100 mn jobs in India can come from small businesses, says Nilekani

'I think small businesses are being brought into a digital world, getting access to markets, and companies can now start leveraging their own data,' says Nilekani

At a time when Covid-19 pandemic has impacted small businesses, Nandan Nilekani, founding architect of Aadhaar and co-founder of Infosys, said that India needs to create jobs at scale. This can be made possible by millions of small businesses in the country, which are the future of India and engines of economic growth and job creation, he said. 

There is also increasing adoption of digitization by small businesses including accounting systems, point of sale systems and return of GST (goods and sales tax) online. This is going to generate a wealth of data, which can then be used to offer them better services like lending, Nilekani added.

“I think small businesses are being brought into a digital world, getting access to markets, and companies can now start leveraging their own data for the future,” said Nilekani. “I strongly believe that if every small business creates one or two jobs more, that may mean 50 to 100 million new jobs. This is very important.”

Nilekani said this at a conversation with  Amazon’s senior vice president, Russell Grandinetti and Mahendra Nerurkar, CEO, Amazon Pay India, at the e-commerce firm’s flagship event Smbhav.

“What Amazon is doing in India is very important. And I would like you to think in terms of how many million jobs you are enabling because that is the future,” said Nilekani. 

For example, if there are 5 million suppliers on the marketplace, and each of them creates 5 million jobs, thanks to the market expansion one is offering them, then collectively, the potential to create 25 million jobs, he said.

“And I think that is the point you have to emphasize,” Nilekani told Grandinetti and Nerurkar. “Because what India needs most now is job creators, and you have a chance to create jobs at scale."

Grandinetti has been a 23-year-old Amazon veteran who joined the company when it was a small bookstore in the United States and has seen it grow into a household brand name worldwide. Grandinetti, who had also led Amazon’s Kindle business, said one could see how dramatic some of the shutdowns were in India due to the pandemic. He said online became important as a lifeline even for businesses that had been entirely offline before. Amazon sprang up with new programmes. This included ‘local shops’ designed just to help offline retailers build an online presence for their business. It has brought online 50,000 such businesses so far. 

“And our goal over the next five years is to make that number a million,” said Grandinetti. “Even that’s a small portion of what we just talked about in terms of the long-term opportunity but has to happen because all businesses ultimately are going to miss an opportunity if they don’t find a way to be online.”

During the pandemic, for Indian customers, paying became difficult. With Amazon Pay, the firm created Pay Later, which gave eligible customers instant access to credit. They could pay later when the act of paying had become more complicated.

“So big changes for us around the world. And big changes for us in India,” said Grandinetti. “I am very proud of the way our team rallied, and our selling partners gave customers what they needed (via) e-commerce, which is even more important than it was before.”

India Stack, the ambitious project of creating a unified software platform to bring India's population into the digital age is playing a key role. Over the last decade, India has rolled out a lot of the pieces of digital infrastructure at a population scale. Aadhaar for 1.27 billion people is using more than a billion authentications a month for all kinds of purposes, e-KYC (know your customer), which allows people to open an instant bank account. The Aadhaar-based payment system allowed the government to do direct transfer into people’s bank accounts in real-time. 

“UPI (unified payments interface) which I’m sure (is used) in Amazon Pay is one of the world’s best real-time payment systems, doing 2.3 billion transactions a month expected to go to 1 billion transactions a day,” said Nilekani, who is an advisor at National Payments Corporation of India (NPCI) which built UPI platform.

GST also benefits small businesses as they learn how to file tax returns electronically. They can have digital streets that are authenticated by the government, which they can use to get credit and other services. There is an  ‘account aggregator’ programme, which allows businesses to access and use their own data for their future.  For instance, an Amazon supplier or Amazon on the behalf of the supplier can combine not only the data that it has about the company, but also their bank statement, or their tax returns, to get a better deal for them from a lender.

“I think the lending boom that is going to happen to small businesses in the coming years is going to be a key driver of growth,” said Nilekani. “In India, most of the credit has gone only to large businesses, because it is very difficult for banks to really assess the creditworthiness of small companies.”

Now digital signatures are free in India. One can sign documents and agreements, electronically. Face authentication (not face recognition) which allows the use of Aadhaar, where one compares the photograph, is also going to make it easier to go online for many use cases. The digital locker has also become successful in India. Here businesses can keep the documents electronically in the DigiLocker. These may include digital certificates for vaccination. 

“When you vaccinate yourself in India, you get an image of a digital certificate, which is encrypted and signed with a QR code and that is stored on your behalf in a locker, which you can pull out (on phone) anytime you want,” said Nilekani. “All this is at population scale, that means 1.3 billion people can use it. This can be dramatically used by small businesses to provide a more efficient system and deliver more to the consumers, increase sales and create jobs.”

Grandinetti said he has the privilege of managing Amazon’s business in over 20 countries around the world, across Europe, Japan and Latin America. “I can tell you that both from a business standpoint, and in the governments, we work with around the world, the India stack and UPI are models, that everybody does not just marvel at, but I think in some way (are) seeking to emulate,” said Grandinetti. 

The future of an identification system and ease of payment is the digitization of payment. And the standardization and scalability of government services is the proper way for a country at any scale to operate. 

“So, I can just tell you, as a non-Indian, who does have a pretty broad perspective on the world that Nandan (Nilekani), and everybody who has helped make this possible have a lot about which they can be very proud,” said Grandinetti. “This is not just doing good for India, but setting an example that a lot of the world is seeking to follow.”