India in the age of technological disruption

1. Nandan Nilekani, 2016
An Alternate View Of
The Future
INDIA IN THE AGE OF TECHNOLOGICAL DISRUPTION

2. Nandan Nilekani, 2016
Conventional Wisdom - Prescription for India?
Exports
Led Growth
Manufacturing
Led Growth
Large Employers
Led Job Growth
Nandan Nilekani, 2016 2

3. Nandan Nilekani, 2016
Domestic Consumption
Led Growth
Services
Led Growth
Small Businesses
Led Jobs Growth
Our Vision of The Future
not Exports led not Manufacturing led not Large employers led
3

4. Nandan Nilekani, 2016
The Digitization Of The Economy
4

5. 5
Mobile Phones are the first 'Universal' product
5.2 Billion people have a mobile phone
Source: ben-evans.com

6. The rise of smartphones
Current sales
about 25M
smartphones
per quarter
Source: Ericsson Mobility Report 6

7. Internet penetration is increasing!
7
With 331Minternet
users, India is now the
second largest internet
market, ahead of the
USA!
Source: World Bank World Development Indicators, data.worldbank.org Source: www.trai.gov.in
Internetusers(per100people)

8. Uses Google Maps
to head to a crime
scene. Bought a TV
on OLX.
“I might not be
educated, but I know
how to respond to
queries I receive on
our website”
“I had no idea
I could sell my
art directly to
my customers”
“3G nahi to
hotspot sahi”
“The internet has helped
us cut the middleman
and changed our lives
forever”
“I don’t need a
passbook any more
because of the SBI
netbanking app” 8

9. 1 Billion in 5½ Years
Source: Data from http://www.uidai.gov.in 9
950 M
600 M
300 M
100 M
50 M
1019 M
A Ubiquitous Digital
Identity Infrastructure
for a digital desh.
The Aadhaar system can
authenticate 100 M
transactions per day, in
real time!

10. The future is here!
Smartphones with integrated
Aadhaar compliant Iris
recognition available for
commercial use!
Source:http://news.samsung.com
10

11. Pradhan Mantri Jan Dhan Yojana
BANKING FOR ALL
11Source: As on 30 May 2016, http://pmjdy.gov.in

12. 2 31 54 6
Micro ATMs,
AEPS, APB
mPOS Prepaid
Instruments
Wallets
Payment
Banks
IMPS Unified Payment
Interface
Digital Payments are coming in a big way!
7
BBPS
12

13. New national platforms to unlock more data streams
Goods & Services Tax
Network (GSTN)
Bharat Bill Pay System (BBPS)
Electronic Toll Collection
System (ETC)
13
GSTN will process
5 Billioninvoices every month
across 70+ Lakhsbusinesses!
1 Billionutility bills amounting to
$60+ Billionper month
BBPS source: http://indiatoday.intoday.in/story/bill-payment-industry-all-set-to-rock-in-services-sector/1/180344.html

14. ● Digitize their supply chains
● Increase consumption of digital infrastructure
- payments, logistics, etc.
● Leave digital footprints for service providers,
and customers alike.
● Digitize their customers
● The best aggregators use these digital
footprints to enhance their services!
New Age Platforms are digitizing their ecosystems
Customers
Platforms
Service Providers
14
Product Providers
Vendors Partners

15. Transport
Hotels
eCommerce
Health &
Care
Household
Services
Food
Delivery
Classifieds
New Age Platforms are leading to digitization in
multiple sectors!
15

16. 16
India will go from data poor to data rich nation in 5 Years ...
Digital
Identity
Paperless
Process
Commerce
Payment
Social
Machine Learning
& Algorithms
… allowing data driven decision making for scale and
inclusion!

