Trade & Supply Chain

India: one commercial connected nation

Published: Nov 2019

When the Indian government took the decision to make digital services available to all citizens, it set about improving online infrastructure and increasing internet connectivity. How has digitally empowering the country affected businesses and, in particular, how should corporate treasurers respond?

India is one of the fastest growing economies in the world, but this phenomenon is not just limited to its GDP figures; it includes the expansion of the overall ‘operating system’ of the country – the infrastructure that keeps it going – covering just about every sector. One of the key elements of this expansion stems from the concerted effort by the government of India to introduce a country-wide programme of digital connectivity.

When it launched its ‘Digital India’ campaign on July 1st 2015, The Ministry of Electronics & Information Technology Government of India outlined an extraordinary programme that would ensure all government services would be made available to all citizens electronically.

It covers three key areas: digital infrastructure, services, and empowerment of citizens, especially the unbanked. There is still a way to go on this ambitious journey, with some infrastructure projects having to start with the introduction of dependable electricity in some rural areas.

The government has introduced a number of new measures, including:

  • The MGov portal which is a platform to share the inputs and ideas on matters of policy and governance.
  • A mass roll-out of e-education, e-health and e-shopping projects.
  • The Digital Locker, offering citizens 1GB of free mobile-accessed cloud space to securely store official documents issued by a number of agencies.
  • The Jan Dahn scheme of bank account opening has reached over 369 million extra people, the focus on providing accounts on every unbanked adult, with the banks stepping up to provide these basic accounts.

With already high mobile usage and the rise of the smartphone, plus the expansion, through infrastructure development, of internet accessibility, banking the many has laid a solid platform for the uptake of digital services. This has in turn set the tone for a commercial digital revolution to which businesses must respond.


Alongside some of the cheapest mobile data anywhere – the sheer size of market making India very attractive to some of the world’s major telco players. Driven by rural internet growth and usage, interst use in India recently exceeded half a billion people for the first time. Internet use in India is expected to reach 627 million by the end of this year. This represents almost half of India’s total population.

The speed of progress can be better seen in this table:

Internet users in 2015 Internet users in 2018 Internet users by end of 2019
260 million 566 million 627 million
140% jump on 2015 10% jump on 2018

“The internet requirement is directly connected with the digitisation of services,” states Praveen Juyal, Treasury Manager, Amway India Enterprises, a business created to give Indian entrepreneurs the chance to own and operate their own business.

Of course, the more digital services are promoted and adopted, the more internet usage there is. “It’s a win-win situation for both the companies providing digital services and the companies providing internet access,” he believes.

Yet at the same time, we need to understand that digitisation is not an electric switch that government can flick on at any time. To meet the original briefing, there is a pressing need to keep building and sustaining appropriate infrastructure as well.

On August 15th 2019, (India’s Independence Day), Prime Minister Modi announced that the government will invest INR100 Lakh Crore (around USD$1.5trn) over the next five years in infrastructure. This investment will be in building roads, railways, airports, ports, hospitals and educational institutions.

Although expressions of concern about the realism of this proposal have been aired (not least from Arvind Subramanian, former Chief Economic Adviser to the government of India) the intention sits well within the scope of Digital India. The last five years have seen massive spending on roads, railways, water, irrigation and urban infrastructure. Connectivity, both physical and digital, has a multiplier effect on the economy.

Successes to date

So, is it working? “I believe India is running at a good pace in terms of accepting digital technology,” comments Juyal. Some examples of Digital India highlights for him include are as follows:

Aadhaar, one of the pillars of ‘Digital India’. Every resident of the country is provided with a unique identity or Aadhaar number. It represents the largest biometrics-based identification system in the world, and is seen as a strategic policy tool for social and financial inclusion. It involves public sector delivery reforms, managing of fiscal budgets, increasing convenience and promoting what the government calls “hassle-free people-centric governance”.

Even given the numbers expected to use it (India has a population of 1.3 billion), Aadhar has been made sufficiently robust to eliminate duplicate or fake identities. The ministry responsible for Digital India says that it could now be deployed as a base or primary identifier solution, facilitating the roll-out of several government-sponsored welfare schemes, “thereby promoting transparency and good governance”.

