Regulatory uncertainty has held back India’s 4.2 million-strong developer base from embracing blockchain tech, says our columnist.
India’s growth story is inevitably tied to its growth as a leading global technology hub. With more than 4.2 million developers, the country is home to the largest talent pool in the world for developer talent.A large number of blockchain developers should be an advantage for India when it comes to developing blockchain-based applications or improving existing ones. Some data estimates from 2018 indicated that India had the second largest number of blockchain developers in the world, just behind the U.S. However, blockchain is not quite the fast-growing tech sector in India as it is in the rest of the world.Tanvi Ratna, a CoinDesk columnist, is the founder and CEO of Policy 4.0, a research and advisory body working on new policy approaches for digital assets. Some estimates place the size of India’s developer base at over 20,000. While this is a large pool of developers globally, it is a drop in the ocean compared to the 4.2 million+ might of the overall developer ecosystem. It is a known fact that public blockchain and cryptocurrencies have not attracted the attention of India’s top developer talent to the same degree as AI, ML, and other emerging technologies. The stigma around cryptocurrency holds back Indian developers who are skeptical of the country’s regulatory environment.Starting from 2013, the Reserve Bank of India issued regular cautionary guidance against cryptocurrencies, citing market volatility, risk, and no legal recognition for cryptocurrency. The developer ecosystem in India was starting to grow with the bitcoin (BTC, -2.93%) boom in 2017-2018. However, that came to a halt when in April 2018, the central bank issued a circular prohibiting the banking system from dealing with entities dealing in virtual currency. The ecosystem went into a veritable freeze, and the chilling effects of regulation have been felt for a long time, arguably even today.
In 2019, the central government released a report with its position on virtual currencies, preferring a complete ban on the instruments, with a draft legislation for the same. After the Supreme Court struck down the RBI circular as being unconstitutional, the industry could finally move again.In February this year, it appeared that a legislative move for a ban was possible, and recent challenges with banking access have reinforced the image that the sector is far too regulatorily complicated and may not guarantee job security. In such an environment, both the evolution of the industry and the agility of local pioneers are tested.
Regulations dictates India’s blockchain ecosystemWhile India’s regulatory stance on cryptocurrencies has been negative, there has been very vocal support for blockchain technology by policymakers. The focus on DLT applications created a divergent path for some developers, who chose to focus on enterprise applications.However, three years on, there are as yet no large-scale enterprise blockchain applications live in India. Most DLT developers have been limited to proof of concepts or pilots for the most part. Some have worked on large overseas projects as an outsourced vendor. The scale for such applications within India remains limited.
India has gone through its own journey in the blockchain hype cycle. The year 2017 saw a large wave in cryptocurrency projects with the ICO boom. By 2018, most large IT majors in India – Wipro, Tech Mahindra, Infosys – had formed blockchain teams, conducting active meetups, conferences, and contributions to code. Various companies were starting to explore pilots and proofs of concept, and even consortium approaches were being experimented with – the most well-known of these was Bankchain, a consortium led by one of the largest banks in India. Most top-tier cities in India saw a rise in developer activity with the adoption of DLT by big conglomerates like TATA, and Infosys, along with several crypto trading companies and active blockchain meetups in India.