INDIA INCREASINGLY IS SILICON VALLEY’S NEW FRONTIER
Prime Minister Modi’s visit to U.S. sharpens tech race with China
China may be a Silicon Valley obsession, but India increasingly is in the conversation and may soon displace its Asian neighbor as tech’s next big frontier.
The near-future was on full display last week, when Indian Prime Minister Narendra Modi made a whirlwind tour of the valley, visiting Google, Tesla and Facebook in hopes of deep- ening ties with the U.S. tech sector. The visit was also economically motivated — stronger bonds with tech’s heavy hitters are crucial if India’s economy is to become a $20 trillion “dream” shared byModi in a Q&A with Facebook CEO Mark Zuckerberg last Sunday.
The digital economy is a prime economic engine in theworld’s second-most populous country (1.3 billion) and the largest democracy on Earth, and yet so many obstacles litter its path.
Indeed, India is beginning to outperform China for a number of reasons. It recently entered the top-10 list of countries, based on gross domestic product, for the first time, according to a report from Credit Suisse. (ChinawasNo. 2, after theU.S., in its best showing yet.)
By 2022, India is likely to pass China and become the world’smost populous nation.
“The Facebook of India is Facebook. The Google of India is Google,” says Beerud Sheth, CEO of Teamchat, a communications app with employees in India and the U.S. “In China, those services are banned.”
But India’s financial allure is fraught with risks, warns Ajay Arora, CEO of cybersecurity firm Vera. He says poor infrastructure and corruption hinder the prospects of U.S. companies in India, not to mention thousands of competing companies within that country.
The problems don’t end there. Only one in five Indians has Internet access, ranking the country a desultory 131st in broadband penetration in 2014. Worse, Indiawas 155th in mobile broadband penetration, according to aUNESCOreport.
Oh, and onemore cautionary statistic: Although consumption accounts for 60% of India’sGDP, says theWorld Bank, only 1% of its population shops online, according to
TheWall Street Journal.
But the governments of each country, and their relations with the U.S., tilt the economic scale to India despite its infrastructure woes.
WhenModiwas elected in 2014, the hope was the pro-business leader would acceleratemarket reforms to attract foreign capital and grow the economy. Reforms, however, have been slow to take hold because political and social problems plague the country.