India has the third biggest quantity of unicorns, but it is way behind the US and China. It has the smallest R&D workforce, the smallest scientific manpower amongst the 3 nations, and has no tech firms of the size of Google, Microsoft, Amazon or Facebook. But even ahead of Aadhaar and UPI, it had NSE, NSDL, Isro … Infosys non-executive chairman and co-founder Nandan Nilekani points out in a fireside chat with FE managing editor Sunil Jain at the FE CFO Awards 2020. Excerpts:
How far behind the US and China is India when it comes to tech energy?
After the 1st two phases exactly where we took actions to modernise our banks and stock market place, the third phase—in the final decade— was about placing in the digital infrastructure at the person level … I joined the government in 2009 and Aadhaar now reaches 1.27 billion folks. It is used to de-duplicate passports, driving licences, PAN cards, and now there is a proposal ahead of the Election Commission of India to use it to de-duplicate voter IDs and make it a lot easier for folks to vote when they travel.
Today we have more than 700 million special bank accounts linked to Aadhaar numbers. That, in turn, laid the foundation for the world’s biggest direct advantage transfer programme. This also came in handy through the pandemic when the government transferred cash into people’s bank accounts … we have demonstrated to the planet the good quality of our infrastructure.
The UPI (Unified Payments Interface) was a further significant innovation in India. By October 2016, we had reached about 1,00,000 customers and then demonetisation occurred. Today UPI does 2.3 billion transactions a month and it is a spectacular results. I go to a vegetable vendor and he requires UPI payments. I consider we have definitely managed to democratise payments. It is a really higher volume, really low price, tiny transactions payments technique. There is absolutely nothing like this in the planet.
On a scale of one to 10, if America is at 10 with Google, Facebook, and so on., exactly where are we?
In regions like social media, search and e-commerce we do not definitely have a good story. But in public digital infrastructure, we do have some thing which is planet beating.
What are the next actions in India’s tech journey?
With Aadhaar, and so on., we have produced issues paperless, cashless and presence-significantly less. I can sit in my home on my phone and do an Aadhaar KYC or a video KYC and open a bank account or purchase a mutual fund. Being capable to purchase economic goods digitally has substantially decreased fees and enhanced efficiency. UPI has a function referred to as auto spend, in which you can set up organization guidelines saying “debit my account every time I take an Ola or every day put Rs 10 in my SIP”. Once this rolls out, you will discover that subscription-based services will get massive traction. You will see more SIPs taking place and SIPs are a massive supply of cash for the mutual fund sector. The mixture of ASBA (applications supported by blocked quantity) and UPI tends to make it really quick for me to apply for an IPO on my smartphone. Suddenly, millions of folks can participate in a economic economy.
You are working on Beckn. What is that about?
Beckn is an API getting created by a foundation set up by Pramod Varma, me and Sujit Nair who is the CEO. The concept is how do we unbundle monolithic applications in the sense that, if it is e-commerce you order the item on one web page, it would be delivered by some other enterprise and it could be paid by a third enterprise. So, if you can unbundle this, folks can make an ecosystem. So, I should really be capable to make a booking on my Ola or Uber and then I book the Metro ticket and in one step I can make the complete finish-to-finish travel. It has the prospective to unbundle e-commerce and mobility just like UPI unbundled payments. It is a extended way from exactly where we are.
So, I can book a cab on my Ola or Uber app, but somebody who is not on Ola or Uber will be capable to service it simply because Ola and Uber will be plugged into the Beckn API?
Yes, but they have to adopt the protocol. I can also book on Ola and the Metro. It is fundamentally unbundling and rebuilding in a way that is more democratic and permits interoperability across systems. What occurred in the West was that you had closed loop winner-take-all models, exactly where a couple of firms became substantially potent. We saw that in each sector. The type of work we do in India is to allow the open loop model so there are not one or two winner-take-all China has just two players in payments, and we have a model exactly where each bank and each front-finish distribution channel can participate. That creates healthful competitors and innovation. At a more conceptual level, we are attempting to develop a more competitive economy by unbundling the ecosystems of digital commerce.
In the closed technique, Ola or Uber is driving it. Who pushes this in the case of a Beckn?
In the case of payments simply because it is regulated, the RBI had the foresight to do it. But it is also about government policy and interoperability for instance, the two exchanges and the two depositories. By law, the two depositories have to be interoperable. Airlines are a good instance of interoperability. In massive tech and hi-tech, issues moved so rapidly that ahead of the regulators could even style interoperability, folks constructed these walled gardens.
