**Policy Continuity for Businesses and Startups**
The National Democratic Alliance (NDA) has emerged as the winner of India’s 2024 general election, although with a smaller majority compared to 2019. This victory signifies policy continuity for businesses and startups, with a continued focus on investment in infrastructure, digitization, and manufacturing. The NDA government, known for transforming India into a global manufacturing powerhouse and reducing the country’s reliance on Western nations, has made significant strides in these areas. This is good news for businesses and startups, as it means that the favorable conditions for growth and development will likely continue.
However, the slimmer mandate obtained by the NDA in this election may result in a reallocation of resources towards rural and welfare initiatives. As the government prioritizes the demands of lower-income segments and rural development, some capital expenditure plans may be impacted. This could have consequences for certain sectors and industries, as the government’s focus shifts towards addressing the needs of these specific segments of the population. Notably, the manufacturing giant Adani Group experienced a decline in value following the election, losing approximately $45 billion.
**Continued Stance on Digital Sovereignty and Clashes with Big Tech**
The assertive stance of the ruling party on digital sovereignty is expected to continue, along with its recent clashes with Big Tech companies. Over the past five years, the Narendra Modi government has enforced or proposed several laws aimed at regulating internet apps, reviewing content for obscenity on streaming services, and even facing legal action from WhatsApp over encryption requirements. These actions have unsettled large tech companies.
The Indian government argues that these measures are necessary to protect the interests of its citizens. By prioritizing digital sovereignty, India aims to assert its independence and reduce reliance on foreign tech companies. This push aligns with India’s broader goal of building a tech stack to rival popular American offerings. For instance, Rupay, India’s own card network, seeks to compete with Visa and Mastercard. Additionally, the Unified Payments Interface (UPI), developed by Indian banks, has already become ubiquitous in India, processing more transactions than all card networks combined.
**Continued Focus on Manufacturing, with Potential Fiscal Allocation Adjustments**
India has positioned itself as a global manufacturing hub in recent years, attracting major companies like Apple, Samsung, and Google with attractive incentives to shift their assembling needs to the country. This focus on manufacturing has been instrumental in India’s economic growth and development. According to Goldman Sachs and Citi, it is expected that India will continue to prioritize manufacturing in the coming years.
However, the brokerage firms caution that the fiscal allocation for manufacturing may be lower than initially anticipated. While India will likely maintain its emphasis on manufacturing, the narrower majority obtained in the election could result in adjustments to the government’s fiscal plans. The government may need to balance its priorities, including rural and welfare initiatives, which might impact the allocation of resources for manufacturing.
Overall, the 2024 general election outcome in India suggests both policy continuity and potential shifts in priorities. Businesses and startups can expect continued support and investment in infrastructure, digitization, and manufacturing. However, there may also be a greater focus on addressing the needs of lower-income segments and rural development. The government’s assertive stance on digital sovereignty and clashes with Big Tech are expected to persist, while fiscal allocations for manufacturing may undergo adjustments. As India navigates its third term under the NDA government, these dynamics will shape the country’s economic and technological landscape.