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iSPIRT’s Official Response to the Draft Drone Rules 2021

This is our response to the Draft Drone Rules 2021 published by the Ministry of Civil Aviation on 14 July 2021.

Introduction

The potential commercial benefits that unmanned aviation can bring to an economy has been well established in several countries. A primary and immediate use-case for drones is in Geospatial data acquisition for various applications such as infrastructure planning, disaster management, resource mapping etc. In fact, as argued in the recently announced guidelines for Geospatial data, the availability of data and modern mapping technologies to Indian companies is crucial for achieving India’s policy aim of Atmanirbhar Bharat and the vision for a five trillion-dollar economy.

The current situation in India, however, is that the drone ecosystem is at a point of crisis where civilian operations are possible in theory, but extremely difficult in practice. Because the regulations in place are not possible to comply with, they have led to the creation of a black market. Illegally imported drones are not only significantly faster, cheaper and easier to fly but also far more easily acquired than attempting to go through the red tape of the previous regulations to acquire approved drones. Thus, rather than creating a system that incentivises legal use of drones, albeit imported, we’ve created a system that makes it near impossible for law-abiding citizens to follow the law of the land and discourages them from participating in the formal system. This not only compromises on the economic freedom of individuals and businesses but it also poses a great national security risk as evidenced in the recent spate of drone attacks. If we do not co-opt the good actors at the earliest, we are leaving our airspaces even more vulnerable to bad actors. This will also result in a failure to develop a world-class indigenous drone & counter-drone industry, thus not achieving our goals of an Atmanirbhar Bharat.

The Draft Drone Rules (henceforth the draft) have addressed some of these problems by radically simplifying and liberalising the administrative process but haven’t liberalised the flight operations. Unfortunately, closing only some of the gaps will not change the outcome. The draft rules leave open the same gaps that cause the black market to be preferred over the legal route.

With the three tenets of Ease-of-Business, Safety and Security in mind, it is our view that while the intention behind the draft rules is laudable, we feel that the following areas must be addressed to enable easy & safe drone operations in India:

  1. Remove Requirement of Certificate of Airworthiness: The draft mandates airworthiness certification for drones whereas, no appropriate standards have been developed, thus, making the mandate effectively impossible to comply with.
  2. Lack of Airspace segregation, zoning and altitude restrictions: The draft doesn’t mention any progressive action for permitting drone operations in controlled airspaces.
  3. Business confidentiality must be preserved: The prescribed rules for access to data is not in consonance with the Supreme Court Right to Privacy Judgement
  4. Lack of transparent Import Policy: This results in severe restrictions on the import of critical components thus disincentivizing indigenous development of drones in India
  5. Insurance & Training must be market-driven and not mandated: We must let market forces drive the setting up of specialised training schools & insurance products & once mature they may be mandated & accredited. This will result in the creation of higher quality services & a safer ecosystem.
  6. Fostering innovation and becoming Atmanirbhar:
    A. Encouraging R&D: by earmarking airspace for testing for future drones
    B. Encouraging the domestic drone manufacturing industry: through a system of incentives and disincentivizing imports should be inherent in the Drone Rules.
    C. Recognition of Hobby flying: Hobbyists are a vital part of the innovation ecosystem; however, they are not adequately recognised and legitimized
  7. Encouraging A Just Culture: Effective root cause analysis would encourage a safety-oriented approach to drone operations. Penal actions should be the last resort and dispute resolution should be the focus.
  8. Enabling Increased Safety & Security: NPNT and altitude restrictions would enhance safety and security manifold.
  9. No Clear Institutional Architecture: Like GSTN, NPCI, NHA, ISRO, and others a special purpose vehicle must be created to anchor the long-term success of Digital Sky in India based on an established concept of operations
  10. Lack of a Concept of Operations: Although drone categories have been defined, they have not been used adequately for incremental permissions, as in other countries; rather the draft appears to prefer a blank slate approach. The failure to adopt an incremental approach can arguably be considered as one of the root causes of the drone policy failures till date in India as regulations are being framed for too many varied considerations without adequate experience in any.
1. Airworthiness

In the long term, it is strategically crucial to India’s national interest to develop, own and promulgate standards, to serve as a vehicle for technology transfer and export. The mandatory requirement for certification of drone categories micro and up is the key to understanding why the draft does not really liberalise the drone industry. It would not be too out of place to state that the draft only creates the facade of liberalising drone operations – it is actually as much of a non-starter as the previous versions of regulations.

The standards for issuance of airworthiness certificates have not been specified yet the requirement has been stipulated as mandatory for all operations above nano category in the draft (pts 4-6). However, most of the current commercial operations are likely to happen in the micro and small categories. And for these categories, no standards have been specified by either EASA or FAA. EASA’s approach has been to let the manufacturer certify the drone-based on minimum equipment requirements. On the other hand, It is only fairly recently that the FAA has specified airworthiness criteria for BVLOS operations for a particular drone type of 40kg, and which it expanded to 10 drone types in November. Building standards is an onerous activity that necessitates a sizable number of drones having been tested and criteria derived therefrom. The only other recourse would be adopting standards published elsewhere, and as of date these are either absent (not being mandated in other countries) or actively being developed (cases noted earlier). Given the lack of international precedent, the stipulation for certificate of airworthiness in the draft needs to be eliminated, at least for micro and small category drones.

2. Airspace

One of the major concerns since the early days of policy formulation in India has been the definition of airspace and its control zones. All regulations till date, including the draft, require prior air traffic control approvals for drone operations in controlled zones. However, given that controlled airspace in India starts from the ground level for the controlled zones upto 30 nm around most airports (unlike many other countries where it starts at higher levels), it effectively means no drone operations are possible in the urban centres in the vicinity of airports in India. While the Green/Yellow/Red classification system is a starting point for Very Low-Level airspace classification, the draft does not move to enable the essential segregated airspace for drone operations up to an altitude limit of 500ft above ground level.

3. Business Confidentiality

In the domain of Privacy Law, India has taken significant strides to ensure protection of individual and commercial rights over data. The draft (pt 23.) in its current form seems to be out of alignment with this, allowing government and administrations access to potentially private and commercially sensitive information with carte blanche. The models of privacy adopted in other countries in unmanned aviation are often techno-legal in nature. It is recommended that DigitalSky/UTM-SP network data access be technically restricted to certain Stakeholder-Intent mappings: executing searches for Law Enforcement, audit for the DGCA, aviation safety investigations and for Air Traffic Control/ Management. This would need due elaboration in the detailed UTM policy complemented with a legal framework to penalise illegitimate data access.

