By Srinath Srinivasan
Indian IT and BPO industry’s trade association Nasscom and a leading global management consulting firm, Avasant, recently came out with a report that shows the role of Indian start-ups, BFSI and public sectors in adopting and spearheading blockchain technology and associated businesses. According to the report, Indian start-ups are involved in over 50% of the active blockchain projects in India across different industries. BFSI tops the list with an over 60% adoption rate of enterprise-level blockchain technology and over 50% of states have already involved themselves in blockchain-related initiatives, driving the public sector adoption in the country.
The report was developed to consolidate the blockchain ecosystem that’s growing fast in the country.
According to the report, there are a number of factors that enable start-ups to play a major role in this revolution. Government projects are creating a productive platform for start-ups. For example, the ripples of the digitisation wave that’s taking place rapidly in healthcare and real estate have led to start-ups like Auxesis group and Zebi Data to deliver critical blockchain solutions for maintaining citizen health record and land registry.
Favourable innovation and procurement policies by government entities (in the State of Telangana especially) have enabled blockchain startups to overcome some of the entry barriers posed by public procurement policies for technology implementation project. However, the report says that the blockchain ecosystem has not taken off as fast as it has globally. While global Venture Capital investments on blockchain start-ups has reached $5.6 billion to date, India has been able to attract only 0.2% of those investments. India accounts for only about 2% of all blockchain start-ups worldwide. Out of these small number of startups, India-based entrepreneurs and start-ups are establishing operations in jurisdictions such as Malta, Singapore, Switzerland and UK to limit their exposure to regulatory risk associated with the use of digital tokens or assets in India. “Blockchain technology is at its nascent stage in India. With better consolidation of the industry and positive changes in policies, the number of startups is expected to grow in the coming years. There are a wide range of use cases to be addressed by blockchain service providers and start-ups which makes things optimistic,” opines Sangeeta Gupta, senior vice president and chief strategy officer, Nasscom, talking about blockchain ecosystem in India.
BFSI sector in India has been using blockchain to solve a number of interesting use cases. For instance, ICICI Bank has onboarded 250+ corporates on its custom made blockchain platform that simplifies paper-intensive trade finance process. The solution enables cost-effective and secured cross-border remittance for salary and vendor payments. The outcome is a reduction in transaction time due to paperless trail. Another instance lies in insurance claims and settlement. Customers use Travel Ezee, a travel insurance application of Bajaj Allianz, to buy travel insurance and claim settlements in case of flight delays. Blockchain enables the application to notify a user about payout eligibility in case of flight delays and also help customers to process claims in just three steps. Following BFSI, healthcare sector has been an early adopter of blockchain with applications in monitoring patient records and drug supply chain to fight counterfeits. “Many blockchain applications will also be directly used by common people in future, marking the technology’s proliferation. With mobile penetration and the advent of 5G, blockchain services are not just going to be more secure but also free of latency. This will make more enterprises and users alike to adopt the technology,” says Swapnil Bhatnagar, Research Director, Avasant, talking about the technology’s impact in solving a wide range of use cases.
Indian blockchain startups and service providers have benefitted from public private partnerships, as per the report. According to the report, currently, more than 40 blockchain initiatives are being executed by the public sector in India, with approximately 92% in pilot/proof of concept phase and approximately 8% projects in the production phase. Andhra Pradesh, Telangana and Karnataka have been the three leading states in implementing blockchain for maintaining land registry, farm insurance and digital certificates of its citizens via partnerships with leading service providers, startups and academic institutions. Telangana is setting up the country’s first Blockchain District which establishes Incubation centres and IT infrastructure to promote startups. FintechValley in Andhra Pradesh (Vizag) is enabling the creation of a network of blockchain companies and has the potential to expedite the growth of the blockchain startup ecosystem in India. Andhra Pradesh is setting up Centre of Excellence labs and innovation centres in collaboration with private sector and academic institutes. The state government is also collaborating with private companies to promote blockchain education. Karnataka Government has hosted the country’s first blockchain hackathon. The government aims to set up innovation and incubation centres as part of blockchain policy design initiative.
As the state governments, startups and blockchain service providers continue to expand their services, the technology promises to make digital infrastructure in the country more secure, robust and fast. It also promises the creation of a number of jobs. The report says that the demand for blockchain talent is growing over 40% a quarter globally and over 6,000 new openings for blockchain roles were posted in June 2018 alone. This leaves the Indian workforce with a huge market to venture into.