Unicorns, Unicorns everywhere, but not one GovTech in sight | OPINION | Centre For Digital Economy Policy Research (C-DEP)

By Dr. Jaijit Bhattacharya

It has been raining unicorns in India. Unicorns are startups that have a valuation of over USD one billion. In fact, India has crossed the landmark of having a hundred unicorns. These unicorns range from industries such as fintech and food to pharmacy and mobility and almost every aspect of life. Strangely, however, we do not seem to have any unicorns in the GovTech sector.

GovTech (or CivicTech, as it is referred to elsewhere) includes startups focused on providing innovative solutions to improve governance in civic society. These startups provide solutions either to the government or to citizens directly in order to improve their lives or the interactions of businesses with the government. This is essentially what is referred to as ease of living and ease of doing business. They also provide solutions for reducing expenditure or improving revenue collections of governments, including local body authorities such as panchayats and those in cities and smart cities.

The government is the largest industry in any economy. The procurement by the government is roughly 20 per cent of any economy. There are large verticals within the government that could benefit from ideas and solutions generated by start-ups to help increase revenue or decrease costs, improve the internal and external security of the country or improve the quality of life of its citizens.

A country like India needs many such interventions, which the government is not in a position to create, given its structure.

There are platforms that only the government can build and the government has been building them at a furious pace. However, there are platforms that the private sector is better suited to create. Moreover, as the peer-reviewed published research of Centre for Digital Economy Policy Research (C-DEP) shows, India can actually increase its GDP by five per cent if the government allows the private sector and startups to interface with government systems and create mash-up systems that deliver incredible value to the people, businesses and economy. The research report was released by the then Secretary of the Ministry of Electronics and Information Technology, Ajay Sawhney. Such a mash-up can be accelerated if the government implements the Open API policy of the ministry. An open API (Application Programming Interface that allows one system to “talk” to another system) would enable startups and the private sector to interface with government systems in a manner that is aligned to the law of the land, with regard to issues of privacy and data security.

So, have there been startups that have already interfaced with government systems? The C-DEP research paper shows that we already have many startups interfacing with the Indian railway system, Aadhaar, PAN, GST and so on. So we already have an ecosystem that has proven that government and startups can integrate at the level of systems. We also have an adopted government policy to move toward an Open API regime. So why don’t we have more GovTechs emerging in India and why are they not growing?

Fortunately, through the Department for Promotion of Industry and Internal Trade, the central government has been providing extensive support to startups. There are many similar structures at the state level also. However, this is not leading to GovTechs scaling up into an ecosystem that clearly needs more innovative solutions than what exists today. What is holding us back? Why do we still not have a single near-Unicorn from the GovTech sector?

There appear to be many issues stopping GovTechs from scaling up in India. Primary among them is the procurement processes of the government that continue to be tilted against startups. Where the government invites the private sector to build innovative solutions, the procurement terms are loaded in favour of large companies, many of which continue to be foreign technology providers, in spite of the heavy leaning towards ‘Atmanirbhar Bharat’. There are instances where the concept is taken from a startup and the system is rebuilt using foreign technology providers. This is value destruction as it is the concept that generates the value. Taking the concept away and inviting foreign players to bid is value destruction within the Indian economy.

There is a clear need to have focused deliberations on this strange situation in which a global digital powerhouse is not able to generate large startups in a key sector the government and civic technologies sector.

It is encouraging to see startups engaging in such deliberations with key government entities such as the Niti Aayog. India needs to rectify the situation urgently if we want to unlock value from innovations in the largest industry of the economy the governance industry.

This article first appeared in India Today, https://www.indiatoday.in/opinion-columns/story/unicorns-govtech-civictech-india-1948398-2022-05-12