4. Insurance

One constant hindrance to compliance is the requirement of liability transfer. While the principle of mitigating pilot and operator liability in this fashion is sound, the ground reality is that as of date, very few insurance products are available at reasonable prices. The reason behind it is that insurance companies have not been able to assess the risks of this nascent industry. Assuming the regulation is notified in its current form (pt 28), arguably affording a clean start at scaling up drone operations, we will continue in this vicious dependency loop in the absence of incentives to either end. Again, market forces will drive the development of this industry with customers driving the need for drone operators to obtain insurance for the respective operations. Therefore it is recommended that initially, insurance should not be mandated for any category or type of drone operations, and instead be driven by market or commercial necessity. Over a period of time, insurance may be mandated within the ecosystem.

Similar feedback has been shared by Insurers: “Though the regulator (aviation regulator) has made mandatory the third party insurance, the compensation to be on the lines of the Motor Vehicles Act is somewhat not in line with international practices,” the working group set up by Insurance Regulatory and Development Authority of India (IRDAI) said.”

5. Training

Currently, there’s a requirement of training with an authorized remote pilot training organization (RPTO) (pt 25), applicable for micro-commercial purposes and above (pt 24). While the intent is right, it should not be mandated at the initial stage. The reality is that there are very few RPTO’s that offer training and the cost of such training is often higher than the cost of the drones themselves, while quality is inconsistent. While the current draft rules try to address this problem, they do this with the assumption that liberalizing the requirements for establishing RPTO’s will solve this problem. While this incentivizes more RPTO’s to be established, it still does not incentivize quality and leaves in place the same bureaucratic process for registration. This has been the experience of the ecosystem so far. While it is certainly reasonable to expect that remote pilots should receive training, the goal of better informed and equipped pilotry is better achieved, at this time, if left to manufacturers and market participants to drive it.

There are currently two types of training – Type training and Airspace training. Type training can be driven by manufacturers in the early days, as is the current practice, and Airspace training can be achieved through an online quiz, based on a Concept of Operations. It is our view that customers of drones will have a natural incentive to seek training for their pilots, thereby creating the market need for better quality training schools. Furthermore, as manufacturers establish higher levels of standardization and commoditization, they will partner with training schools directly to ensure consistent quality. In the upcoming years, as the drone ecosystem grows more mature, it will become reasonable to revisit the need for mandating pilot training at approved training schools, and DGCA may create a program that accredits the various RPTOs.

6. Fostering innovation and becoming Atmanirbhar
6A. R&D

To encourage institutional research and development further, we recommend authorised R&D zones be designated, particularly where low population and large areas (like deserts, etc) are available, some key areas of experimentation being long range and logistics operations which might require exemptions from certain compliance requirements.

6B. Import policy

Rather than simply delegating the entire import policy to DGFT (pt 8), there needs to be a clear statement of the import guidelines in the rules based on the following principles in the current draft:

  1. No barriers for the importation of components and intermediary goods for local assembly, value addition and R&D activities
  2. Disincentivising import of finished drone products, both pre-assembled and Completely Knocked Down. Possible avenues could be imposition of special import duty as part of well-considered policy of “infant industry protection”, a policy used successfully in the recent past in South Korea and is considered a part of the policy of Atmanirbhar Bharat by the Principal Economic Advisor to the PM, Sanjeev Sanyal.
  3. Incentivising investments in the indigenous manufacturing industry by aligning public drone procurement with the Defence Acquisition Procedure (2020) and supplemented by targeted government programs such as PLI schemes and local component requirements, which will help realise the PM’s vision of ‘Make in India’ and “Atmanirbhar Bharat’.
  4. In the long term, developing incentives for assemblers to embed themselves into global value chains and start moving up the value chain by transitioning to local manufacturing and higher value addition in India, to be in line with the PM’s vision of Atmanirbhar Bharat. Some suggestions here would be prioritisation for locally manufactured drones for government contracts, shorter registration validity for non-locally manufactured drones etc.
6C. Hobby Fliers

While research and development within the confines of institutions is often encumbered by processes and resource availability, hobby and model flying has enjoyed a long history in manned aviation as a key type of activity where a large amount of innovation happens. Hobby clubs such as The Homebrew Computer Club, of which Steve Jobs and Wozniak were members, and NavLab at Carnegie Mellon University are instances out of which successful industries have taken off. Far from enabling hobby or recreational fliers, they are not even addressed in the draft, which would only limit indigenous technology development. Legally speaking, it would be bad in law to ban hobby flying activities considering hobby fliers enjoy privilege under the grandfathering rights. A solution could lie in recognising hobbyists & establishing hobby flying green zones which may be located particularly where low population and large areas are available. Alternatively, institution-based hobby flying clubs could be authorised with the mandate to regulate the drone use of members while ensuring compliance with national regulations. The responsibility of ensuring safe flying would rest with these registered hobby clubs as is the case in Europe and USA.

7. Encouraging A Just Culture

Implementation is the key to the success of any policy. One of the key factors in encouraging voluntary compliance is an effective means of rewarding the compliant actors while suitably penalising any intentional or harmful violations. Therefore, arguably, an important step could be to build such rewards and punishments. In the context of aviation safety and security, the key lies in effective investigation of any violation while fostering a non-punitive culture. Effective investigations enable suitable corrective actions whilst minimal penal actions encourage voluntary reporting of infringements and potential safety concerns. ICAO encourages a just and non-punitive culture to enhance safety. Penal actions, if considered essential, should be initiated only after due opportunity and should have no criminal penalties except for deliberate acts of violence or acts harming India’s national security. However, considering the fallout from any unintentional accident as well, there should be adequate means for dispute resolution including adjudication.

8. Enabling Increased Safety & Security

The draft while taking a blank slate approach clearly aims to reduce hurdles in getting drones flying. However, we argue that lack of clarity on several issues or not recognising certain ground realities actually reduces the chance of achieving this. We list the details of these issues in the subsections below.

