Why India is not the New Silicon Valley

Written by: Abby Ivancevich

India’s recent economic growth has been historic and promising for developing countries around the world. However, in recent years, its lack of economic growth curtailed hopes of becoming a global technological power. India’s unique history of colonization and the caste system are sadly still part of the makeup of society and the country’s success. British colonial rule decimated cultural norms and created inequality for the vast majority of Indians. Still, India made incredible bounds against the legacy of decolonization through the leadership of Mahatma Gandhi. According to Cultural India, in the “late eighties and in the beginning of the 1990s, the Indian policymakers realized that state-controlled economy was not able to produce desired results in almost 45 years. It was decided to pursue an economic policy based on liberalization, privatization, and globalization.” The large, motivated, and increasingly educated population led many to suspect that the country would encounter unprecedented wealth within the globalized, lucrative tech industry. Indeed, India’s economy proved to be very promising, and companies like IndiaMART and Rajesh Exports Ltd. have proved India’s abilities as a strong economic power. However, these enormous, fast-growing companies are the minority among many tech startups in India. Large investments have been squandered due to a lack of ingenuity and infrastructure. Other fairly recently developed countries such as China have prospered not only due to startups but due to an explosion of middle-class manufacturing jobs as well, creating a slow but steady construction of an eventual middle class.

Lack of innovation and infrastructure are two main issues scholars recognize as reasons why India’s technological growth stalled. Money flowed into India from large companies eager to capitalize on the growing market. Large companies thrived, yet after the initial influx of money and jobs, a certain stagnation, stemming from the large gap in resources and education still present in Indian society, stymied further growth. Lack of the most basic infrastructure blocked India from fully capitalizing on investments. Simply throwing money in large corporations is not sustainable in an age where technology moves faster than investment. Technology like artificial intelligence will soon replace technology inroads established today. The lack of mid-level work is only adding to the shortage of jobs and growth. The economy needs growth from local communities and ideas instead of the top-down approach when it comes to India’s long-term economic health. Even if the technology industry suddenly grew, there is no guarantee that the wealth of the technology sector would trickle down to the majority of people in India who need money.

Gaps in innovation also added to India’s stunted technological sector growth. Looking at patents as a measure of innovative ideas, India filed 1,423 international patents in 2015-16, while Japan filed 44,235, China 29,846 and South Korea 14,626. Using models from other successful countries can be valuable; however, reliance on these models alone do not produce automatic, sustained prosperity. There’s also a possibility that in the asymmetric, globalized, ultra-competitive environment today, where powerhouses like China and the U.S. are soaring ahead in infrastructure and innovation, that it is impossible for any country to catch up when it comes to the tech industry. India possesses enormous promise implementing reform and ensuring better economic wealth equities. Clearly, the tech trade is not the best approach for a developing country and its long term health. Such rapid growth also does not bode well for India’s ability to modernize its enormous population. It simply is not practical. Silicon Valley, for example, has provided billions of dollars in profits and widely celebrated innovation but contributes and facilitates the enormous economic inequality and gentrification in the area. Maybe striking unequal distribution of wealth is a necessary evil when it comes to big-name startups, but India’s middle class is not robust enough to adapt.

India must foster new ideals and ways to include the masses to secure the victory and longevity of the technology industry. India’s unique history and challenges mean that the infrastructure must be built up securely, and if the nation wants to utilize globalization, they’ll need to use new means to achieve global influence.