While the concept of decentralised cryptocurrencies did not fare well with the Reserve Bank of India (RBI), the technology underlying cryptocurrencies – blockchain, has piqued the interest of governments across the country.
In February 2018, the PMO India had tweeted –
“Disruptive technologies such as Block-chain and the Internet of Things, will have a profound impact on the way we live and work. They will require rapid adaptation in our workplaces.”
According to the National Association of Software and Services Companies’ (NASSCOM) India Blockchain Report 2019, blockchain development in India is growing, and this can be witnessed from the fact that nearly half of the Indian states are involved in over 40 public-sector blockchain projects. While the banking and finance sector has been the most active player in adopting blockchain technology, other industries including healthcare, retail and logistics are also making progress in identifying the applications of the technology.
Building on Blockchain
The Quality Council of India (QCI), a Central Government council, is among the first departments to have started working on a blockchain solution in their domain. The project is aimed at improving the quality and standards across industries. The QCI has collaborated with Turing Labs, a Gurgaon-based blockchain company to develop a solution for the verification of lab certificates, and therefore, ensure the authenticity of accepted certificates. According to Divyashish Jindal, the CEO of Turing Labs, the ability to verify the authenticity of lab certificates can help eliminate adulteration in materials across various industries, especially the food sector.
The country’s coffee industry also announced a blockchain project recently. The Ministry of Commerce and Industry has piloted a blockchain-based online marketplace for coffee to integrate farmers into marketplaces and enable coffee producers to receive a fair price for their product. According to commerce secretary, Anup Wadhawan, the use of blockchain technology will reduce the number of layers between coffee growers and buyers and help farmers double their earnings. To develop the marketplace application for mainstream use, the Coffee Board of India has partnered with Bengaluru-based digital commodity management platform Eka Software Solutions.
Niti Aayog – also known as National Institution for Transforming India, a government think tank working towards achieving Sustainable Development Goals, is working with blockchain technology to detect fake drugs in the pharmaceutical supply chain. Niti Aayog has collaborated with Apollo Hospitals and Oracle to use blockchain to track medicines, and therefore keep a check on spurious drugs.”There is a need to use blockchain to track and trace medicines and spurious drugs. Therefore, Niti Aayog, in collaboration with Apollo Hospitals and Oracle, is putting pharmaceutical supply chain in blockchain for complete traceability of drugs from manufacturer to consumer to protect our citizens from the menace of spurious medicines,” says Amitabh Kant, the CEO of Niti Aayog.
The state and central governments are not the only ones engaged in blockchain development. Large-scale private organisations, especially banks, are testing the technology for reducing costs and achieving operational efficiency. A consortium of India’s eleven major banks including ICICI Bank, Kotak Mahindra Bank, HDFC Bank, Yes Bank, Standard Chartered Bank, RBL Bank, South Indian Bank, and Axis Bank has developed a blockchain-linked loan system in the country. The first-of-its-kind loan system will be marked by transparency in credit disbursement and efficiency in communication among different banks.
It isn’t easy for Start ups Yet
While governments and large-scale private organisations are developing blockchain projects, smaller companies and new blockchain startups are having a difficult time sustaining in the Indian market. Owing to blockchain’s association with Bitcoin, a cryptocurrency whose name has been tarnished because of its association with several major scams in the country, the technology is looked at apprehensively. New blockchain startups face difficulty with getting themselves registered and investors are sceptical about investing in blockchain projects.
According to Alay Mehta, founder of blockchain startup ChainEx, a working prototype of the product is now a primary requisite for raising money. “A whitepaper alone does not suffice… Startups with products now rely on retail investors or raise an ICO at a later stage. The first step is to raise a seed amount for the product,” he says.
Many blockchain startups are even shifting overseas to countries that have a crypto-friendly environment. The regulatory issues around cryptocurrencies have forced many startups to register themselves in foreign countries like Estonia where cryptocurrency trading is not illegal. These startups are raising money for product development through Initial Coin Offerings (ICOs). Drivezy, a Mumbai-based self-drive car rental platform raised $5 million through a security-based ICO after ensuring compliance with the regulations laid by the Securities Exchange Commission (SEC) in October 2017, and since then, many other Indian startups have flocked to crypto-friendly countries for conducting ICOs.
The number of public and private projects in the major industries indicates the bright future of blockchain technology in the country. However, without involving smaller players in this wave of technological revolution, its impact will remain limited to a small percentage of the population. Also, though the public and private sector is proactively investigating blockchain technology, it is doing so without involving cryptocurrencies. Cryptocurrencies are only one of the applications of blockchain technology, but they are essential for encouraging mass adoption of the technology. RBI’s banking ban on cryptocurrencies still stands, and the Supreme Court of India’s judgement on it has been delayed till July.
About the Author:
Madhuri Walia is a business partner at one of the leading blockchain development company in Asia, Turing Labs. Gained substantial leadership experience. Passionate about understanding new emerging technologies. Her specialities are Business Consultant, Product Manager, Blockchain Solutions Expert, Business Development, and Security Auditor.
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