Points 13-14 acknowledge the existence of non-NPNT (No Permission No Takeoff) compliant drones and makes airworthiness the sole criteria for legally flying, provided such drone models are certified by QCI and are imported before the end of this year and registered with DigitalSky. This is a great step forward, however, keeping in mind the win-for-security that NPNT provides through trusted permissioning and logs, it is recommended that NPNT be phased back in with an adoption period of 6 months from the date of notification.

To bring back a semblance of safety to the thought process and keeping in mind that manned aviation would be operating above 500 ft except for takeoff, landing and emergencies, it would be pragmatic to enforce altitude fencing in addition to two-dimensional fencing going forward. Permissive regulation has the effect of encouraging good and bad actors alike, and this measure ensures the correct footing for the looming problem of interaction between manned and unmanned traffic management systems, where risk of mid-air collisions may be brought back within acceptable limits.

9. Institutional Architecture

The draft indicates that institutions such as QCI and Drone Promotion Council (DPC), along with the Central Government, would be authorised to specify various standards and requirements. However, no details have been specified on the means for notification of such standards as in the case of the Director-General (Civil Aviation) having the powers to specify standards in the case of manned aircraft. Such enabling provisions are essential to be factored in the policy so as to minimise constraints in the operationalisation of regulations e.g. as was observed in the initial operationalisation of CAR Section 3 Series X Part I which did not have a suitable enabling provision in the Aircraft Rules.

Further, effective implementation demands that responsibility for implementation be accompanied by the authority to lay down regulations which is sadly missed out in the draft. In the instant draft, the authority to lay down standards rests with QCI/ DPC but the responsibility for implementation rests with DGCA which creates a very likely situation wherein the DGCA may not find adequate motivation or clarity for the implementation of policy/ rules stipulated by QCI/ DPC.

It is not clear that setting up a DPC would advance policy-making and be able to effect the changes needed in the coming years to accelerate unmanned aviation without compromising safety and security. We argue that for effective policy and making a thriving drone ecosystem, Digital Sky is a unique and vital piece of digital infrastructure that needs to be developed and nurtured. In the domain of tech-driven industries, the track record of Special Purpose Vehicles (SPV) is encouraging in India, the NSDL, NPCI and GSTN being shining examples.

The field of unmanned aviation has its own technical barriers to policy making. Its fast-evolving nature makes it extremely difficult for regulators who might not have enough domain knowledge to balance the risks and benefits to a pro-startup economy such as that of India. With the context formed through the course of this paper, it is our view that an SPV with a charter that would encompass development of a concept of operations, future standards, policy, promotion and industry feedback, would be the best step forward. A key example of success to model on would be that of ISRO, which is overseen by the Prime Minister. This would remove inter-ministerial dependencies by overburdening the existing entrenched institutions.

10. Lack of a Concept of Operations

The difference in thought processes behind this draft and the rules notified on 12th March 2021 is significant and is indicative of the large gap between security-first and an efficiency-first mindsets; keeping in mind that mature policymaking would balance the three tenets. It also points to the lack of a common picture of how a drone ecosystem could realistically evolve in terms of technology capability and market capacity while keeping balance with safety and security. The evolving nature of unmanned aviation requires an incremental risk-based roadmap; the varied interests of its many stakeholders makes reaching consensus on key issues a multi-year effort. To this end, taking inspiration from various sources and focusing on the harsh realities peculiar to India, we are in the process of drafting a Concept of Operations for India.

Concluding remarks

With the goal of raising a vibrant Indian drone ecosystem, we recommend the following actionable steps be taken by policy makers:

Immediate Term – Enabling The Ecosystem

Changes to the draft

  1. Airworthiness Compliance requirements for all drone categories be removed till such standards are published
  2. Hobby flying and R&D Green zones be designated in low risk areas
  3. Guiding principles for Import policy formulation be laid out to incentivise import drone parts and de-incentivise drone models
  4. A privacy model be applied to DigitalSky ecosystem data access that technically restricts abuse while laying a foundation for a legal framework for penalties
  5. Insurance be not mandated for any drone categories
  6. The provision for setting up the Drone Promotion Council be subsumed by a SPV as discussed below
Next six months – Setting the ecosystem up for long-term success

A) NPNT be re-notified as a bedrock requirement for security

B) An SPV outside of entrenched institutions be set up with a charter to

1. Envision India’s concept of aviation operations for the next few decades

2. Formulate Future Policy and institutionalize some aspects of key enablers of operations currently missing in India:

  • Development / update of ConOps
  • Monitor / develop / customize International standards
  • Establish Standards for Airworthiness and Flight Training

3. Develop and operationalise DigitalSky in an open, collaborative fashion with oversight and technical governance mechanisms

4. Redefine control zones and segregate airspace for drone operations

5. Establish an advisory committee with equitable membership of stakeholders

6. Address all charter items of the Drone Promotion Council

Key Authors

1) Amit Garg – [email protected]

2) George Thomas – [email protected]

3) Hrishikesh Ballal – [email protected]

4) Manish Shukla – [email protected]

5) Siddharth Ravikumar – [email protected]

6) Sayandeep Purkayasth – [email protected]

7) Siddharth Shetty – [email protected]

8) Tanuj Bhojwani – [email protected]

About iSPIRT Foundation

iSPIRT (Indian Software Product Industry Round Table) is a technology think tank run by passionate volunteers for the Indian Software Product Industry. Our mission is to build a healthy, globally competitive and sustainable product industry in India.

For more, please visit www.ispirt.in or write to [email protected]

iSPIRT’s Official Response to the Draft Drone Rules 2021 from ProductNation/iSPIRT

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Can digital currencies and crypto investors help close India’s SME financing gap?

The internet connected the average Indian to millions of sources of information. Could crypto protocols connect Indians to millions of sources of capital?

To achieve its goal of a five trillion dollar economy by 2025, India needs to close an enormous financing gap for its small and medium-size enterprises (SMEs). It already has important assets with which to attract global capital: the youth of its population, the energy of its tech sector, the growth of its internet connectivity, and the rising acceptance of so-called informational collateral in lieu of traditional physical collateral. But what hasn’t yet been done is to integrate these assets into the new multi-trillion dollar cryptoeconomy, which may have the most risk-tolerant, internationally oriented, growth-seeking pool of investors in the world.

