Demonetisation has failed to dent confidence in Narendra Modi’s ruling Bharatiya Janata party. Stock markets received a further boost last Wednesday, after the Government passed a bill replacing the myriad of state and federal levies with a single goods and services tax. Other no less important reforms have slipped under the radar: over 99% of adults are registered to Aadhaar – the world’s largest biometric identification scheme – which could propel the digital economy forward in India.
The potential stimulus from China was highlighted last October. Chinese tech companies have failed to gain traction in India, but are instead investing heavily in home-grown start-ups. Alibaba’s Electronic World Trade platform is one notable example of technology transfer. Alongside high levels of FDI, the exchange of intellectual property is helping local start-ups to compete with US tech giants. This will provide significant opportunities for SMEs in India.
Competition to serve the world’s fastest growing smartphone market is also intensifying. Chinese and US smartphone makers are trying to match Samsung as the lead supplier to the Indian market. Mobile data charges have been slashed as disrupters undercut established players. This will accelerate the shift to mobile banking, and perhaps help to overhaul a sclerotic banking system and stimulate consumer demand.
Summary
- Chinese companies transfer technology to Indian start-ups
- This will stimulate consumption in India
- World’s largest biometric identification scheme will accelerate shift to digital economy
