With a population of more than 1.3 billion, India ranks second only to China among the world’s largest countries. Yet with poverty rates of more than 25% in its rural communities and nearly 14% in its cities, challenges in India abound.
The issues have stoked interest in impact investing in India, with many initiatives aligned with the country’s information technology (IT) sector, a significant source of economic growth. Although exports generally account for the bulk of IT activity in India—77% of the sector’s pre-pandemic 2020 projection of $191 billion by the India Brand Equity Foundation—the domestic market was poised to expand by 25% between 2016 and 2020.
Sizing up the country’s needs, the industry’s efforts have channeled technology impact investments toward a number of critical areas.
In 2019, India’s government spent 1.28% of the country’s GDP on public health, which topped the previous year but ranked among the world’s lowest. Although the government pledged to double that level by 2025, 70% of the country’s population lives in rural areas where limited healthcare resources consist largely of private clinics and hospitals, necessitating out-of-pocket costs.
Of the more than 3,200 healthcare tech startups in the country, many target access to care, and the government estimates that advances in telemedicine could cut $10 billion in healthcare expenses by 2025. Separately, as COVID-19 swept across the country, a number of startups addressed shortcomings in medical supplies and acute care.
India’s education system recently entered a new era with the enactment of the National Education Policy 2020. The legislation strengthens early childhood education; allows for more student choice in preparatory, middle, and secondary schools; and aims to raise enrollment in all higher education institutions.
Already, startups that were focused on test preparation and online certification programs received 88% of the funds dedicated to edtech between 2014 and 2019. Looking ahead, the country’s market for online learning platforms, which saw usage spike during pandemic stay-at-home orders, is projected to grow to $1.7 billion by 2022.
Although the country’s output of grains, livestock, fruits, and vegetables is abundant, an inefficient supply chain contributes to poor wages for agricultural workers, who comprise almost 50% of the country’s workforce, along with high levels of food waste. In addition, of the 90 million individual farmsteads in the country, more than two-thirds measure one hectare or smaller and are hindered by low yields.
To enhance yields and incomes, agricultural tech companies are developing programs that analyze on-the-ground data, satellite imagery, and weather information. Others are developing e-commerce platforms to streamline distribution channels and expand farmers’ market opportunities.
Given the broad opportunities for impact investing in India, the benefits of targeted technology solutions are two-fold. In addition to addressing a specific need, the efforts expand the knowledge and skill sets within its growing IT sector.