India’s $250B Digital Economy Runs on Web2. That’s About to Change

March 3, 2025

Suhas Shankarappa

For decades, India has built digital empires atop borrowed infrastructure. UPI revolutionized payments, yet its rails are government-owned. Zomato, Ola, and Flipkart dominate daily life, yet their platforms rely on Web2’s gatekeepers—Google, AWS, Meta. Even the most successful startups remain tenants in someone else’s digital kingdom.

Web3 changes that equation.

A new internet is forming—one where ownership, value, and governance shift from platforms to users. Yet, while Silicon Valley debates tokenomics and regulation, India faces a more profound challenge: Who builds the next billion-user Web3 applications, and will they even be Indian?

Web2 Made India a Digital Superpower. Web3 Can Make It a Digital Owner.

India’s rise in Web2 was fueled by three factors:
- Digital Public Infrastructure (DPI): Aadhaar, UPI, ONDC—India excels at open, scalable platforms.
- Startup Scale: 100+ unicorns, 700M internet users—the world’s largest digital market under 40.
- Engineering Talent: The global CTO factory—leading AI, fintech, and cloud innovation worldwide.

But Web2 had a cost. The data India generates—its payments, social networks, and businesses—enrich US-owned cloud servers and Chinese-owned apps.

Web3 is India's moment to own the stack, own the data, own the economy.

India’s Web3 Future: From Builders to Owners

1. Public Blockchains as Digital Infrastructure
India pioneered public goods in Web2 (UPI, CoWIN). Web3 lets us do the same for identity, finance, and commerce—without corporate monopolies.
- IndiaStack on-chain? A decentralized UPI could make remittances instant, permissionless, and global.
- Self-sovereign digital identity? A national blockchain ID (without surveillance risks) could redefine e-governance.

2. DeFi: Rebuilding India's $4T Financial Sector from Scratch
India’s fintech success (Razorpay, CRED, Zerodha) was built despite legacy banks. DeFi removes banks entirely.
- Tokenized real estate makes land registries transparent, cutting corruption.
- On-chain lending lets India’s MSMEs access global liquidity without collateral.

3. Gaming: The $5B Trojan Horse for Mass Web3 Adoption
Over 450M Indians play games—yet game developers keep only 20% of the value.
- Web3 gaming lets players own in-game assets. India's gaming unicorns (Dream11, MPL) must evolve or be disrupted.
- Play-to-earn, if regulated well, could generate millions of digital jobs beyond IT.

4. The Creator Economy: India’s Cultural Export Becomes Borderless
India dominates YouTube’s creator economy, yet ad revenue is controlled by platforms.
- NFTs & social tokens let creators monetize without platforms taking 30%.
- Imagine Bollywood on-chain—IP rights automated, royalties instant, piracy impossible.

The Biggest Threat? India Might Build Web3 Unicorns, But Not Own Them.

VCs still fund Indian Web3 startups via Singapore or Dubai entities.
US-listed exchanges hold Indian tokens.
Most Indian founders still deploy on Ethereum, Solana—not homegrown chains.

For Web3 to truly belong to India, we need:
Regulation that enables, not stifles. Compliance-first Web3, not knee-jerk bans.
India-first blockchains. Why settle for foreign protocols when India can lead?
A startup ecosystem that scales Web3, not just experiments with it.

2025-2030: India’s Web3 Decade or Another Lost Opportunity?

History remembers who builds rails, not just applications.

The next five years will decide if India owns the Web3 economy or just participates in it. Will it be an era of homegrown protocols, decentralized unicorns, and borderless commerce? Or will India’s startups repeat Web2’s mistake—building value that ultimately accrues to platforms they don’t control?

The infrastructure is ready. The talent is here. The funding is flowing.

The only question left is: Will India seize Web3, or will Web3 seize India?

About the Author

Suhas Shankarappa

Suhas Shankarappa is the Senior Partner at NXG World, specializing in business consulting, digital transformation, and brand and marketing communication. With a wealth of experience, Suhas helps organizations drive growth, innovate strategically, and build impactful brand narratives in an ever-evolving business landscape.

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