Digital India: Empower Growth through Connectivity

By Nicolas Fonseca, CFA
Associate PM
Van Eck Associates Corporation

Listen to this related podcast for more on the digitization of India and the potential opportunities this is creating for investors.

Within emerging markets investing, China often dominates the conversation given that it is by far the largest economy. However, for investors searching for the next wave of growth, we believe that the rapid digitization occurring in India should not be overlooked.

India’s digitization started back in July 2015 when Prime Minister Narendra Modi launched the Digital India program with the vision of transforming India into a digitally empowered society and knowledge economy. The government expanded broadband internet and created a digital-payments system so that everyone has access to a bank account as well as a secure digital locker to store and verify documents, among other things. In addition to these forward-looking government initiatives, India’s demographics play a key role in its digital transformation.

Young, working age people are more likely to be early adopters of technology. Contrary to China, India has one of the youngest nations in the world (median age of 28 vs 42 in China and 40 in the US1) and one of the largest working-age populations. Its middle class has been driving digitization and it is estimated that India will add about 140 million middle-income and 21 million high-income households by 20302, with a vast majority already owning a mobile phone. Extremely low data costs has helped drive this growth in mobile penetration. Having a mobile phone with internet access is a useful proxy for digitization because it provides a large segment of the population access to many of the latest developments at the touch of their hands. Just think about what the iPhone unleashed back in 2007 and how the mobile phone space has evolved.

India Mobile Penetration to Increase to 77% by 2022

India Mobile Penetration to Increase to 77% by 2022

Source: TRAI, CLSA, World Economic Forums

Widely available access to the internet makes India an internet and mobile first economy, which has disrupted and will continue to revolutionize consumer habits for its approximately 1.4 billion people.

Zomato, a food delivery player that has high customer engagement and retention rate, is a clear example of what Digital India may look like in the future. Founded in 2008, Zomato began as a restaurant search site where customers could read and write reviews. In 2015 it expanded into food delivery, and then into booking tables for customers at its partnering restaurants in 2016. In 2019 it launched Hyperpure (a B2B supplier platform for restaurants to provide fresh, hygienic and high quality ingredients), and in 2021 they have started looking into digital payments to handle all electronic payment services within its platform. Zomato underwent an IPO in the summer of 2021, achieving “unicorn”3 status after it raised $1.3B.

Zomato has grown from 6 million monthly transacting users (MTU) in Q2 of 2021 to 16 million MTU by Q2 of fiscal year 2022.4 Not only has its user base grown over the past year, but so has the number of its delivery restaurants and delivery partners. Zomato has scaled up organically, expanding rapidly to more than 500 cities with more than 170,000 active delivery restaurants and 300,000 delivery partners.5

Growth of Digital India: Zomato in Numbers

Zomato in Numbers

Source: Zomato

India’s market for IPOs is hot, in our view. High demand from retail, institutional and foreign investors are encouraging Indian firms to go public at a record pace. As of January 27, 2022, India has had 84 unicorns with a total valuation of close to $286B according to These new IPOs are expected to drive India’s market capitalization growth to $5T by 2024 (up from approximately $3.5T at the end of 2021).

Digitization in India has been happening for some time, but with the COVID-19 pandemic, the pace of an already visible and persistent long-term growth trend accelerated. It impacts not just technology and e-commerce, but all sectors of the economy.

Core Digital and New Digitizing Sectors

Source: MVIS. Sectors are a representation of the MVIS Digital India Index.

Investing in India’s Digitization

India’s economy is rapidly digitizing, potentially creating significant economic value and transforming its capital markets. The VanEck Digital India ETF (DGIN) provides investors with access to local companies across sectors which are enabling and benefiting from the country’s digitization, allowing investors to gain exposure to this theme within an emerging markets portfolio. DGIN seeks to track, as closely as possible, before fees and expenses, the price and yield performance of the MVIS Digital India Index.

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Originally published by VanEck on February 3, 2022.

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1 ,2 World Economic Forums “Future of Consumption in Fast-Growth Consumer Markets: India.

3 Unicorn is a term used to describe a privately held startup company with a value of over $1 billion.

4 Source: Zomato.

5 Source: Zomato.

Fund effective as of February 2, 2022, but not yet available for trading.

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