Mobile internet, fintechs, and digital identity: India's major rise brings a breath of fresh air

India is one of the major markets of the future and one of the fastest-growing economies in the world. A forecast by the International Monetary Fund (IMF) states that the emerging nation will overtake Germany as the world’s fourth-largest economy in 2025/2026. India surpassed the population of its rival, China, just last year and is now the most populous country with 1.4 billion inhabitants. While China has seen a population decline since 2022 and faces the threat of an aging society (as we reported), India’s young and growing population can help sustain the country’s impressive economic growth of over 8% for many years to come.

Unlike in previous years, the country seems to be mastering its economic ascent this time. According to its Ministry of Finance, one of the most serious problems facing India’s economy is logistics costs caused by inadequate infrastructure. To remedy this, India has launched massive infrastructure projects. For example, an 8-lane highway on reclaimed land is intended to connect the business districts in southern Mumbai with the residential areas in the north. Instead of 2 hours, commuters should then only need 40 minutes. Cost: 1.5 billion dollars. The country is also investing in airports and railways to unleash its growth potential.

India also has big plans for its energy supply: for the next five years, the country intends to add 50 gigawatts of solar and wind power capacity to the grid annually. This alone consumes a large amount of critical metals such as indium, gallium, and rare earths, such as dysprosium oxide. For comparison: Germany is aiming for an annual expansion of 22 gigawatts of solar power and ten gigawatts of onshore wind energy by 2030.

India’s upswing can also benefit Germany. The Düsseldorf-based energy group Uniper announced an agreement with the Indian energy producer Greenko in February last year, which intends to deliver 250,000 tonnes of green ammonia—effectively transportable hydrogen—to Europe in the future. This offers Germany another opportunity to supply itself with “green” hydrogen.

Germany can learn a great deal from India’s digital competence. While 58% of Germans still pay in cash, this figure is only 27% in India (2021/2022), with the remainder paying digitally. The virtual currency is based on an infrastructure that uses a digital ID verified via retinal analysis and fingerprints—a technology that Germany is far from achieving. In India, by contrast, small barbershops on street corners often do not even have a roof. Yet almost every vendor has a sticker with a QR code on the wall somewhere, where customers can pay with their mobile phones without cash. This is not only easier for the merchants because they do not need coins for change, but it also brings transparency to payment flows. This has successfully combated corruption while simultaneously increasing tax revenue.

India is still a land of contrasts. While scientists in skyscrapers with mobile-controlled air conditioning research AI and the Internet of Things, rickshaw drivers dodge potholes and stray cows in front of the buildings. Working conditions are sometimes very poor, especially in the informal and thus unregulated sector. There are religious conflicts, and Narendra Modi has already been compared to Donald Trump because of his authoritarian nationalism. Nevertheless, the country needs Europe for its economic development. And that means huge opportunities, making India an unavoidable partner.