Rural Will Drive New Biz Models

Rural Will Drive New Biz Models

Bringing the next 30 million businesses online can put India on the path of explosive economic growth

Illustration by Anirban Ghosh Illustration by Anirban Ghosh

India of 2021 is dramatically different from the India of early 2020, not just because of the massive health crisis that we’re facing globally, but equally because of a generational shift that has happened over the last one year as a result of an explosive digital transformation. One of the most visible effects of digital adoption has been on businesses, both small and large, and consequently on the Indian economy. We know that the pandemic has adversely affected business operations, but it’s also true that the digital forces unleashed over the last one year have made the economy more resilient, created new opportunities for business growth and are now paving the way for economic recovery.

Several studies have shown that the economic impact of the second wave of the Covid-19 pandemic in India was less severe than in the weeks following the first lockdowns last year. Then, businesses were merely trying to adjust to a world that had moved online almost overnight. Over the course of the year, they discovered that moving online is not just the need of the hour, but can also be a transformative opportunity for the future.

With 700 million people on the internet, and a majority of them coming online in the last four years alone, India is brimming with new ideas that are just waiting to be converted into business opportunities — whether it’s the 63 million businesses or the 150 million farmers who will be able to connect with each other and their customers online for the first time in the coming years.

As this landscape continues to evolve with new emerging technologies in fields such as artificial intelligence and quantum computing, the task ahead would be as much about bringing the next 600 million people on the internet as it would be about uplifting the lives of those already connected by offering them solutions that allow for the possibility of a fundamental transformation in their lives.

Our commitment to India runs deep. As an ally for India’s social and economic transformation, we are focussed on a few key areas where the Facebook family of apps can act as a catalyst for shaping the country’s digital future. Around half of India’s small businesses have already adopted digital, up from 30 per cent before the pandemic, and the stage is set to bring the next 30 million small businesses online. Our responsibility would be to reduce the friction in the experience on both sides — the business and the consumer — while creating and supporting new and resilient business models for the future.

The World’s Innovation Lab

Over the last decade, India has been steadily emerging as one of the largest and most vibrant start-up ecosystems in the world. As internet access grew, start-ups boomed across the country. Despite the pandemic, the Indian tech start-up ecosystem is witnessing a steady growth of 8-10 per cent. Just this year alone, India has produced 16 unicorns that have raised more than $11 billion.

The country’s entrepreneurial zeal combined with the tectonic shifts of the last one year are fuelling new business models out of India that have the potential to be scaled up and replicated elsewhere in the world.

Ed-tech, healthcare and gaming are examples of lighthouse sectors that have witnessed enormous growth on the back of digital technologies. Facebook’s ‘Topics and Trends Report’ for 2020 says conversations around ed-tech grew nearly 10x on Facebook and Instagram in India in 2020. This was corroborated by the massive growth in ed-tech startups across our apps. White Hat Jr., an online education platform for coding and maths for children, grew into a $300 million rocket ship in 18 months on the back of just advertising on Facebook and Instagram. A substantial growth for White Hat Jr., and several other businesses, has come on the back of access to global markets that digital, and more specifically social media, has been able to unlock.

Gaming is another industry that has received a massive impetus from digital growth. In the first nine months of 2020, India rose to the number one spot in mobile game downloads. This has created an enormous opportunity for gaming developers in the country, further attracting investor interest.

For us at Facebook, India is the testing ground for path-breaking ideas and technologies that can fuel the growth of digital and small businesses in the country. Many of our products have an India-first lens. It’s the first country where we have made minority investments in start-ups. It’s the first where we have built a pioneering partnership by investing in Jio Platforms. There are several other compelling models emerging out of India that have the potential to be scaled up globally. Instagram Reels was first tested in India, and today, six million Reels are produced every day. Payments on WhatsApp is another exciting example of how we used lessons from the market to create a feature that is driving financial inclusion through the government’s Unified Payments Interface.

Unlocking Growth for Women

While the pandemic has been hard for women-led businesses, in the studies we conducted, we found that women business leaders showed a greater degree of flexibility in their business models in response to Covid-19. In fact, female business leaders were more likely to make more than 50 per cent of their sales through digital channels. We have noticed a similar trend on our apps; 20 per cent of Instagram Business profiles created since November 2020 mention the words ‘female/women owned’.

Of the 63 million small businesses in India, approximately 20 per cent are owned by women. Research and studies show that bringing women online can spur economic progress, expand markets and improve health and education outcomes for everyone.

We know that gender equality is crucial to a sustainable internet economy. While this is a big focus area for the government, the private sector has an equal responsibility to enable women to come online and to help women entrepreneurs to grow.
Facebook, in collaboration with The Nudge Centre for Social Innovation, incubates and accelerates early stage women-led non-profits. Now in its second phase, the initiative awards six grants of up to Rs 50 lakh for each non-profit to scale up their work.

Our goal is to provide opportunities for women even in rural areas. In 2020, together with the CSC Academy, Facebook up-skilled 2.5 lakh rural entrepreneurs on digital tools related to digital marketing and online safety. As a result of this, the average income of women village-level entrepreneurs increased by nearly 20 per cent on a quarterly basis.

Every day, we come across inspiring stories of women-led businesses using digital to unlock growth for themselves and their businesses.

The Power of Bharat

The rural internet population is growing faster than the urban one, and by 2025, rural India is likely to have a higher number of internet users compared to the urban centres. That more and more innovations and business models are going to be propelled by rural India is not a probability but a certainty.

The big opportunity for businesses right now is to build for the new-to-net population and the next 300 million people who will come online by 2025. We are constantly building for India with this lens in mind.

WhatsApp, for instance, is enabling millions of small business owners to speak to their customers in real time. Many kirana shops and micro businesses have replicated their physical storefronts with digital with the end-to-end encrypted messaging app and are creating a new growth opportunity for themselves. Artinci, a young Bengaluru-based natural ice-cream, cake and cookie maker, uses online channels exclusively to communicate about its business and connect with its customers. The homegrown company directly takes orders on WhatsApp and supplies freshly made ice-creams across various localities in the city.

Our investment in Jio is a critical part of this vision. Its goal is to enable new opportunities for businesses of all sizes, but especially for small businesses across India. We see WhatsApp making it seamless for businesses to connect with their customers, and the integration with JioMart will help make it even easier for customers to view catalogues and shop from the app.

Next Decade of Growth

Small businesses don’t just contribute 30 per cent to India’s GDP, they are also drivers of entrepreneurship, innovation and employment. In fact, employment within micro, small and medium enterprises rose from 23.9 million in 2000-01 to nearly 111 million in 2019-20. Bringing the next 30 million businesses online can put India on the path of explosive economic growth.

In India, we have barely scratched the surface in terms of the benefits that can be derived from digitally empowering people and businesses. The dots further connect when you reflect on what is at the heart of powerful technology ecosystems — openness, that people and businesses will build off each other’s ideas to solve for India’s unique needs. This deeply resonates with the values of India and its belief in an open democracy. The focus has to be on building an inclusive ecosystem that attracts world-class talent, world-class capital, and, given the scale of India’s internet, ends up solving problems not just for India but also for the rest of the world.

(The author is Vice President and Managing Director at Facebook India)