns are the author's own opinion and do not necessarily reflect the views of CapX.