In this piece we begin by reviewing India’s need for SME and startup capital. We then tick through India’s existing assets, with particular focus on informational collateral, which combines the previously separate concepts of due diligence and physical collateral into an internet-friendly financing package. Finally, we discuss why global crypto investors could help meet India’s capital needs.

India’s need for SME and startup financing

India is home to more than 60 million businesses, 10 million of which have unique GST registration numbers, most of them SMEs. However, of the one trillion USD worth of total commercial lending exposure of the banking system, only ~25% of it is provided to SMEs, which are considered less creditworthy than larger corporates or multinationals. This has resulted in a financing gap estimated to be between 250-500 billion USD, where meritorious businesses without national profiles aren’t able to access the capital they need to finance their growth. India’s next trillion in GDP growth depends upon solving this problem, but the incumbent financial system may not have the resources to fix it alone. Despite ever-increasing bank branches, India’s legacy financial system is still slow, costly, and unwieldy for borrowers— in sharp contrast to the databases, online KYC systems and intelligent lending apps of new-age fintech companies. And in addition to this high cost of capital for MSMEs, India also has a low baseline level of financial inclusion.

The baseline issue is being partially addressed with low-frill Jan Dhan accounts, which are providing partial banking support for millions of previously excluded individuals. Many of these Jan Dhan accounts are held by small businesses, entrepreneurs, students and self-employed people in rural India, the same folks who are running India’s SMEs. But these accounts have only inflow data, with outflows typically in cash. Even though cash still plays a big role in the self-organized and informal sectors, it’s not easy to provide business-related financing in cash. The so-called JAM trinity (Jan Dhan accounts, Aadhaar digital identities, and Mobile phones) offers a partial solution for this under-banked population, but it only supports what we might think of as consumer-grade applications like basic peer-to-peer payments and individual savings accounts. Access to capital sufficient to finance a business — a true measure of financial inclusion — is still not yet present for these low-income, mostly feature-phone possessing groups.

On the other end of the spectrum from rural SMEs are India’s tech startups. Over the last decade, India has broken into the ranks of global technology and is now the #3 generator of unicorns in the world. Supportive governmental policies, combined with a young, creative, and aspirational workforce has helped reimagine large swathes of the economy including diverse industries such as e-commerce, logistics, SAAS, education, food, healthcare etc. This rise has attracted global equity and loan-funds that could in turn help many start-ups become world beating players in their respective domains. But the startup sector is just as hungry for capital as the rural SMEs, and India’s startup economy is still somewhat disconnected from global venture capitalists and financial markets.

India’s assets: youth, growth, connectivity, and informational collateral

India does have assets with which to close the capital gap. It has a youthful population. It has a fast-growing economy, even given the setbacks of COVID-19. It has an enormous population of hundreds of millions of new internet users. And it has something new, which is the possibility of informational collateral as a sort of combination of traditional concepts of due diligence and physical collateral.

Specifically, the SME funding gap is most pressing for the Indian cash-flow businesses that don’t have the physical assets to take out loans, which are the mainstay of the current, hard-collateral-backed credit system.

One alternative is to use trustworthy digital records to ascertain whether a business is worthy of credit or equity investment. India’s Goods and Services Tax (GST) helps to address this by generating invoice and payment data in a format suitable for credit underwriting and risk analysis. The GST data also enables a small enterprise in a large value system to provide data and visibility across the supply chain; for example, one can track the progress of parts from a small parts supplier to an auto component manufacturer to a large passenger car maker all the way through to distributors, sub-dealers, and retail sales.

The digital version of an SME’s sales and purchase invoices ledger thus amounts to informational collateral on both the company and the larger ecosystem within which it sits, that could become the basis for extending credit, as an alternative to the hard asset or collateral-based financial system. This is similar to how Square Capital and Stripe Capital already function in the West.

In addition to credit-based financing, the trustworthy records furnished by GST’s informational collateral can also support equity or quasi-equity financing, to support growth without increasing debt. These might take the form of direct equity investments in small businesses, or even personal micro-equity investments in individual consultants or students. 

India’s innovation: use new pools of crypto capital to address long-standing financing needs

So, we understand that (a) Indian SMEs need capital, and that (b) IndiaStack’s UPI and Aadhaar can help GST generate informational collateral for potential investors and lenders.


Now the question arises: what class of investors is most willing to use this newfangled type of informational collateral to invest in potentially high-risk businesses outside of the proven venues of America, Europe, East Asia and the large Indian enterprises? Who are the most risk-tolerant, international, forward-looking, class of investors in the world — willing to risk millions of dollars purely on the basis of internet diligence alone?

It may turn out to be the new class of wealthy, globally-minded crypto investors. After all, the 10-year old cryptoeconomy is now worth trillions of dollars, there are more than a hundred million crypto holders around the world, and there are at least fifty crypto protocols valued over one billion dollars, a “unicoin” analog to the traditional tech unicorn. While still small in comparison to global capital markets, a sector worth $2T that is growing at more than 100% per annum could become a much larger piece of the global financial puzzle in short order. This is a new source of risk-tolerant digital capital that could flow into India to help close the SME financing gap, if we can make it an attractive proposition for the global investor.

Specifically, India could offer a viable path to deploy this new crypto wealth in a controlled manner, while solving for SME financial inclusion. Inflows of cryptocurrencies from KYC-ed investors through approved Indian and global exchanges can potentially be allowed into India for the purposes of enhancing SME access to low-cost global capital. GST-registered companies could, for instance, receive capital against their issued e-invoices and other information collateral in special accounts opened via a controlled conduit such as GIFT city, which is one of India’s favored bridges to international markets. The companies benefiting will need to explicitly consent to sharing their information and receiving funds into a new account at system-level while capturing cash flows against invoices for repayment. Inflows of global crypto-capital into Indian SMEs could also enable the rest of the credit system to migrate to informational collateral-based lending. And the special account could eventually be ported to a wallet backed by a national digital currency, such as the proposed digital rupee.

