For the past few years, India’s startup ecosystem has been at the forefront of adopting various emerging technologies in driving the country’s economic growth, innovation and social development. One such technology is Web3, or Web3.0, which is influential in shaping up the digital landscape.
Web3 generally means the next generation of the worldwide web. It is derived largely on blockchain technologies, which use a distributed network of servers and devices across which any data or service is hosted.
According to a recent report by management consulting firm Primus Partners, Web3 sector has the potential to generate around 2.2 Mn jobs in India over the next 10 years.
The report underscores India’s position with over 900 enterprises in the Web3 domain, constituting 11% of the global Web3 developer community in 2022. It predicts that the sector will contribute a substantial $1.1 Tn to India’s gross domestic product (GDP) over the next decade, by 2032.
The impact of Web3 transformation spans across various sectors, including supply chain management, healthcare privacy, education, certification, voting systems and identity management. However, challenges persist, particularly in terms of taxation issues and the ease of doing business, the report said.
The Primus Partners findings further point out that higher tax deductions introduced by the Finance Act of 2022 have led to a trade shift to foreign platforms and the grey market, undermining consumer protection efforts of compliant Indian platforms.
The survey also suggests a need for adjusting the tax framework to support compliance and encourage participation in monitored transactions, rather than discouraging it.
It underlines the importance of clear guidelines and specific regulations for Web3 businesses, in line with Startup India recognition. The study also points out that due to a limitation in the access to UPI and banking rails within the virtual digital assets’ ecosystem, users have to opt for foreign platforms, while risking their payment security.
The report predicts that Web3’s contribution to the global GDP is projected to reach 8%, amounting to $13 Tn by 2030. Despite the notable attention received by VDAs like bitcoin and ethereum in recent years, the genuine potential of Web3 goes far beyond speculative trading.
Bharat Web3 Association, the primary representative body for Web3 companies in India, has recently proposed several recommendations to the Karnataka government aimed at fostering its development within the state. These suggestions include initiatives, such as the creation of a sandbox environment.
While crypto deals have been scarce, Web3 space has seen a few notable announcements. In a recent instance, Huddle01, which is building a decentralised real-time communication (dRTC) network, secured $2.8 Mn in a seed funding round from Hivemind. In March, homegrown venture capital firm pi Ventures raised INR 22 Cr in its second fund, which it also intends to deploy for early-stage blockchain startups.
Further, Transak, a startup specialising in Web3 payments solutions, has successfully raised $20 Mn in its Series A funding round.
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