By DP Singh,

Investing in sectors where innovation leads can give retail investors an opportunity to benefit from the potential profit pools in them. Innovation has disrupted traditional business practices, compelling organisations to embrace change or face obsolescence.

Innovation involves transforming creative concepts into tangible outcomes that can improve efficiency, effectiveness, or meet previously unaddressed needs. It is not just about technological advancements; it includes novel approaches to problem-solving, processes, organisational practices or business models. In effect, doing things differently to deliver value to a consumer which they or even the market has not thought about yet.

Rapid innovation has led to a surge in new companies and unicorn startups. Three key points drive innovative businesses: Incrementally unlocking large markets, leveraging technology or business models within ecosystems and clear paths to monetisation.

Automobiles: In 2023, the mobility industry saw significant developments, including growth in micro mobility, vehicle electrification, and investment in autonomous vehicles. Electric cars constituted 18% of global car sales in 2023 (up from 14% in 2022 and 2% in 2018). Battery electric cars accounted for 70% of the electric car stock in 2023. Indian cab aggregators’ market surged to `72 crore in FY 2020 and is predicted to reach `5,515 crore by FY 2025.

Energy: India achieved its target of 40% installed electric capacity from non-fossil fuels in 2021. It ranks fourth in renewable energy installed capacity, fourth in wind power capacity, and fifth in solar power capacity. India is aiming for 500 GW of non-fossil fuel-based energy by 2030.

Financial Services: Fintech and blockchain are revolutionising the financial services industry. UPI accounts for 73% of digital retail payments transactions (as of 2023) compared to 6% in 2018.

Consumption: Personalised experiences and supply chain optimisation are expected to take India’s e-commerce market to $325 billion by 2030.The country had the third-largest online shopper base (150 million) in FY21, projected to be 350 million by FY26.

Technology: AI, cloud computing and cybersecurity are buzzwords today. The government has launched the IndiaAI Mission, a comprehensive national-level program to democratise and catalyse the AI innovation ecosystem in the country and ensure the global competitiveness of India’s AI startups.

India’s Global Innovation Index ranking has improved significantly, reaching 40th place in 2023 (up from 81st in 2015). Innovation remains a cornerstone of human progress. Embracing innovation is essential for progress, and strategic investments in cutting-edge startups can yield substantial returns.

The writer is deputy managing director & joint CEO, SBI Mutual Fund.

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