Over the last few years, India has had success in attracting high levels of foreign investment, but around ten years ago, FDI had plummeted. In the tech market, specifically, investor confidence was low, and not even announcements from mobile phone suppliers like Apple or semiconductor firms like Micron Technology had urged a groundswell.

The reason for this is multifaceted. The frequent changes in regulations and policy frameworks have not helped. Over the last few decades, complex bureaucratic processes, unclear regulations – particularly around the Data Protection Bill – and sudden changes to FDI policies have made the investment environment more risky. Add to this the infrastructure gaps, talent shortages, high taxes, and IP law concerns, and you’ve got a hotbed of uncertainty. Not just for the tech industry, but every industry that depends on foreign investment for success.

Sticking with the tech market, however, the outlook is starting to grow more positive. Throughout the last decade, a distinctive change in tech strategy has been undertaken that could encourage foreign investment to grow – potentially even making India one of the global hubs for tech over the next decade.

Overview of India’s Tech Strategy Shift

Perhaps the most important shift in India’s tech strategy comes in the ‘Digital India Initiative’, which was launched by the government in 2015. The main goal of this initiative was to empower more citizens by increasing access to digital infrastructure, improving digital literacy and promoting businesses that functioned predominantly online.

One of the biggest milestones in this regard was the arrival of Reliance Jio in 2016, which revolutionised internet access by offering affordable 4G data plans and smartphones – which led to a dramatic increase in internet penetration, with India reaching over 700 million internet users last year alone. As mentioned before, this has been a boom for both citizens and businesses, with one of the biggest benefactors being the iGaming industry.

This is one of the fastest growing industries in the world, set to reach $100 billion by the end of 2024, and yet, due to high latency, a lack of payment solutions, and reduced audience reach, the majority of online casino platforms in the country have not been able to capitalise. Now, however, this has all changed. Digital connectivity has improved, audience reach has grown exponentially, and numerous new casinos have been launching as a result.

In 2024, millions more users can now make the choice on IndiaCasinos.com – one of the platforms hosting the widest range of fresh online casinos – between a variety of casino platforms, each of which have been bolstered by the Digital India Initiative and, crucially, will be bolstered even further by foreign iGaming investment – which is projected to reach over $2 billion as global operators tap into India’s rapidly growing market.

Key Factors Driving the Change in Policy

Everything is, of course, connected. With the Digital India Initiative, more citizens have been able to operate online, and businesses have been able to optimise and streamline their processes. As a result, the iGaming industry has grown, and as a result of this, projected investment has grown, which will then filter back down into the foundational tech ecosystem. Plenty of other industries are, crucially, benefiting each other.

We have used the iGaming market as an example, but even this market has been bolstered – and boosted in return – by fintech providers, cloud service platforms, cybersecurity firms, analytics companies, and more. And this leads us to the key factors that are driving the change in India technology policy in the first place. The first is economic growth. India’s government is undoubtedly aiming to position the country as a global economic power, driving initiatives and policies – including ‘Make in India’ and ‘Atmanirbhar Bharat’ that will encourage foreign investment in India. The tech landscape is the most obvious place to start.

Over the last few years, the tech industry has been booming, with developments including AI, VR, and machine learning driving the surge in investment, and it’s not looking set to slow down anytime soon. According to a recent study, it’s estimated that the global tech market will grow from $8.5 trillion to $11.47 trillion in 2026, and if technology reforms in India can tap into this expansion, this will be its top priority for overall economic growth.

With a booming tech industry comes a booming job market, too. With a large and youthful population, India faces the challenge of creating enough jobs to sustain its growing workforce, and so policies are becoming increasingly aimed at fostering sectors that promise high job creation, particularly in tech, manufacturing and services. Initiatives like the ‘Skill India Mission’, for instance, aim to train millions of citizens in emerging technologies like AI, machine learning, and blockchain – all of which will equip the workforce with essential skills, drive innovation, and will enhance the digital economy in India and its competitiveness in the tech landscape.

 Impact of the New Strategy on Foreign Investors

While we’ve mentioned several initiatives that are driving the new India tech strategy, there are still more that are building solid groundwork. The rise of digital payment solutions – including UPI, Paytm, and PhonePe – and the introduction of cryptocurrency as an accepted payment method have streamlined processes for a number of businesses, as well as paved the way forward for new blockchain startups. The expansion of the startup ecosystem itself has also seen great success, with Indian government tech initiatives like ‘Startup India’ offering mentorship, funding, and business support to make India the third-largest startup ecosystem in the world.

But perhaps more important than them is the reform in policies for foreign direct investment in India, which has a direct impact on foreign investors. Over the last few years, the tech sector in India has progressively liberalised its FDI policies in various sectors, meaning 100% FDI is now allowed in e-commerce marketplaces, telecom, and software development under the automatic route – without government approval.

Policies in sectors like data centres, cloud computing, and AI have also been eased, which has encouraged global tech companies to set up operations in the tech sector in India and made it a particularly attractive destination for giants like Meta, Google, and Amazon – all of which have made substantial investments to drive growth. Couple this with the corporate tax rate being reduced from 30% to around 22% for domestic companies, and a 15% tax rate being introduced for new manufacturing companies – subsequently encouraging global manufacturers like Apple and Samsung to invest – and the landscape has become a far more inviting place than it was ten or so years ago.

Opportunities and Challenges for International Companies

Speaking of the opportunities now available for international companies, specifically, India’s new tech regulations are immensely favourable. The Indian government’s liberalisation of FDI policies, coupled with production linked incentives creates an easy route for international companies to expand in the market, with the digital economy in India not only enhancing access to a vast consumer base, but opening up a wealth of collaboration opportunities with local startups – including startups in emerging fields like AI and IoT.

These kinds of opportunities, however, don’t come without their separate challenges. It’s still true, for instance, that India’s regulatory landscape is complex, with multiple laws and regulations making it difficult to remain compliant at both national and state level. The increase in competition will also be a challenge.

While collaboration with local startups will be beneficial, it’s also true that local firms will understand the market nuances of India better, which makes competing against domestic players with lower cost structures more difficult than it should be. Fluctuating political landscapes and India technology policy shifts can also pose risk to foreign investment in India, with companies needing to remain agile and prepared amidst constant changes, and the current economic climate in India – and around the globe for that matter – has made inflation and currency fluctuations a challenge to navigate.

Future Outlook: How This Move Could Shape India’s Tech Sector

Having said that, the challenges that international companies face doesn’t seem to be creating any issues as far as the India tech strategy is concerned. Foreign investment in India is indeed rising and ambitious targets for India’s digital transformation and digital growth look set to be hit in the next decade.

The increasing confidence of international investors reflects a belief in India’s potential to overcome its hurdles, adapt to market needs, and foster an environment that is conducive to innovation. And as more companies recognise the vast opportunities that are becoming available in India’s market, the more synergy is expected to occur between domestic advancements and foreign expertise and investment driving progress.

Some experts are projecting that, by 2030, the tech sector in India will become a global leader in IT services, digital innovation, and entrepreneurship, even going as far as to challenge China as Asia’s new tech powerhouse. Whether this will happen remains to be seen, but the outlook is looking decidedly positive if the last few years are anything to go by. The tech world is escalating rapidly, and India is right at the front of the crowd, following it to its next destination.