For more detail on this possibility, we invite your attention to Balaji S. Srinivasan’s companion piece on the subject, where he proposes to Add Crypto To IndiaStack. Balaji makes the case for crypto-powered extension of IndiaStack, which broadens IndiaStack from its current mostly domestic remit into an international platform for attracting capital from around the world. He describes several case studies by which the emerging world of decentralized finance or “defi” could help enrich the Indian economy, without competing with the digital rupee. For example, Indian startups could benefit from crypto crowdfunding, Indian SMEs as discussed could access global defi lending pools, and Indian students might even be funded with the emerging concept of personal tokens, like an equity-based version of microfinance. As the former CTO of  Coinbase, the $100B crypto goliath, and a former General Partner at Andreessen Horowitz, the $16B venture capital firm, Balaji’s proposals have technical and social support from the very class of investors we’d seek to attract. At least insofar as they relate to the issue of plugging the SME financing gap, we believe they deserve serious consideration by policymakers in India. 

In short, India has a unique opportunity to close the SME financing gap by attracting the new class of global crypto investors, by using everything the IndiaStack team has helped build over the last decade — particularly UPI, Aadhaar, GST, and the informational collateral they generate —  to help connect the trillion-dollar cryptoeconomy to capital-hungry Indian entrepreneurs.

The blog post is co-authored by Sanjay Phadke, Krishna V Iyer, Pankaj Gupta, Sanjay Jain, Sharad Sharma and Siddharth Shetty.

For any further queries, please write to [email protected]

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IGP (Innovative Growth Platform): The Capital Enabler

Two Cs are extremely critical for startups: Capital and Customers. In India, with a population of 1.3B, customers for B2C or B2B2C startups is not an issue. For B2B startups, although the market in India is promising, global markets are still very important.  Capital on the other hand is trickier. The total capital raised by startups India from 2010-2020 is around $100B. In the same period, startups in China have raised 4x and startups in the US have raised 10x the capital raised by startups in India. India needs to have a stronger mechanism to enable more Capital. There is a need to increase Capital availability in India.

IGP platform proposed by SEBI is a very refreshing initiative that aims to address the Capital issue. It provides another great avenue for startups looking to raise series B and beyond. This platform can double the available capital over the next 5 years. It addresses a key pain point of Capital availability for startups raising between INR 70 to INR 200 Cr. There is a chasm in this space- there are early-stage VC funds and there are PE funds for growth companies. However, there is not enough growth stage VC funds in India to fill this gap. IGP has the potential to be the platform to bridge this void.

The design of IGP has been very thoughtful with the key focus is on technology startups. The precursor to IGP was ITP (Institutional Trading Platform). Due to various reasons including the maturity of the startup ecosystem, the response to this platform was tepid. IGP addresses a few key pitfalls of ITP.

IGP restricts the listing to technology-focused companies with a proven Product-Market Fit and entering its growth phase. The revenue of the companies listing on this platform is expected to exceed INR 50 Cr. This will greatly help in mitigating the risk of listing by ensuring a good understanding of Product-Market Fit beforehand.

The governance issues are well balanced – protects the investor interests but at the same time provides enough flexibility for the founders to have control over strategy and execution. The companies listing on this platform cannot be burdened with the same rules of the public markets as they need to be very nimble. A balance between taking risks and moving fast with financial discipline as against governance practices such as quarterly reporting and stability is advised.

As in the case of investments in Alternative Investment Fund, the platform is selective about its investors. The companies listing on this platform need to operate as startups and not as mature companies. The risks are much greater with these companies and hence it is very critical to have investors who understand these risks and who can understand these nuances. 

M&As have been a key hurdle for startups in India. This is one of the key reasons for companies opting to flip. The platform is designed to simplify the process of M&As, post-listing. Simplifying the M&A process encourages corporates and PEs to participate on the platform. However, this spirit should be maintained in the implementation of the platform as well.  This is one of the critical success factors for the platform.

For the Indian startup ecosystem to become one of the major contributors to the economy, key policy changes are needed. IGP is one such platform that has the promise to increase capital availability significantly.  IGP has the added advantage of enabling exits for early stage investors. This increases the liquidity in the market that will further spur the startup ecosystem- a much needed virtuous cycle.

NASDAQ encouraged and enabled technology startups to list because of its adaptability and easier listing and governance guidelines. This accelerated technology startups in the US. IGP has the potential to be that platform in India. India can build products for the world and has the potential to be startup capital, but it needs a perfect storm of- Capital, Liquidity, Policy, Customers, and Entrepreneurs. IGP certainly has the promise to address the Capital and Liquidity aspects. Most importantly it enables Indian startups to stay in India!

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Announcing Healthathon 2020

  1. Context
  2. Format
  3. Ideas & Themes
  4. Speakers & Judges
  5. Event Calendar
  6. Sponsors & Partners
  7. Prizes
  8. Registration Details

Context

Those of you who have been following this blog would know that as we speak, India is rolling out a piece of public digital infrastructure known as the National Health Stack (NHS). This project, which is being put into place to futurize the nation’s health technology ecosystem, has exciting and important ramifications for the entire country.

The ground reality in India is that the doctor:patient ratio in the country is low and inequitably distributed. Moreover, the digitization of health data is minimal and the availability of care facilities is sporadic. Taken together, these factors contribute to a relatively subpar standard of public health, which in turn affects happiness and productivity. In a country like India in which each percentage point of productivity and growth corresponds to millions of people moving out of poverty, it is doubly important to bring up the standard of public health as quickly as possible.

One of the components of the NHS which can do this is the Personal Health Records (PHR) system. This system establishes a standardized interface for storing, managing, and sharing medical data, all with user consent. If users can assert greater control over their own health data, they can derive more utility, convenience, and value. This might take expression through easier access to teleconsultations, or perhaps through a better consumer interface to canvas second opinions about some test reports or medical images. The PHR could also allow for individuals to securely and voluntarily contribute their anonymized healthcare data towards data sets used to map and manage public health trends over time.

The possibilities for the PHR system are many, but it will require a collaboration between the public sector, private sector, and medical community to make the most of this technology. For this reason, we are excited to announce the launch of the Healthathon 2020.