17. Nandan Nilekani, 2016
Domestic Consumption Led, Not Exports!
17

18. Protectionism
is growing
around the
world
Trade deals
are
slowing down
"Globalization is being
attacked as never
before"
- Jeffrey Immelt, CEO General
Electric
Nandan Nilekani, 2016 18Source: Fortune.com

19. Nandan Nilekani, 2016
Global Trade Is Slowing Down
19Source: economist.com

20. Nandan Nilekani, 2016
Outlook for Trade is Bleak
Freight Prices Are Down
Source: economist.com 20

21. Nandan Nilekani, 2016 21Source: www.business-standard.com

22. Nandan Nilekani, 2016
Domestic consumption is continuing to grow
Domestic consumption
continues to grow
Even as exports slow!
22Source: data.gov.in (MOSPI)

23. Nandan Nilekani, 2016
Services Led, Not Manufacturing!
23

24. A young
country in an
aging world
- jobs in
outsourcing
2X GDP -
growth in
Housing,
Health,
Education
Services are
labour
intensive.
Growth will
drive jobs
Services like
tourism -
job creators /
forex earners
Services will Grow!
Growthof the formal economy will
Unlock Savings, Credit and Investments, leading to growth in associated services
24

25. Nandan Nilekani, 2016
Rise in Small Businesses
Small Services
businesses are
growing faster
than
Manufacturing
businesses.
25Source: livemint.com

26. Nandan Nilekani, 2016
Services Like Tourism Have Significant Potential
26
With 8M
International
Arrivals, India earned
$ 20B in 2014.
However, there is
significant potential
as can be seen from
other similar
destinations!
Source: World Development Indicators.

27. Manufacturing outsourcing trend is
starting to reverse
Foxconn is considering manufacturing in
the US
Technology is a huge driver of
change in manufacturing
Manufacturing is becoming a high
end, capital intensive activity
Will not lead to jobs growth
Robotics, IoT, 3D printing are
changing manufacturing
Automation will hit manufacturing
before we catch up
The Changing Face of Manufacturing
27

28. Nandan Nilekani, 2016
Why India Cannot Copy China
They had universal
literacy
They had no established
competition
China has over 10x India's
Capacity for Steel production!
When China, Korea, Japan
started
2014
China - 822 Million Tonnes
India - 86 Million Tonnes 28Source:www.worldsteel.org

29. Nandan Nilekani, 2016
Growth in Services
Service Taxes are
growing faster than
Excise collections!
29Source: indiabudget.gov.in

30. Nandan Nilekani, 2016
Small Businesses Led, Not Large Employers!
30

31. A New Structure Is Emerging ...
Customers
Platforms
Service Providers
31
Product Providers
Vendors Partners
Large employers will transition to
Networks of small businesses,
micro entrepreneurs, built
around New Age Platforms
(aggregators / marketplaces)
leading to broad based jobs
growth

32. Use data to grow and
optimize
Provide Common Services
Customer Acquisition,
Discovery, Payments, Logistics
New Age Platforms
Platforms
Service Providers Product Providers
Vendors
Partners
Few in numbers
Generate economies of scale
Few Employees
Grow the market
32

33. Service Providers
Provide a specific service
Taxi Drivers, Pathology Labs,
Retail stores, Hospitality
Use platforms for the rest
Accounts, Inventory
management, Supply chain,
Logistics, etc.
Many in Number
Have few Employees
Platforms
Service Providers Product Providers
Vendors
Partners
33

34. Supporting Products
Provide a service to the
aggregator ecosystem
Accounting / Tax software,
Data based lending,
Payments
Enablers - create
efficiencies in the
system
Work with multiple
networks / aggregators.
Platforms
Service Providers
Product Providers
Vendors
Partners
34

35. 35
Only 6500
Employees
1.5 Million
Cars & Drivers
New Age Platforms
Create a few, high value, jobs
that can be leveraged to enable service
providers.
Service Providers
Large number of service providers
Each service provider creates multiple jobs
With 6500 employees, Uber supports 1.5M cars &
drivers!

36. 10,000 Hospitals
200,000 Doctors
Labs, etc
1.5M Cars
0.25M Cars 100,000+
Merchants
5000
Employees
6,500
Employees
8,000
Employees
4,500
Employees
100,000+
Merchants
Logistics,
Support
23,000
Employees
M
arket Estim
ates
Only
36
Global

37. High Quality Jobs - At the Edge
37
These platforms bring in new efficiencies. As a result, the same jobs pay more
than before.
● With better demand matching, cab drivers drive more with Ola / Uber than before
- hence earn more, and have more control on their life.
● Flipkart merchants sell more, and have lower costs of sale - hence make more
money than before!

