Turning mission $5 trillion economy by 2024 into a reality requires propelling the economy’s future growth levers and setting the stage for the next revolution.
India’s future will be ‘digital’. This potential is clearly reflected in the large bets put on the country by top companies of the world. The next few decades are set to witness a tectonic shift from traditional to technology driven enterprises.
With growing concerns over tech companies from across the northern border, India is likely to find itself at the center of the world’s tech transformation. Technology giants are investing in India as they seek to create early inroads into a prosperous digital future. By the end of this decade, India will have the world’s third largest consumer market (WEF) and this consumption will be largely supported and driven by technology products and services.
The government has shown clear resolve for putting India on the course of tech leadership by investing and focusing on digital solutions, artificial intelligence & even early investments in the quantum mission.
At the same time, battles in the telecom industry which led to cheaper data plans and proliferation of low-priced smartphones are making more and more Indians adaptable to easy online services. Last year, Zomato announced that about 35% of their revenue came from tier III & IV locations, indicating that use of digital services is not just a luxury of tier 1 cities, but also a reality in tier 3 and tier 4 cities.
By 2023, India’s internet users will increase by 40% and the number of smartphone users will double (McKinsey). This growth will complement emerging sectors such as ride hailing services, e-commerce marketplaces, online food-delivery services etc., the same way previous growth revolutions gave fillip to industrial age enterprises.
By 2021, India’s e-commerce industry is poised to reach $84 billion, from $24 billion in 2017 (Deloitte); another study pegs the e-commerce market to clock $100-120 billion in gross merchandise value (GMV) (Bain &Co). By 2024, e-commerce will contribute about 4% to India’s GDP (PwC). To put it in perspective, the years old retail industry today contributes about 10% to India’s GDP
A transition towards smarter and nimbler market supporting regulations
Nurturing and bolstering this growth requires reducing barriers to internet access in rural regions and making Indians more tech-friendly. At the same time, it is vital to create an enabling and favorable regime where e-commerce and other digital enterprises grow with the least regulatory hurdles.
News reports indicate that online marketplaces may be regulated to the extent of even creating a separate regulator for the sector. The online industry is not only important from job creation and enabling exports of goods and services, it is also very relevant to economic revival during and post COVID.
A separate regulator for a market driven business which has enabled flow of investments, created job opportunities and supported small and medium enterprises could inhibit/hinder sectoral growth and possibly discourage new players from entering the Indian market. This sector needs enablement and empowerment and not regulation and regulators. Both can cause a pre mature end to sector that is at the cusp of takeoff. It is better to see the challenges of a sector and then regulate rather than regulate and try and grow a sector as that has never succeeded. That is the also the essence of the difference in approach of the EU and the US. Over regulation has killed innovation and successful companies coming out to the EU while the US continues to have companies like Facebook, Google, Amazon and so forth.
But India seems to be treading its own path. The Union Government has already highlighted plans for a Data Protection Authority under the PDP Bill as well as a regulator for non-personal data. Thus, an e-commerce operator will have to deal with three different regulators under three different legal frameworks/ regimes with over lapping jurisdictions. This multiplicity of regulation / over-regulation can stand in the way of sectoral growth and create numerous regulatory hurdles.
Role of the next-gen regulator
The role of the ‘next-gen’ Indian Regulator and Policy Maker is crucial. The right moves have to be made just like in a game of chess.
Policy makers in a post-covid era have to put in place the right architecture/ framework and create a conducive, vibrant and commercial ecosystem which like a magnet attracts businesses. They must take on the role of a talisman to manage the economic fallout through innovative and agile interventions and easily implementable measures/ solutions. They must support an open economy, strengthen / shore up markets and refrain from micromanaging business. Too many regulators can and will usher in a new culture of Regulatory governance and can set the stage for India becoming a 5 trillion-dollar economy and the leader in the digital space. Do we want to back to an era prior to 1991? Is it reforms or more regulation that India needs at this stage?
(Gopal Jain is senior advocate, Supreme Court of India. The views expressed in this article are his own)