Economy

24 November 2017

India takes the digital leap

When we think about “digitalization” in Europe, we still think about “mobile phones, apps, etc.” When we think about “digitalization” in India, it’s about retina scan and finger prints. 97% of the population in India is part of a biometric database which gives enormous opportunities in terms of access to services via a digital identity.

India's digital identity program

India has developed an outsized technological infrastructure breakthrough that leaves the rest of the world far behind. Pre-2009 nearly half of the people in India did not have any form of identification. Babies born outside of a hospital and not registered didn’t get a birth certificate. Without a birth certificate, you can’t get the basic infrastructure of modern life: a bank account, driving license, insurance or a loan. You operate outside of the official sector, and thus many opportunities are not available to you.

In 2009 India launched a project called Aadhaar which was a technological solution to the problem.
It consisted of creating a biometric database of the population. Every person gets a 12-digit digital identity authenticated by finger prints and retina scans. Aadhaar became the largest and most successful IT project ever undertaken in the world.

Another impactful government initiative was the introduction of the “demonetization” which happened nearly overnight in November 2016. As a result the volume and value of non-cash transactions doubled. India has not become a completely cashless economy, but nevertheless it has a fiscal impact through constraining the parallel economy.

Digital jump
"Data is the new oil - Data you share will make the difference"
Christian Leysen
Chairman AXE Group

All these digital initiatives laid the foundation for the digital jump.
Think rise of mobile devices, new distribution channels, rise of e-commerce.
Currently only 28% of the population has a smartphone but growth rates are close to 70% per year.
Think government projects : Smart Cities, Make in India, Digital India. The Indian government is clearly prepared to allocate significant resources to digitalization.

Some projects are that big and complicated and involve a whole ecosystem, such as Smart Cities, that Consortia, rather than one-on-one tenders, led by the world’s largest companies are required to lead those projects.

Offering alternative ways of entering India ?

According to Mr. Hasit Kaji, Vice President and Head of Special Initiatives at Tata Consultancy Services, in order to grow in India, it is interesting to consider, next to the traditional way of thinking about setting up a local presence and creating partnerships, to think with a focus on innovation and entrepreneurship and try to link Belgian start-ups with the many Indian innovative initiatives. Together they will better understand the magnitude of the challenges and will contribute together from the start. This is important since customer needs are too specific for 'just importing a product'.

Infrastructure and trade policies

Inefficient infrastructure and many trade policies are some of the reasons why many companies are reluctant to enter the Indian market.

To help things forward the government is in delivery modus on it’s commitment to improve those issues. One of the recent examples is the Goods and Services Tax (GST), a unified tax, aiming to replace the pre-existing many different indirect central and local taxes in several states.

Road Development

Over the last two years, the Government of India has increased its pace of road construction. Furthermore, the Government has decided that no road project will be awarded until 80% of the concerned land is acquired, which increases the viability of the project and reduces delays in implementation after award of the project. The government has set a target of constructing 15.000 km of roads in 2017-2018 with a budgetary allocation of close to USD 14 billion for the year. So the stage is set to develop a more robust road infrastructure network across the country.

Dedicated Freight Corridors – the Delhi-Mumbai Industrial Corridor Project

The Government approved the construction of dedicated freight corridors in 2014-2015 to increase freight handling capacity trough railways and reduce the transit time. Currently, the plan is to connect the high container traffic routes from North to West and North to East through dedicated freight corridors.
Completion of these projects will not only increase the freight handling capacity on these routes, but will mainly increase the average travelling speed of trucks, which is currently 25km/hour, to 70 km/hour.
The benefit would be to enable seamless cargo movement from areas of production to areas of consumption.
Going forward, the Government is further committed to developing three additional freight corridors i.e. (1) East-West Corridor (Kolkata-Mumbai, 2.330 km), (2) North-South Corridor (Delhi-Chennai, 2.340 km) and (3) East Coast Corridor (Kharagpur-Vijaawada, 1.114 km).

Better Organized Air Cargo Industry

Nowadays, it is being witnessed that some players in the air cargo industry have begun to utilize the aggregator & marketplace model within this space to make it more organized. These aggregators provide all information related to the air cargo industry like benchmark prices, incentives & spot rates, export/import, and cross-trade & domestic tariff. In addition to these services, they also provide software such as airway bill, barcode label, among others. This brings more transparency and efficiency in processes.

Inland Waterways Development

India has about 14.500 km of navigable waterways which include rivers, canals, backwaters, creeks, etc. Currently, only 4.382 km of waterways have been utilized. There is a huge potential waiting to be unlocked through development of these inland waterways. In 2016, the Government anounced 106 new national waterways trough enactment of the National Waterways Act. This will help realize the potential of inland waterways as greender and more cost effective options and establish routes in which adjoining hinterlands could be serviced. According to government estimates, inland waterways transport has potential investment opportunities of around USD 600 million in the next 3-4 years, towards various ongoing/proposed programs.

The Belgian State Visit to India

ING joined the Belgian State Visit to India in november. As we believe in exchanging experiences, inspiring each other and sharing tips and tricks, we held a local event in Mumbai together with Kotak to explore the business opportunities.

Watch the video of the event here:
The most memorable moments in image

Go to our photo album and breathe in the atmosphere!

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