This four-week long virtual conference aims to bring together different stakeholders to work on solutions and products stemming from the PHR system. One key group of stakeholders is the public sector bodies like the NHA and MoHFW,  without whose support this initiative can never reach all of the 1.3 billion Indians. The second group is the private sector players such as health tech companies, entrepreneurs, private equity investors, and technology providers – without their creativity, capital, and execution capacity, it will be hard to make any project sustainable or scalable. The last stakeholder group is the medical community of doctors, hospitals, labs, and others; it is clear that without the buy-in and support of this group, no technology intervention can pinpoint or solve the most pressing problems. 

Format

The Healthathon 2020 will feature two competitions: the Hackathon and Ideathon. The Ideathon is a 2-week long event aimed at students, medical practitioners, and non-technical parties. During this event, teams will compete to come up with the best business plans and product ideas around the PHR system. 

In contrast to the Ideathon, the Hackathon is a 4-week long event aimed at startups, corporates, entrepreneurs, developers, and health tech enthusiasts. As part of the Hackathon, teams of developers will work on building projects on top of the new PHR APIs provided by our sandbox providers. 

Participants in both competitions will receive the mentorship, guidance, and resources they need to put out the best possible submissions. Panels of judges will then award prize money to the best teams from each competition. 

In addition to the Ideathon and Hackathon, there will also be a slew of masterclasses, panel discussions, and other events. These sessions are intended to generate engagement, awareness, and innovation around the PHR system, and they will all be recorded and open to the public. 

We hope that the event will draw in participants from different fields and backgrounds, united in the purpose of leveraging technology to make India healthier, more inclusive, and more efficient.

Hackathon & Ideathon Themes

Some of the themes that teams could choose to work on for the two competitions could include:

End Use Apps:
  • Apps that can read healthcare reports and provide some additional context or insight using AI
  • Platforms to help create real time monitoring and alerts for doctors using their patient’s wearable device data
  • Doctor-facing apps that help unify and analyze patient’s health records across different data sources
  • Health lockers for secure and convenient long term storage of health data
  • Matching systems that pair patients with the right kind of care provider given a medical report or treatment history
  • Anonymised health trends/dashboards for epidemiological studies
  • Preventive care applications that promote healthy living by tracking health markers and gamifying healthy living
  • Applications that provide and track continued & personalized care plans for chronic disease patients (eg. cancer care) 
  • New insurance products, possibly featuring fraud prevention and auto-adjudication based on PHR 
Consent Management:
  • Apps that help the user discover, link, and share access to their medical data
  • Building assisted and accessible consent flows for low-literacy or non-smartphone users
  • Systems to delegate patient consent in case of emergencies or other extenuating circumstances
  • Consent lifecycle management systems ie. generating, storing, revoking, and  safeguarding consent
  • Easy and informed consent experiences eg. “scan to share data”, “understand what you are consenting to”
Middleware and Utilities:
  • Secure data storage and management facilities
  • Tools to help medical institutions adopt and use the PHR system
  • AI utilities to decipher and parse medical data
  • Developer tools to simplify and abstract the workflows for PHR development 

Speakers and Judges

Here is a list of some of the speakers and judges for the event:

  • Kiran Mazumdar Shaw, Executive Chairperson, Biocon
  • Dr. C. S. Pramesh, Convener, National Cancer Grid
  • Sanjeev Srinivasan, CEO, Bharti Axa General Insurance
  • Arvind Sivaramakrishnan, Group CIO, Apollo Hospitals
  • Nachiket Mor, Commissioner, Lancet Committee on Reimagining Healthcare in India
  • Shashank ND, CEO, Practo
  • Gaurav Agarwal, CTO, 1mg
  • Dr. Ajay Bakshi, CEO, Buddhimed
  • Dr. Aditya Daftary, Radiologist, Innovision
  • Kiran Anandampillai, Technology Advisor, NHA
  • Dharmil Sheth, CEO, PharmEasy
  • Pankaj Sahni, CEO, Medanta
  • Veneeth Purushotaman, Group CIO, Aster Healthcare
  • Yashish Dahiya, CEO, Policybazaar
  • Abhimanyu Bhosale, CEO, LiveHealth
  • Prabhdeep Singh, CEO, Stanplus
  • Rajat Agarwal, Managing Director, Matrix Partners India
  • Tarun Davda, Managing Director, Matrix Partners India

Prospective Talks and Masterclasses

  • “An overview of the NHS architecture and objectives”
  • “A deepdive into the PHR APIs”
  • “Medical imaging data: Changing the Status Quo”
  • “Using delegated consent to bolster efficacy in emergency care”
  • “Technology challenges and opportunities for hospitals and labs”
  • “Health Tech in India: successes and areas of improvement”

Sponsors and Partners

Principal Sponsors
  • Matrix India Partners
  • Swasth Alliance
Knowledge Partners
  • CHIME India
  • HIMSS India Chapter
Sandbox Providers
  • National Health Authority
  • LiveHealth
Organization Partner:
  • Devfolio

Cash Prizes

Six teams in the hackathon will be eligible to win prizes of Rs. 50,000 each

Five teams in the ideathon will be eligible to win prizes of Rs. 20,000 each.

Dates, Registration, and Outreach

Registration Link (for both events): https://healthathon.devfolio.co

Registrations Close (for both events) : 22nd October, 2020

Opening Ceremony: 24th October, 2020

Ideathon submissions: November 6th, 2020

Hackathon submissions: November 19th, 2020

Closing Ceremony: 22nd November

Outreach: [email protected] (Email subject: “Healthathon”)

Blog Post Image Source: SelectInsureGroup.com

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Technical Standards of the Personal Health Records (PHR) component of the National Health Stack

We have an exciting announcement for you all today!

We are publishing a draft of the technical standards of the Personal Health Records (PHR) component of the National Health Stack (NHS)!

As a refresher, these standards govern the consented sharing of health information between Health Information Providers (HIPs) – like hospitals, pathology labs, and clinics –  and Health Information Users (HIUs) like pharmacies, medical consultants, doctors, and so on. The user’s consent to share their health data is issued via a new entity called a Health Data Consent Manager (HDCM). 

This is a big deal. The problem today is that the electronic health records listed in one app or ecosystem are not easily portable to other systems. There is no common standard that can be used to discover, share, and authenticate data between different networks or ecosystems. This means that the electronic medical records generated by users end up being confined to many different isolated silos, which can result in frustrating and complex experiences for patients wishing to manage data lying across different providers. 

