Cryptocurrencies, unicorns, decacorns, IPOs, super apps, data breaches became a part of drawing room conversations in 2021 — a year when India’s digital economy boomed.
The year saw legacy conglomerates like Tata and Reliance expand aggressively into the digital space with quite a few acquisitions and launches under Tata Digital and Jio Platforms, respectively.
Several important pending Bills and policies across data protection, cryptocurrencies, e-commerce and social media intermediaries were fast tracked. A lot of this was driven by an unprecedented digital adoption of payments, e-commerce, social media, healthcare, education, remote working and every other possible utility. In 2022, the digital economy will continue its upward journey, propelled by the listing frenzy of internet start-ups towards the end of 2021. The listings have boosted investor confidence in the internet economy space.
Rameesh Kailasam, CEO, IndiaTech.Org, told BusinessLine, “Last three years of our efforts with SEBI and government finally took shape in 2021 with the listing of Indian start-ups in India. Two years ago, we had predicted that once this is triggered, we will see an exponential surge from the average $8-10 billion fund inflow into start-ups to a range of $30-40 billion, as we are seeing now.”
Also see: Funding rush to continue in the future
Sijo Kuruvilla George, Executive Director, Alliance of Digital India Foundation (ADIF), said, “With more liquidity in hands, founders are making more aggressive bets in terms of acquisitions. The ambitions and beliefs of the new crop of founders are way bolder and more global,”
George believes that by 2022, India could surpass China in terms of aggregate unicorns.
“On a quarter-to-quarter basis we are already neck to neck with China in adding new unicorns, and will soon surpass their aggregate number,” he said.
Even as the digital economy gained speed, regulations arrived and we are likely to see more rules governing the space. But an area of concern are overlaps, and experts feel these need to be streamlined. The draft bill focussing on “personal” data protection now includes social media intermediaries, which could also fall under the new IT Rules.
A similar overlap will be seen when the new e-commerce rules come into play. A saving grace will be that companies would have at least two years to implement and comply with the data protection regulations.
“You would want to achieve synchronisation on how you regulate various streams of the tech economy. For e-commerce, there needs to be separate policy. Similarly for data and intermediaries there has to be separate bills governing them. Don’t regulate intermediary under PDP Bill. Don’t regulate e-commerce marketplaces and sales under Consumer Protection Act. Consumer Protection Act is just for consumer protection and nothing more,” Kazim Rizvi, Founding Director, The Dialogue, told BusinessLine .
Rizvi is expecting the Data Protection Bill to be enacted in 2022.
“We largely expect a year of system building and implementation. It will be the beginning of the compliance journey for a host of processors and fiduciaries, ranging from SMEs to the government itself,” he said.
App ecosystem battle
Both Google Play and Apple App Store are currently under the scanner of the Competition Commission of India (CCI), for charging 15-30 per cent commission on in-app sale of digital goods and services, while making it mandatory to use any of their payment gateways. App developers don’t get the choice of choosing a different payment gateway which would charge around 1.5-5 per cent commission in comparison.
2022 will be a major year for the app stores, especially Google Play, which has extended its implementation deadline for the new policies and charges to October 31, 2022.
Murugavel Janakiraman, Founder and CEO, Matrimony.com, told BusinessLine that almost 90 per cent of interactions on his matchmaking platform happen over mobile phone apps.
“We are already paying a lot for promoting our apps on Play Store. Globally, governments have started taking note of their anti-competitive practices.
In the long-term, they need to be regulated by the government as today, the entire app ecosystem is controlled by two players,” he said.
Cryptocurrencies are also likely to see more regulatory action. After several discussions with various stakeholders, the government has decided to draft and finalise the Bill more cautiously, pushing the conversation to the budget session. Meanwhile, an ever-growing interest in the crypto space — which has seen two unicorns emerge this year — will have more use cases to invest in.
“Even as it continues to grow as an asset class, crypto’s true potential is much more than that. We are already seeing the early signs of this globally and in India as more and more industries, including banking, healthcare and agriculture, adopt blockchain, the technology that enables cryptocurrencies,” Ashish Singhal, Founder & CEO of CoinSwitch Kuber, and Co-Chair of Blockchain and Crypto Assets Council (BACC), said.