Achieving a $30 trillion GDP by 2047 and becoming Viksit Bharat is a grand vision of our Prime Minister. It's commendable that beyond the usual politics of caste and religion, we are focusing deeply on development. However, achieving this rapid pace of growth won't be easy. If India continues at its current 7% growth rate, it will likely reach around $16 trillion by 2047 - not the $30 trillion target we aspire for. Therefore, we need to generate an additional $14 trillion in GDP growth by innovating and creating novel products, intellectual property, and businesses.
Even more challenging is the emergence of the AI-driven Intelligence economy. If we fail to capture the value generated by artificial intelligence, much of this growth will be superficial, with the majority of economic benefits accruing to countries like the US or China, leaving little taxable wealth for our future welfare policies. We need high-growth, high-margin companies in burgeoning sectors that can provide substantial tax revenues and are headquartered in India.
A New Approach
Addressing this complex challenge requires a departure from our traditional top-down policy and investment models like the PLI schemes. A promising approach lies in adopting the 'Rainforest model of innovation', as described by Victor Hwang in his influential book The Rainforest: The Secret to Building the Next Silicon Valley. This model emphasises fostering a vibrant innovation ecosystem by facilitating easy access to capital, talent, and information, and by promoting a culture that embraces risk-taking. This is crucial for creating an innovation-driven economy capable of generating the additional $14 trillion needed to achieve the goal of Viksit Bharat.
China's rapid ascent as a technology powerhouse provides a relevant example, largely due to its successful implementation of public-private investment funds known as 'Chinese Government Guidance funds', which focus on strategic and emerging technologies, including artificial intelligence. These funds have raised nearly $700 billion and played a pivotal role in channelling capital into China's flourishing innovation ecosystem, now poised to rival Silicon Valley.
The 'Startup India' Movement
To unlock this new paradigm of development and adapt it for India, we must closely examine successful models within our own country. Drawing on my over 15 years of experience in AI entrepreneurship, investment, and policy in India, I recognise the transformative impact of the 'Startup India' movement. This initiative not only mainstreamed innovation and startups but also thrived on the Startup India Fund of Funds, a ₹10,000 crore programme. Managed by SIDBI with a professional investment committee, this fund has committed ₹10,229 crore across 129 venture funds, which in turn have financed over 1,000 startups with ₹17,000 crore, creating millions of direct and indirect jobs. This successful initiative must be massively scaled up as India strives toward the Viksit Bharat goal.
We should begin by establishing our own guidance fund model, starting with a $10 billion public-private capital pool aimed at emerging technologies such as AI and robotics, pivotal to the development of sunrise sectors. Approximately $1 billion could be sourced from the government, with the remainder coming from institutional investors like LIC or global pension funds seeking diversification of their corpus away from investments in China. Institutions like SIDBI or SBI could manage these funds, instilling trust through a professional investment committee tasked with selecting daughter venture funds. For ventures focused on sunrise sectors, the fund may contribute up to 50% of the capital, with longer timelines of 15 years or more to provide consistent and patient capital crucial for these sectors.
This initiative will set three significant growth vectors in motion:
- It will create patient domestic capital for deep-tech innovation, addressing the critical need for strategic emerging technologies. Currently, even India's most promising deep-tech startups often struggle or relocate to places like the US, where capital access is more straightforward and abundant.
- By introducing market discipline and expertise, policymakers can enhance industrial policy effectiveness. This model has the potential to reduce inefficiencies and corruption associated with subsidy/PLI schemes and other policy tools. Further, it may reduce the need for very large PLI schemes in future to jump-start a sector, like we are doing now for semiconductors.
- It will synergise with other large development efforts like the AI mission, the quantum mission, the creation of research parks, R&D initiatives, and talent creation plans. It will accelerate the formation of new businesses in sunrise sectors and millions of high-value direct & indirect jobs, leading to higher tax growth.
An often overlooked strategic benefit of such a capital pool is its potential impact on the ownership structures of strategic companies. Many deep-tech startups see founder ownership drop below 50% after just a few funding rounds, hindering the possibility of nurturing long-term visionaries who can guide companies through technological changes. Achieving the scale of an NVIDIA or Facebook with a founder at the helm in India remains a challenging prospect.
Investing In The Future
Establishing a $10 billion fund of funds dedicated to disruptive technologies like AI and robotics is not merely a technological investment; it is an investment in India's future. A future for India with a leading innovation ecosystem in the world contributing to brain gain of a massive order.
Achieving a $30 trillion GDP by 2047 is an ambitious but feasible goal with the right investments and strategic focus. The time to act is now, and the $10 billion fund of funds for deep technologies like AI and robotics is pivotal in unlocking Viksit India's vast potential. Delaying action risks this goal becoming an unattainable mirage within the next five years.
(The author is chairman of AIfoundry, co-founder of ARTPARK(AI & Robotics Technology Park), and passionate supporter of AI & deep tech innovation in India.)
Disclaimer: These are the personal opinions of the author