Bharat Broadband Network Limited (BBNL). Devised with the National Payments Corporation of India (NPCI), BBNL aims to connect hundreds of thousands of ‘Panchayats’ under the scheme. ‘Panchayat’ is a term used in India for the village council that has been acknowledged by the community as its governing body. Connection to BBNL should ensure better connectivity between local institutions, offices, schools and other government institutions.

One Indian state is using this technology to record the attendance of students and teachers at schools in rural areas, through an app. When a teacher arrives at and leaves the school, they are required to take a ‘selfie’ with their students and upload it to the school administration’s site. “It is a clear move towards the roll-out and acceptance of digitisation,” says Juyal.

Unified Payments Interface (UPI) is an instant real-time payment system developed by NPCI that allows for multiple bank accounts of participating banks to merge into a single mobile application. It effectively offers users end-to-end fund routing.


It’s apparent that demonetisation in India in November 2016, when Modi announced that the high denominations of INR500 and INR1,000 would become invalid overnight, has played a major role in driving acceptance of its process amongst citizens. According to Marsh research, it led to the rapid adoption of e-wallets, and credit and debit cards as a means of payment. Such digital payments have, in a large way, replaced cash transactions – at least in urban areas.

But India’s investment in digitisation is having a major positive impact on business that is driving uptake too. At a practical level, the government has already digitised the sharing of cross-border documentation between trade counterparties and customs offices through the Fourth Industrial Revolution project, an online import/export portal that goes some way to easing the previously paper-heavy processes underpinning any trade involving foreign exchange.

At a high level, eCommerce has become India’s fastest growing channel for commercial transactions. The Indian e-commerce market is expected to grow to US$200bn by 2026 (from US$48.5bn in 2018). By 2023, 28% of sales of durables in India will be through online modes, says a survey of over 6,800 shoppers by Boston Consulting Group in collaboration with Google India. Electronics is currently the biggest online retail sales category with a share of 48%, followed closely by apparel at 29%.

“If there are more online sales, companies will invest less in their physical shops. All that’s needed is a tie-up with an e-commerce company, and a warehouse from where you can deliver the products to customers,” notes Juyal.

To increase the participation of foreign players in the e-commerce field, the Indian government raised the limit of foreign direct investment (FDI) in the e-commerce marketplace model for up to 100%, at least for B2B models. In the B2C arena, the FDI norms will be subject to riders, such as when a manufacturer is selling country-made goods through online format.

This level of support for e-commerce has made it easier for major foreign brands to reach Indian customers and has seen it emerge as one of the fastest-growing trade channels available for the cross-border trade of goods and services. This is feeding a growing appetite for international brands amongst the swelling ranks of digitally connected aspirational Indian shoppers, a phenomenon also seen amongst China’s burgeoning middle class.

e-government in action

A key initial focus of Digital India has been the optimisation of the country’s administrative processes. The government has established an urban renewal scheme called ‘Smart Cities’, the aim of which is to develop at least 100 cities across the country, making them “citizen-friendly and sustainable”. Part of the programme will move Smart Cities towards a cashless economy where the delivery of electronic services to citizens can be faster and at a lower cost to the providing municipal corporation.

One beneficiary has been Nashik Municipal Corporation (NMC), the governing body of the city of Nashik in the state of Maharashtra. By leveraging the UPI mechanism and the Smart City Payment solution, Nashik Municipal Corporation enables residents to make a variety of seamless ‘municipal’ payments.

Prashant Magar, Head of Department at NMC, told Treasury Today Asia that the digitisation of payments for government service delivery mitigates common issues such as cash payments, lengthy queues at municipal offices, and the need for multiple ID cards. It also goes some way towards the digitisation of payments for, and documentation of, a host of Nashik’s services such as property tax, water tax, and birth and death certificate issuance. NMC was a Highly Commended Winner in the Adam Smith Awards Asia Best Card Solution category in 2018.

An app is also being offered to retailers in the form of a ‘soft’ POS. Registered merchants can now accept cashless payments from citizens via the UPI or NPCI’s BharatQR, a mobile payment app using Visa and Mastercard networks and QR codes deployed at merchant locations in order to pay utility bills.

