The digitization of India’s physical assets and their integration into a digital repository is a complex and ambitious task with the potential to unlock trillions of dollars’ worth of financial assets spread across over 16 asset classes. Although it is challenging to guarantee the digitization of every single asset, there is an undeniable trend towards asset digitization and its potential benefits for various industries and stakeholders.

The Indian government has recognized the significance of asset digitization and has taken substantial steps to drive this initiative. Programs like the Digital India Land Records Modernization Programme (DILRMP) seek to modernize land records, integrate spatial and textual data, and simplify the registration process. Similar initiatives have the potential to revolutionize land ownership, lending, and investment, unlocking substantial financial assets and driving economic progress, particularly in rural areas.

Digitizing land records demands investments in technologies such as drones and 3D imaging. Other asset classes require investment in data management systems, and cybersecurity measures. Overcoming the cost barrier requires collaboration between public and private entities with due support from regulatory bodies.

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Building secure public infrastructure rails like UPI, ONDC, and Digilocker has led the transformation by helping to streamline processes, reduce transaction costs, increase liquidity, and improve access to financial services, ultimately fostering economic growth and financial inclusion. For UPI alone, data from April 2023 published by NPCI reveals the transaction volume of INR 14.07 lakh crore. On a YoY basis, the number of UPI transactions increased by 59% and UPI transaction value increased by 43%. By leveraging these infrastructure rails collectively, India can continue to drive its digital transformation agenda and unlock the potential of asset digitization across various industries.

However, digitizing India’s physical assets faces various challenges. The large volume of assets, valued at more than INR 12 lakh crore, coupled with the country’s large population of over 1.4 billion people and diverse asset classes, makes it an immense endeavor. Adequate investment in financial and technological resources is necessary to ensure successful digitization. Additionally, technical and legal obstacles must be overcome, such as navigating copyright and privacy laws when dealing with intellectual property or sensitive personal information. Standardizing data formats and ensuring interoperability across different systems and platforms are also technical challenges that need to be addressed.

Despite these challenges, the benefits of asset digitization are substantial. Digitizing physical assets enhances their accessibility, manageability, and security. It improves transparency, reduces the risk of fraud and disputes, enables data-driven decision-making, facilitates efficient asset valuation, and creates opportunities for asset-based financing and investment.

Over time, it is envisioned that every asset held by an individual will have a unique digital identity, allowing for easy transfer or pledge. While not all assets currently have a digital identity, it is expected that this will become the norm in the future.

The digitization of physical assets in India is a transformative journey with tremendous potential. While achieving complete digitization may take years, it is a worthwhile endeavor that can revolutionize the way assets are owned, managed, and collateralized in the digital age. By addressing technical, financial, and legal challenges, India can unlock new opportunities, drive financial inclusion, and establish a more efficient and transparent ecosystem for asset owners, lenders, and the entire economy.

(By Shreyans Nahar, Co-founder & CEO, Finsire. Views are personal)