With the PHR system, a user is able to generate a longitudinal view of their health data across providers. The interoperability and security of the PHR architecture allows users to securely discover, share, and manage their health data in a safe, convenient, and universally acceptable manner. For instance, a user could use a HDCM to discover their account at one hospital or diagnostic lab, and then select certain electronic reports to share with a doctor from another hospital or clinic. The flow of data would be safe, and the user would have granular control over who can access their data and for how long. Here is a small demo of the PHR system in action. 

The standards document released today offers a high level description of the architecture and flows that make this possible. You can find version 0.5 of the document embedded below.

Health Information Flows Technical Standards – V 0.5 from ProductNation/iSPIRT.

All the exciting progress we are making on this new digital public infrastructure for healthcare is all thanks to you, the community. We are grateful for your support and look forward to engaging with you further!

The blogpost is co-authored by our volunteers Aaryaman Vir, Saurabh Panjwani and Graphics by Dharmesh BA.

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Covid19 Crisis: Sharpen the Saw with Marginal Costing

When reality changes, it’s important for the firms to acknowledge and adjust to the new situation. This is the time to remember the mantra ‘Revenue is Vanity, Profit is Sanity, Cash is Reality’.

The Covid-19 crisis is much written about, debated and analyzed. If there is one thing everyone can agree about on the future, it is that there is no spoiler out there for this suspense. The fact is that no one knows the eventual shape of the business environment after the pandemic ends. 

When revenue momentum slows down or even hits a wall as it is happening in the current scenario, costs take centre stage even as every dollar of revenue becomes even more valuable for the firms. So, enterprises need an arsenal of strategic weapons to operate and survive, maybe even thrive, in this period of dramatic uncertainty. The same old-same old, push-push methods will not move the needle of performance. 

As an entrepreneur and CEO, I have always found the theory of Marginal Costing (MC) to be practically powerful over the years. Let me tell you why.

At the best of times, MC is a useful tool for strategic and transactional decision making. In a downturn or a crisis, it is vital for entrepreneurs and business leaders to look at their businesses through the MC filter to uncover actionable insights.

Using MC-based pricing, the firm can retain valuable clients, win new deals against the competition, increase market share in a shrinking market and enhance goodwill by demonstrating dynamism in downmarket.

As the firm continues to price its products based on MC, the idea is to continually attempt to increase the price to cover the fixed costs and get above the Break-Even Point (BEP) to profitability. However, this happens opportunistically and with an improving environment. 

Pricing for outcomes is more critical during these times and playing around with your costing models can go a long way in determining the most optimal outcome-based pricing approaches. 

Steps to Get the Best Out of MC:

1. Determine bare minimum Operating level

Estimate the bare minimum operating level or fixed costs you will need to bear to stay afloat and capitalize on revenue opportunities. This is the BEP of the business. This estimate can include:

  • Facilities, machines, materials, people and overheads. 
  • All R&D expenses required to support product development
  • Necessary support staff for deployment and maintenance of products/services.

2.  Ascertain the variable costs

Identify the incremental costs involved in delivering your business solutions to fulfil contractual and reputational expectations to both existing and new customers. These costs are the variable costs in your business model. Try to maximize capacity to flexibly hire, partner or rent variable costs as needed, based on incremental revenues.

3. Distinguish between fixed costs and transactional variable costs.

Take your fixed costs at your operating level as costs for a full P&L period. Let’s say, the fiscal year. Take your variable costs as what it takes to fulfil the Revenues that you can book. Make sure you only take the direct, variable costs. Note that if Revenues less Variable costs to fulfil the revenues is zero, then you are operating at MC.

4. Sweat the IP already created.

For every rupee or dollar you earn over and above the MC, you are now contributing to absorbing the fixed costs. Do bear in mind that all historical costs of building the IP are ‘sunk’, typically to be amortized over a reasonable period. Hence, it doesn’t figure in the current level of fixed costs. The idea now is to ‘sweat’ the IP already created. 

5. Peg the base price at marginal cost.

Start at the level of marginal cost, not fully absorbed costs. Then, try and increase the price to absorb more and more of the fixed costs. The goal is to get to BEP and beyond during the full P&L period. At the deal level, be wary of pricing based on the fully-loaded costs (variable and fixed costs, direct and indirect).

6. Close the deal to maximize cash flows

Price your product at marginal cost + whatever the client or market will bear to get the maximum possible advance or time-linked payments. This is a simple exchange of cash for margins wherever possible and an effective way to maximize the cash flows. Many clients, especially the larger ones, worry more about budgets than cash flow. 

Let’s look at a high-level illustration. 

Assume a software product company providing a learning and development platform to the enterprise marketplace. Let’s call this company Elldee.

Elldee has a SaaS business model that works well in terms of annuity revenues, steady cash flows and scale. Clients prefer the pay-as-you-model representing OpEx rather than CapEx. Investors love the SaaS space and have funded the company based on the future expectations of rapid scale and profitability.

However, given the ongoing crisis condition, Elldee needs to take a good re-look at the licensing model. By applying MC filters, it may make more market and financial sense to maximize upfront cash by doing a longer-term `licensing’ deal for the software-as-a-service at even a deep discount, with back-ended increments in price. The variable costs of on-boarding a client are similar to a SaaS deal yet the revenue converts to contribution to absorb fixed costs quickly to help survival and longer runway for future growth. So the client pays lesser than what they would have for a three year SaaS deal but Elldee is able to sweat its IP while maximizing cash flows.

Elldee can even move its existing SaaS clients to this model to capture more revenues upfront by being aware of MC and figuring out the right pricing models to get to the BEP of the business or product. Outcome-based pricing can also be designed to deliver margins beyond the MC, contributing to the absorption of fixed costs more aggressively.

Elldee is now in a position to address different types of markets, clients and alliances. It can calibrate higher and higher margins as the environment improves and client relationships deepen. Over the next two years, Elldee would come out stronger with a more loyal client base, higher market share and a growth trajectory aligned with its pre-Covid19 business plans.

Yes, this is a simplified example but many variations to the theme can be crafted, based on a firm’s unique context.

Remember that a strong tide lifts all boats but a downturn separates the men from the boys. Marginal costing techniques, when customized for sector-specific operating models, delivers a competitive edge at a time from which will emerge stronger winners and weaker losers. Be a winner.

