The latter is becoming more pertinent when we see serious regulatory challenges emanating from the biggest new economy play in the world, China.
On the day when the China ed-tech companies and other new economy stocks were reeling under the fear of profits being taken away, Zomato, a fast growing Indian food tech company had its listing day gains of more than 50%.
Close on the heels are many other digital businesses which are getting ready for listing.
In fact, around 750 million have access to a mobile payment system tied with the Aadhar card, a biometric card which uniquely identifies an individual and is very easily accessible by any business, government services, and healthcare services securely, seamlessly and at almost no cost.
India digital economy has to overcome one big hurdle though – affordability.
With per capita incomes of about $2,000 and large infrastructural challenges, to offer a value proposition at a mass level is extremely challenging, and requires large capital.
2021 has been a breakout year with more than $20bn in funding so far this year and almost $10bn in July 2021 alone. Prior to this the average was just $8bn-$10bn per year.
Another thing holding back India is lack of credit.
The future is looking bright for India to become a credit-rich country enabled and backed by data. fintechs with buy mow pay later (BNPL) businesses will help fuel the data backed credit boom.
With one of the youngest economies with about 1.4 billion people, the highway to growth is long.
Traditional businesses tend to grow in an algebraic way, but digital businesses are growing at geometric scale and some potentially at logarithmic scale.
Digital economy was one missing piece in India. While it can be very rewarding opportunity, at the same time, its disrupting and in some cases can sweep away established businesses.
They better keep a copy of Who moved my cheese handy as the cheese is going to be constantly moving.
We as investors are keenly analysing these changes and investing in upcoming opportunities and remain hawk-eyed on potential disruptions.
A vibrant digital ecosystem throws in immense possibilities of large capital coming to India.
Tens of billions have been invested by global investors in Chinese internet businesses and India is at a similar stage and with the recent chaos, potential realignments can accelerate the flows.
Y2K was a watershed moment for India IT services and 20 years later, Covid-19 will likely be a watershed moment for the Indian digital economy.
Nitin Jain is CEO and principal fund manager at Kotak Mahindra Asset Management (Singapore) Pte ltd.