Most noticeable changes

  • To make this a successful launch, the government has disbursed rewards worth around US$23.8m to one million customers for embracing digital payments.
  • Cash-on-Delivery quickly changed into Card-on-Delivery. Cash transactions resulted in high administration costs for e-commerce companies which reduced their margins; digital payment solutions are evolving fast to address this.
  • According to the Reserve Bank of India (RBI), the country’s Central Bank, in June 2018 Indians had 944 million debit cards that could be used for online payment.
  • E-commerce companies report that 61% of customers use debit cards for payment. This clearly reflects that people are getting comfortable with using debit cards for activities other than withdrawals at ATMs.
  • Mobile e-commerce (m-commerce) is growing rapidly as a secure supplement to the e-commerce industry. Industry leaders believe that m-commerce could contribute up to 70% of their total revenues.


For Juyal, this all adds up to a change of significant importance. “I believe digitisation is today the hottest topic in India. Everyone – companies, government departments, and individuals – is ready to deep dive into the world of digital life. Companies understand digitisation is the next step to success.”

Commercial success

Of course, individual success stories abound and Juyal obliges with a tale of digital achievement at Amway India. Having opted for digital solutions in its payment collections method, cash is now only 2% of its total business: it was around 70% just ten years ago. “It was a huge challenge for us to manage cash because it comes with other inherent risks,” he says of the decision to digitise.

Managing physical cash has a cost attached. It requires safes in which to put the cash, it needs banking arrangements so that the cash is picked up every day, and insurance is essential to safeguard that cash. “The whole process has a huge cash outflow,” says Juyal.

In response, Amway introduced a number of digital models to collect payments. “By shifting towards digital modes, we have saved cost and time,” explains Juyal. “At the same time our customers are having the enriched experience of not carrying cash.”

Treasury role

Today, treasury is no longer just playing a supporting role, Juyal believes. It is now more to the fore. “Treasury can bring changes by implementing new technology, innovations and new ideas which results in savings for management,” he says.

With the RBI introducing new technologies which are capable of changing the payment structure in India, it will also change treasury. By the end of 2019, the 24/7 payment cycle will be functional, says Juyal.

“Amway uses RBI’s National Electronic Funds Transfer (NEFT) and RTGS payment cycles today for making payments, but these cycles only work during the daytime,” he reports. “When the 24/7 payment cycle comes, there will be no time between payment processing and payment settlement for treasuries – and funds can arrive anytime. Managing working capital will not be easy as it is today.”

With increasing numbers of fintechs emerging in the light of Digital India, treasurers need to make sure that they are changing their systems in line with the needs of customers. The pace of change in India is “intense”, with development “almost on a daily basis”, notes Shankar Subramaniam, Head of India Global Transaction Services, Bank of America. “As banks, we have had to invest substantially in technology to keep pace with government plans.”

The Fourth Industrial Revolution trade documentation project, for example, demands upstream capabilities from banks to enable corporate clients to access the data. But corporates too need to ensure their own back office systems and processes are capable of accepting that data. It is, observes Subramaniam, a dynamic environment “in which that capability is still growing across corporates”.

For a small manufacturer supplying to a large corporate, “it can be challenging,” he says. It’s why he feels that part of the role of the banks is to help clients “get up and running, digitally”. But with beneficial solutions such as supply chain finance trickling down from the large corporate buyers to their SME supplier community, he believes there is sufficient motivation to digitise at almost every level.

Indeed, with the government having launched the Trade Receivables Discounting System (TReDS) initiative, the micro, small and medium enterprises (MSME) community now has a bank-agnostic platform enabling the flow of cheaper finance based on financier bids for early settlement of uploaded invoices. “It ensures the supplier gets the best price possible,” explains Subramaniam, noting that RBI is encouraging banks and large corporates “to become more active on TReDS”.

Keeping up

Depending on the type of customer base, treasury must keep in tune with developments. Treasurers need to ensure customers have access to as many options to make payments as possible. UPI, for example, is now being considered for transfer of invoices as part of the payment message; if it comes online then treasury needs to know.

The core systems are up and running, but even here rapid progress demands that treasurers keep tabs on how Digital India is impacting their business and how best they can respond, says Subramaniam.

“To a certain extent banks are able to support that exploration, but it is incumbent on all treasurers to stay on top of the available offerings,” he notes. “There is a lot that can be gained from Digital India but there is still a lot of work involved in getting to the point where all corporates will feel the benefit.” Of course, nobody said it was going to be easy, but then Digital India really is connecting a nation.

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