Sumitomo Mitsui DS Asset Management Co., Ltd.
“India Stack” that Japan wants to emulate
Sumitomo Mitsui DS Asset Management Co., Ltd. (President and CEO: Takashi Saruta) publishes market reports on economic events and market trends on a daily basis. We would like to inform you that the market report “India Stack” that Japan wants to learn from has been published on December 12, 2022.
India is currently operating an innovative system “India Stack” under the Modi government’s digitalization policy “Digital India”. Citizens can store and share various personal data, and private companies are actively using “India Stack” for business. With the rapid expansion of cashless payments through smartphones, the nationwide promotion of digitization is contributing greatly to the efficiency of society and the development of the economy.
[Point 1] Rapid expansion of cashless payments with “India Stack” ■One of the achievements of “India Stack” is the rapid expansion of cashless payments through smartphones through the use of UPI (Unified Payment Interface), a remittance and payment platform.
The Indian government has made it possible to identify individuals through biometric authentication and mobile phone short message service (SMS), which has lowered the cost of identity verification and has made it possible for the poor to have bank accounts. In 2016, we launched the UPI payment system.
■ UPI is the foundation of payment services such as “Google Pay” in addition to bank networks. Cashless payments have spread rapidly among India’s low-income population, allowing citizens to make instant transfers using smartphones anytime, anywhere, 24 hours a day, 7 days a week.
■Cashless payment using UPI, which started in 2016, has expanded rapidly with the increase in electronic commerce (e-commerce) after the corona shock. In November 2022, the number of payments will reach 7.3 billion and the transaction value will be 12 trillion rupees (approximately 20 trillion yen), a six-fold increase in two years. There is also a survey that cashless payments using UPI will account for 18% of personal consumption in 2021.
*Although we refer to individual brands, we do not endorse them. [Point 2] “India Stack” is also a source of startups in India ■The “India Stack” promoted by the Indian government refers to digital public goods and mechanisms that enable the government, private companies, and developers to use digital data smoothly. This is a platform of digital infrastructure in which multiple systems are interconnected based on the Indian version of the My Number Card, Aadhaar.
■ ‘India Stack’ is a core infrastructure that connects the public personal identification number system with public and private services, and performs identity verification and remittance, contributing to India’s economic development. Private companies can use the “India Stack” relatively freely, and even non-major companies can easily enter the market, leading to the development of start-ups and SMEs.
■ For example, many Fintech-related start-up companies are using “India Stack” to enter the market as cashless payments are progressing in the fields of agriculture, fisheries, and medicine, coupled with the rapid spread of smartphones. New entry.
■According to media reports, the number of start-up companies certified by the Indian government exceeds 80,000, with 70 unicorns (unlisted companies with a corporate value exceeding $1 billion), ranking third in the world after the United States and China. It is positioned, etc., and is increasing its presence.
In addition, in the corona crisis, we will use “India Stack” to quickly pay subsidies, and about 1.3 billion people will be able to book, manage, and issue certificates for vaccinations through the vaccine reservation site app. I did.
[Future development] The Indian economy will continue to grow at a high rate due to the advancement of digitalization
■The Indian economy has achieved a high annual growth rate of 5-8% since FY2010, excluding the years affected by the corona shock. This growth is believed to have been supported by digitization, which progressed based on the Indian version of the My Number card “Aadhaar” introduced in 2010.
■India is becoming a digital powerhouse in terms of both quantity and quality of data, as private companies actively use the “India Stack” in their business. It is believed that this will lead to further enhancement of India’s international competitiveness. The Indian economy is expected to maintain high growth going forward due to the fact that the working-age population is expanding and the country is entering a period of demographic bonus, as well as further advances in digitalization.
■In addition, “India Stack” is attracting worldwide attention, especially in emerging countries. A scheme for deploying “India Stack” to other countries has also been made public, so it can be said that there is a possibility that digitization using this scheme will greatly advance in emerging countries in the future.
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