So if the government says that an Ola or an Uber should have systems that are interoperable, we can entirely modify the game?
It’s not just that. You need to have a lot of players and there is a complete market place-producing work. But broadly, yes, we should really encourage interoperability like we have completed in payments.
What is Open Credit Enablement Network (OCEN)?
This is the third massive factor in India just after Aadhaar and payments, and iSpirt has completed a lot of work on this the challenge is how we leverage information in a way that folks can use their personal information and it is also linked with the challenge of winner-requires-all. All of us create a lot of information in each transaction we do and that information is collected by a couple of firms and then they monetise it by means of marketing or what ever. But that information is ours.
Is there a way to re-architect this in a way so that I as an person or I as a tiny organization can use my personal information? We contact that concept information empowerment.
The 1st implementation of that is in economic services, beneath the leadership of the RBI, but all the 4 to 5 regulators in the economic services are on board and they have defined a notion referred to as consent manager or account aggregators, who sit among information providers and information customers.
Suppose I am a tiny organization and I want to get a loan. I ask my consent manager to get my GST record from the GST technique, get my bank statement from the bank, get my TDS return from the earnings tax technique, bundle all this information in an encrypted way and give it to two or 3 lenders. The lenders can decrypt this information and use their personal algorithms and say this individual is credit-worthy and then I get a digital loan. The tiny organization is applying its personal information to get a loan.
OCEN is definitely the API. Let’s say I am operating an accounting computer software enterprise. I have a lot of shoppers and these shoppers have information, some of which is on my platform like invoices, balance sheets, and so on. I can now ask OCEN to connect to 5 lenders so that the firms on my platform can go to these lenders applying a uncomplicated API and get loans from them. It is all about minimizing the transactional price of producing these systems work. It will take some time to place all these pieces in spot. The credit once more goes completely to the government as it came up with the notion of account aggregators. So, abruptly we have a national infrastructure for information empowerment.
If other folks advantage from it, how is the individual who is making the app or the computer software benefiting from it?
They will make cash on the transactions. We are speaking of really higher volumes and really low fees.
When you look at India’s R&D-devote or tech manpower, it is fairly restricted …
We have a constraint, but investments will come about there. If you look at all the good firms of the planet … GE does really sophisticated R&D in Bengaluru. So, a lot of R&D taking place in the multinationals is taking place in the Indian firms. It could not be at the scale of the US or China, but it is taking place. We are seeing lots of firms carrying out deeptech applying AI.
How do we evaluate with China?
China is a great deal larger than India in each day life. But I consider the way to consider about this is that India is the only young nation in an aging planet. China is going to swiftly age simply because of the one-youngster policy. When you have a young nation in an aging planet, the demographics are in your favour, and you will absolutely be capable to get to 5-6% development. When the rest of the planet is developing at 1-2% and you are developing at 5-6% constantly more than 20 years, then you are going to do a considerable catch-up.
So we are finding our formula correct?
Paytm is a massive user of UPI and is worth $17 billion. PhonePe, which is now element of Walmart, is supposed to be worth a couple of billion dollars. BharatPe has just grow to be a unicorn and has completed an astounding job of spreading QR codes to retailers. Zerodha has grow to be the biggest on the web stock exchange.
On the digital infrastructure, which the government has laid, innovation is taking place, competitors is taking place and billions of dollars of worth are getting produced. The West invested public cash on the net, public cash in GPS and that permitted the Ubers and Googles to succeed. So, we are making some thing equivalent right here.
The distinction is that we are not making monopolies, and we are assisting the tiny guy. Today banks discover it challenging to give loans to tiny firms simply because they cannot go and evaluate them. Now the evaluation is all digital and they can apply AI. All this stuff will make it quick for tiny organizations to get access to credit.
Look at FastTag, it came out of a report I did in 2010 at the request of the then road transport minister Kamal Nath, and today, thanks to our present road transport minister Nitin Gadkari, FastTag is ubiquitous. It is raising Rs one hundred crore a day. It is extraordinary. We are now lastly seeing all this technologies basically impacting the lives of the folks.
The stuff that is taking place is a silent revolution and we do not notice it simply because tiny bits are taking place each day. But if you take a decadal view, it is an extraordinary revolution.