India is home to more than 900 enterprises in the Web3 sector, making significant strides by accounting for 11% of the global Web3 developer community in 2022, securing its position as the third-largest talent pool of developers on a global scale.
According to Chainalysis, India leads in grassroots crypto adoption globally and ranks as the second-largest market in terms of raw transaction volumes in 2023, demonstrating a thriving Indian market. This growth is propelled by a thriving startup environment, an abundant talent, widespread internet accessibility, digitally adept population, and an increasing interest in Web3 technologies.
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According to a report called “Unlocking the Web3 Potential: India’s Journey from a Talent Exporter to a Product Powerhouse” by Primus Partners Pvt Ltd (Primus), a management consulting services provider, the Web3 sector is projected to create an employment base of ~2 million high paying direct jobs in India within the next decade, with a 3x multiplier on indirect jobs.
The report further indicates that India stands at the forefront of this technological revolution, equipped with the necessary elements to emerge as a dominant force on the global stage.
As we witness the evolution of Web3, its potential for transformative growth becomes increasingly evident
Shravan Shetty, Managing Director, Primus Partners
Shravan Shetty, Managing Director, Primus Partners said, “As we witness the evolution of Web3, its potential for transformative growth becomes increasingly evident.”
The transformative potential of Web3 extends across various sectors, with collaborative pilot projects showcasing its usefulness. Promising use cases include supply chain management, privacy in healthcare, education, and experience certificates, voting systems, identity management, and more. Web3, therefore, when integrated responsibly, can transform industries.
In December, AlgoBharat, Algorand Foundation’s India-focused initiative, strengthened its commitment to the Indian Web3 ecosystem by tying up with T-Hub, NASSCOM, and TiE Bangalore.
As we contribute to the growth of the global Web3 ecosystem, our journey in India has only just begun, with much more ground to cover
Staci Warden, CEO of Algorand Foundation
Staci Warden, CEO of Algorand Foundation, said, “India’s remarkable role in global technological progress has inspired us to establish a distinctive presence in the country. In just a year, our strategic collaborations and innovative blockchain solutions with key players have pioneered financial inclusion, with the potential for impacting millions of lives in underserved communities. As we contribute to the growth of the global Web3 ecosystem, our journey in India has only just begun, with much more ground to cover.”
Blockchain technologies can bring profound upliftment by providing greater access to markets, capital, and financial services
Anil Kakani, Vice President and India Country Head at Algorand Foundation
“Blockchain technologies can bring profound upliftment by providing greater access to markets, capital, and financial services,” says Anil Kakani, Vice President and India Country Head at Algorand Foundation.
Navigating Web3 Challenges in India
Despite significant growth in India’s Web3 sector, challenges persist in the form of taxation issues and Ease of Doing Business (EODB) hurdles. High TDS rate introduced by the Finance Act of 2022 has led to a shift of trade to foreign platforms and the grey market, undermining consumer protection efforts of compliant Indian platforms.
The report advocates for a recalibration of the tax framework, emphasising that taxation should support compliance and encourage participants in monitored transactions, rather than driving them away. It underscores the importance of clear guidelines and specific regulations for Web3 businesses, aligning with Startup India recognition.
Access to UPI and banking rails within the VDA ecosystem remains restricted, leading users to opt for foreign platforms and compromising payment security. The lack of clear rules and regulations further complicates registering a Web3 business and opening a bank account in India.
While existing legislation includes Virtual Digital Assets (VDAs) in frameworks like the Prevention of Money Laundering Act (PMLA), and CERT-IN Directions, the report notes a fragmented approach. India, through its G20 presidency, has shown dedication to addressing VDAs, evidenced by the publication of the IMF and FSB’s synthesis paper on Crypto in September 2023. As a global consensus takes shape, the report stresses the urgency for India to advance its domestic policies, creating a conducive environment for Web3 businesses by implementing forward-thinking legislation.
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The rise of Web3 in India presents a promising trajectory. India’s substantial presence in the global Web3 developer community, coupled with a thriving startup environment and widespread internet accessibility, positions it as a potential powerhouse in the technological revolution.
The transformative potential of Web3 is evident across sectors, from supply chain management to healthcare and education. However, challenges such as taxation issues and regulatory hurdles need addressing. The report emphasizes the urgency for India to proactively shape domestic policies, fostering a conducive environment for Web3 businesses and solidifying its position on the global stage.
