ESG Investing

3 Areas of Tech-Driven Impact Investing in India

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.

1. Healthcare

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.

The challenges India faces have stoked interest in impact investing, with many initiatives aligned with the country’s IT sector, a significant source of economic growth.

2. Education

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.

3. Agriculture

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.


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