Discussion with a Former Civil Servant
An interaction with a retired civil servant reveals concerns about the current enthusiasm for startups in India, drawing parallels with past economic policies like import substitution that failed.
Potential of Tech Startups
- Startups are important for economic growth, but there is apprehension about repeating past policy mistakes.
- India has witnessed a surge in startups, with over 120,000 registered in the past decade, making it the third-largest startup ecosystem globally.
- Institutions like IITs, IIMs, and Atal Incubation Centres are fostering innovation at various levels, including schools.
Challenges for Tech Startups
- Limited domestic market with few early adopters due to a highly price-sensitive population.
- Cultural factors lead to a 'wait and see' approach for adopting new technologies.
- Consumers demand 'value for money,' expecting innovations to be priced affordably.
- High failure rate of startups globally (90%) raises concerns about sustainability.
- Questions about sufficient venture capital and supportive tax policies in India.
Case Study: Unified Payments Interface (UPI)
- UPI's success demonstrates a blend of technology, policy, and socioeconomic strategies.
- Developed by NPCI as a not-for-profit, supported by the Reserve Bank of India and Indian Banks' Association.
- Part of 'India Stack,' including interoperable initiatives like Aadhaar, e-KYC, and DigiLocker.
- The government promoted UPI via mandates, incentives, open API architecture, and zero charges for small transactions.
- Contributed to a significant shift towards digital payments in India.