38. Portability of skill
related certification and
experience is
essential
Networks and
aggregators require a
skilled workforce
for uniform service
delivery
Requires a growth in
training,
certification and
related services
Skilling the workforce
38

39. The New Social Safety Net: Direct to Employees
Health &
Insurance
J
Skills Training &
Certification
Education
Pensions
Savings &
Investment
Schemes
Replaces the safety
net previously
provided by large
employers and is
portable -
Empowering the
Workforce.
39

40. Why New Age Platforms are important
Solve local
problems
Remove
inefficiencies
Create
Significant
Value
Enable service
providers
across the
country
to grow, and
to create jobs
40

41. Nandan Nilekani, 2016
Why India Is Different From The Rest of
The World!
41

42. Goods Agriculture Services Labour
USA Single Market,
No manufacturing
tax, states have sales
tax
Single market Fragmented, due to
several regulators,
approval for
insurance products
by state, ...
Free movement
European Union Single Market (GST) Fragmented, due to
local regulators in
each country for
banking, telecom,
insurance, ...
Free movement
China
Single Market Single Market Single Market No free movement
India Fragmented (pre
GST) due to excise,
state / city entry
taxes, etc.
Highly fragmented,
local. Due to lack of
infrastructure - cold
chains, storage,
processing, as well as
regulation - APMC,
Single market for
banking, telecom,
insurance, capital
markets, etc.
Free movement
42

43. Nandan Nilekani, 2016 43
India Stack
Open APIs as Public Infrastructure
Will result in massive innovation!

44. Name
DoB/Age
Gender
Address
Mobile/Email
1234 5678 9012
Unique
Lifetime
44

45. Aadhaar
Authentication
NO MORE PHYSICAL
PRESENCE
Are you who you claim to be?
Only a yes/no answer
Anytime anywhere
45

46. Aadhaar
e-KYC
NO MORE PHOTOCOPIES!
Access ONLY via authentication
No more fake identities
No more paper
46

47. Existing DSC non-scalable due to physical verification, paper process, and use of dongles
eSign allows all Aadhaar holders to digitally sign anytime anywhere
Open API based, allowing applications to easily integrate
eSign - eliminating wet signature
47Source: http://www.cca.gov.in/cca/?q=eSign.html

48. Digital Locker - eliminating fake papers
Open API based
Ecosystem driven
Digitally protected
Source: https://digilocker.gov.in 48
DigiLockerIssuer Requestor
Users
Issues Documents
Digitally
Accesses Documents
Online
Approves
Access

49. Validation & Assurance
Virtual Payment Address
Minimal Issuer/Acquirer Cost
Ubiquitous - Bank accounts
Easy Immediate Payments
Timely Notification
UPI Features
Push & Pull Payments
@Every one with a bank account can send
money to any bank account in India!
Real-time posting
Funds are not locked!
Immediate notifications of
the payment made
Payments can be initiated by payer or payee.
Real-time validation of the
account and balance
No need to disclose account information.
Allows account portability, enhances privacy.
Smartphone replaces card and
PoS machine!!
49

50. 50
● Structured consent artifact and log system
● User controlled data sharing, data flow, and
data retention
● Separation of data and consent flows
● Consistent with current legal frameworks
Electronic consent architecture
Data
Consumers
(Banks,Credits
Providers etc)
CONSENT
MANAGER
Data
Providers
(Banks,Telco,
Hospitals,etc)
Consent Flow
(facilitated by
consent manager)
Data Flow

51. Data flows tracked digitally, providing
traceability
Quickly identify fraud, take early
action. Reduced data leakage,
improved security and privacy
Allows more data sources to be used
for lending decisions
Stronger underwriting, less
likelihood for loan defaults
Consent tokens are shared, not credentials
Reduced potential for misuse, leading
to improved security and privacy
Real Identity is verified in the process
Reduces potential fraud, and
improves the effectiveness of
credit bureaus.
Purely digital process
Instant monitoring, and reporting,
improved transparency. Regulator can
monitor defaults, risks, fraud
Benefits of proposed consent architecture
51

