DIGITALISATION WILL HELP IN VALUE CREATION
Forbes India|May 21, 2021
As the pandemic brings technology and innovation to the core of business and daily life, the next decade will see about 150 million digital-first families in India
GAURAV DEEPAK

We will see a strong jump in value creation in India in this decade, an almost 200 percent increase. In the decade of 2001-10, we saw an incremental value creation of about $1 trillion and a similar number in the decade of 2011-20. This created a market cap of around $2.5-2.7 trillion, combining both public and private markets by end of 2020. In my estimate, we will end the current decade at a market capitalisation of $7.5-8 trillion, which implies an incremental value creation of $5 trillion, which is five times the previous two decades.

I believe that this value will be driven by three key forces: Digital, large-scale manufacturing and sustainability.

I want to focus on digital here. I believe that 50 percent of the incremental value creation will be driven by digital and digital business models, which will account for 30 percent of the total value of the market that we will see at the end of this decade. This number stands at approximately 10 percent today.

50 percent of incremental value creation will be driven by digital; it will account for 30 percent of the total value of the market

India does not have the physical infrastructure that is required to provide a standard of living that one would expect in a developed country. While estimates vary, economists believe that $12,000-$15,000 gross domestic product (GDP) per capita is good enough for a high standard of living. By leveraging digital, India would be able to achieve a high standard of living at a much lower GDP per capita. I would be bold enough to say that it may be nearly half of the number suggested by economists.

In the first wave of digitalisation, we saw digital largely around B2C commerce, travel, entertainment, payments (started with wallets), ride sharing, car and financial products and marketplaces. We also saw deep penetration in urban and semi-urban areas where families have adopted digital in daily lives. In this evolution of digital, the first few years was all about data and content consumption, then about discount hunting leading eventually to pay for service, quality and convenience. Our estimate of digital-first families in India is approximately 10 million, which is less than 3 percent of the families in India. And digital-first businesses you can count by name, with most of them being native digital. Traditional businesses still have not changed their models to become digital-first businesses. Once they do, the digital game will climb into a different orbit.

You are all aware that Covid has deeply accelerated digital adoption not only in India, but in the world. This has led to two core fallouts. One is that families and businesses have started adopting digital faster and deeper in their daily lives; two, entrepreneurs have started innovating products like never before. The products and services we use today were mostly conceptualised prepandemic, but you will now begin to see a full flow over the next 12 months of new innovation that was driven by the large-scale adoption of digital during the pandemic.

The fact that families, businesses and communities are getting comfortable with digital, and the overall telecom penetration levels, will lead to a deeper digital penetration over the next five to 10 years. Let me give you a few examples. Prepandemic, the role of digital education was minimal in the Indian context.

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