NRIs in UAE: India’s fintech sector continues on strong growth path

Question: Is India’s fintech sector growing domestically as well as globally?  This was promised by the Government at the time of introduction of the last budget proposals.

ANSWER: India’s fintech sector now comprises more than 10,000 companies with investment of $40 billion. This is on account of the large technology talent pool and a diverse financial ecosystem. Last month, the Governor of the Reserve Bank of India announced the creation of the Unified Market Interface which will enable instant buying, selling and trading of financial assets as digital tokens settled through the central bank’s digital currency. India’s digital finance ecosystem has reached a critical juncture, driven by data integration, digital currency, asset tokenisation, artificial intelligence and cyber security.  Financial data through the account aggregator framework currently serves 160 million accounts.

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The Reserve Bank is working on new standards for customer onboarding, consent management and data security.  This will promote greater interoperability among aggregators.  The commencement of the Unified Lending Interface platform has bridged India’s credit gap by linking lenders to verified data sources.  Since its launch, 3.2 million loans worth Rs.1.7 trillion have been sanctioned. The system will help lenders to use data more effectively to serve individuals with no credit history. The retail digital e-rupee has also been successfully introduced and is adopted by 19 banks and 7 million users. This serves as a critical layer in India’s digital public infrastructure.

Question: India’s annual spending on research and development is way below the amount which is spent by the US, China and Europe.  Will this not have an adverse impact in this age of technology and make it difficult to bridge the gap?

ANSWER: It is true that R&D spending in India is much less than in developed countries (0.7 per cent of GDP v. over 2.5 per cent in US and China). However, it is possible for India to out-innovate through AI enabled science. Traditional research is constrained by time, cost and data. AI is changing that equation.  By learning from the world’s accumulated data – scientific papers, experimental results, and molecular structure – AI can now predict how materials will behave. What took years of trial and error can now be simulated, validated and iterated in weeks.  The key areas of impact will be in life sciences, scientific instruments, climate and disaster resilience, and space and frontier science.  While it will be difficult for India to outspend advanced economies on R&D, AI will reduce the cost of experimentation, democratise access to knowledge and make scientific talent the most valuable currency.

In most advanced countries, innovation has been redefined through small empowered teams, flexible funding and mission driven focus. It has been proved that high risk projects when managed by talented leaders and measured by outcomes can create a meaningful impact. Therefore, India is now in the process of building dynamic networks by interconnecting Indian Institute of Technologies, CSIR laboratories, startups and industry. By doing so, India can leap from incremental science to frontier discovery and turn a modest R&D budget into a force multiplier for global leadership in AI, biotech and security technologies.

Question: The number of automobiles on the roads of India is increasing by leaps and bounds.  I am told that cars manufactured in India are being exported.  Is there sustainable growth in this sector?

ANSWER: Exports of passenger vehicles have registered a 20 per cent growth rate during the six-month period April-September 2025. Around half a million cars manufactured in India have been exported by Suzuki, Hyundai, Nissan and Volkswagen.  This year Suzuki exported more cars in one quarter than they did in a whole year four years ago. The cars shipped abroad ranged from electric vehicles, hatch backs to sedans and SUVs.  Suzuki is now exporting cars made in India to Japan, indicating a tremendous improvement in the quality of the product. The first electric car made in India by Suzuki has been earmarked for the export market where the demand is growing in spite of competition from Chinese electric vehicles.

Hyundai has registered a 17 per cent growth in exports this year, having shipped nearly 100,000 units.  Analysts expect vehicle exports to register a robust rate of growth based on the fact that India has become a global manufacturing hub not only for vehicles but also for critical components which are used in the manufacture of the same. Another foreign company which has invested heavily in its factory in India is Nissan which has been exporting vehicles to Africa, Europe and the Middle East.

The writer is a practising lawyer, specialising in corporate and fiscal laws of India.