52. Nandan Nilekani, 2016
PRESENCE-LESS LAYER Aadhaar Authentication
Unique digital biometric identity
with open access of nearly a Billion
users
CONSENT LAYER Open Personal Data Store
Provides a modern privacy data
sharing framework
PAPERLESS LAYER
Aadhaar e-KYC,
E-sign, Digital Locker
Rapidly growing base of paperless
systems with billions of artifacts
CASHLESS LAYER IMPS, AEPS, APB, and UPI
Game changing electronic payment
systems and transition to cashless
economy
COMMERCE
(GSTn)
CREDIT
(RBI)
INVESTMENTS
(SEBI)
OTHERS
INDIASTACK
SKILLS
JAM Jan Dhan, Aadhaar, Mobile 52

53. The Evolution of the India Stack - Built on JAM
53
2010 2011 2012 2013 2014 2015 2016
950 M
1005 M
190 M
Aadhaar
Mobile
JDY
2009
944 M
600 M
100 M
Source: Ericsson Mobility Report, PMJDY, Aadhaar Web Sites
AEPS
APB
Aadhaar
Authentication
Aadhaar
eKyc
eSign
UPI
Consent
Architecture
Digilocker
1.2+ B
1+ B
250+ M

54. Aligns market goals with
social goals
No physical presence required
(reduces more costs)
Increases trust - allows a new
business architecture to emerge
Broad based, ubiquitous, inclusive
platform
Cuts Onboarding Costs
Cuts Transaction Costs
Allows Innovation
Why Is The India Stack Disruptive?
54

55. Nandan Nilekani, 2016
Banking at scale
55
Presence-less
Paperless
Data driven
Algorithms driven
Network model
Transaction Infra
Mobile Becomes The Bank!

56. Nandan Nilekani, 2016
Investment at scale
56
To increase market size 10x or 50x and bring in mass inclusion,
cost of doing business must be brought down!
Source: NCAER-CMCR survey, www.openthemagazine.com, discussions with ScripBox
Low Cost, High Volume, Low Ticket Size

57. Nandan Nilekani, 2016 57
Millions of Borrowers
Data Driven
Algorithm Driven
Consented Data Sharing
Enabled by Mobile
Electronic Contracts
Digital Payments
Credit
Marketplaces
Thousands of Lenders
Digital Footprints
Credit at scale

58. Nandan Nilekani, 2016
Skilling at scale
58
COMMERCE
TRANSPORT
TOURISM CONSENT ARCHITECTURE
DIGITAL LOCKER
COMMON IDENTITY
SKILLS
EXPERIENCE
Networks and aggregators driving
mass skilling in several domains
India Stack allows skill and
experience to be portable

59. Aadhaar
Digital Identity For All
Jan Dhan
Banking For All
Mobile
Communications & Ubiquitous
Compute Device for All
New National Platforms
built on India Stack and JAM
59

60. Digital footprints - build value for the
consumer & businesses
A Trust networks
A Skills repository
Build credit history
Manage customer workflows with
user consent
Other Innovative Businesses
Reimagine Market Services
Innovative Businesses
Aadhaar - officially valid document
KYC for Regulated Markets
MicroATM Distribution
Mobile Payments
Paperless, Presenceless, Cashless -
lowered costs, market expansion &
financial inclusion.
Regulated Market
Enrolment - Digital id for all
Subsidy reform - deduplication
DBT - Aadhaar as a financial address
Biometric Attendance
Government
India Stack Enabled Businesses
60

61. Friction Reduction
Reduces cost of doing
business, and expands
markets - everyone wins
More Education
More Healthcare
More Services
Access to Education, Healthcare on mobilewill lead to
Inside the System
Make it easier to be inside
the formal systems vs
outside!
Access to Formal Credit will lead to Prosperity
Compliance
People will pay taxes if it
is easier to be compliant!
Acceleration of formalization
61

62. Nandan Nilekani, 2016 62
It drives up productivity by an order of magnitude
It drives a formalization of various businesses
Unlocks savings, credit, investment and skilling at scale
As a result, kick starts a new cycle of growth!
India Stack Is The Tipping Point

63. Our View Of The Future!
COMMERCE
HEALTH
Small Businesses Led
Not Large Employers
JAM
Universal banking, identity, and mobile
SKILLS
TRANSPORT
National platforms for Savings, Credit,
Skill, Taxes, etc. built on India Stack
Services Led
Not Manufacturing
TOURISM
Domestic Consumption Led
Not Exports
63

64. Nandan Nilekani, 2016
Thank you!
64