About the contributor: Sam Iyengar is a PE investor, mentor and advisor focused on Innovation and Impact. He can be reached at [email protected].

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NHS Open House Discussion #4: Doctor Registry, Enrollment APIs And PHR

On 13th June, iSPIRT hosted the fourth open house discussion on the National Health Stack (NHS). For anybody unfamiliar with the NHS, here are some introductory blog posts and videos.

In the session, our volunteer Vikram Srinivasan deep dived into the Enrollment APIs of the electronic doctor registry. These APIs are called when a new doctor is being added to the registry, or when a doctor’s information is being uploaded. 

Vikram also spoke about the attestation APIs, which come into play when an attesting institution (such as a state medical council, medical college, or hospital) confirms some data about a doctor. This is crucially important for building trust in the registry and preventing the proliferation of false profiles. With the release of these enrolment and attestation APIs, all the APIs pertaining to the electronic doctor registry are now available here.

After Vikram’s presentation, he and our other volunteer Siddharth Shetty answered some technical questions submitted by the community. Here are some of the questions they fielded:

  • Doctors have multiple identities (from different medical councils), how are these unique IDs handled by the electronic registry?
  • Can anybody access the doctor information in the registry, including phone numbers and photographs of doctors?
  • Who can healthcare companies partner with in the Health Stack Ecosystem?
  • How does the federated network architecture of the PHR system deal with downtimes, incorrect data, and other failure? Is this architecture scalable for a system with 1000s of participants?

As always, these were great questions. You can watch Sid and Vikram answer these questions and walk through their presentations below. Please keep the questions coming by sending them in through this form: https://bit.ly/NHS-QAForm.

If you would like to get involved with Health Stack, we encourage you to watch the recordings of the previous Health Stack open house discussions before reaching out.

Furthermore, if you are interested in the Health Stack and wish to build on top of it or contribute to the working groups being formed, you should reach out to [email protected]

Please note: The fifth open house on PHR Implementation was previously planned for 27th June. This has been postponed to 11:30 am on 4th July due to unavoidable circumstances.

To confirm your participation, continue to register on this form.

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iSPIRT Open House Discussion on National Health Stack [Virtual]

The National Health Stack is a set of foundational building blocks that will be built as shared digital infrastructure, usable by both public sector and private sector players. 

Healthcare delivery in India faces multiple challenges today. The doctor-patient ratio in the country is extremely poor, a problem that is exacerbated by the uneven distribution of doctors in certain states and districts. Insurance penetration in India remains low, leading to out-of-pocket expenses of over 80% (something that is being addressed by the Ayushman Bharat program). Additionally, the current view on healthcare amongst citizens as well as policymakers is largely around curative care.

Preventive care, which is equally important for the health of individuals, is generally overlooked. The leapfrog we envision is that of public, precision healthcare. This means that not only would every citizen have access to affordable healthcare, but the care delivered would be holistic (as opposed to symptomatic) and preventive (and not just curative) in nature. This will require a complete redesign of operations, regulations, and incentives – a transformation that, we believe, can be enabled by the Health Stack.

iSPIRT Foundation in partnership with Swasth Alliance is hosting an Open House Discussion on the following building blocks of the Health Stack

  • Doctor Registry
    • The ability for doctors to digitally authenticate themselves and share their electronic credentials with a third-party application such as a telehealth provider
  • Personal Health Record (PHR) System
    • The ability for every Indian to be empowered with control over their health data such that they can share it with trustworthy clinical providers to access a digital service
  • Open Health Services Network 
    • A unified health services network that comprises of a common set of protocols and APIs to allow health services to be delivered seamlessly across any set of health applications, doctors, and providers. 

The virtual session will be from 11:30 AM to 1:00 PM on Saturday 23rd May.

To confirm your participation and receive the virtual link, please click here.

Recommended Reading 

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#8 Call for Volunteers: Designing Digital Infrastructure for Healthcare at National Scale

Why Healthcare?

Interacting even briefly with the healthcare system reveals the issues that plague the sector in India: a severe shortage of high-quality doctors, nurses, or medical supplies (and a lack of information on where the best are); misdiagnoses or late diagnoses; overcrowding and long waits in public hospitals; overpriced and over-prescribed procedures and in private hospitals; a complicated insurance claim system; and significant gaps in health insurance coverage. Those who have worked on trying to improve the healthcare system know the systemic challenges: misaligned incentives in care delivery, a lack of health data to coordinate care, low state capacity, and the political battles between states and the Centre. Yet not one of us is spared bouts of illness or other health incidents over our lifetime. We have no choice but to work with this system. And when it doesn’t function effectively, the largest effects are felt by the poorest: productivity losses and income shocks caused by health issues have a way of spiralling individuals on the cusp of economic well being back into poverty. 

Designing for high quality, affordable, and accessible healthcare in India is a challenging societal problem worth solving, with huge potential spillover benefits.

iSPIRT in Healthcare

At iSPIRT, we have started to develop an approach to dealing with complex societal problems at national scale. Our work on India Stack and financial inclusion taught us that public digital infrastructure can create a radical transformation in social outcomes when designed with a regulated and shared back-end that enables a number of (sometimes new!) private players to innovate on the front end to deliver better services. After all, innovative companies like Uber or Amazon are built on digital infrastructure: the TCP/IP Internet protocol and GPS systems that were both funded by public research. iSPIRT targets societal challenges by setting an ambitious target that forces us to think from first principles and innovate on the right digital public goods – which then catalyses a private ecosystem to help reach the last mile and solve the challenge at scale.

Over the last three years, members of our Health Stack team have been thinking deeply about how to design for a radical transformation in healthcare outcomes. We have developed a trusted working relationship with the National Health Authority and the Ministry of Health to better understand their operations and the issues at play. Our approach to addressing the challenge is evolving every day, but we’ve now developed a hypothesis around a set of building blocks that we believe will catalyse the health system. These blocks of digital infrastructure will, we hope, improve capacity at the edges of the system and realign institutional incentives to solve for long term holistic healthcare for all. 

Health Stack Digital Building Blocks Overview (Work in Progress!)

Some further teasers to our approach are included in the attached writeup which provides an overview of some of the more mature building blocks we hope to implement in the coming year. 

We’re striving for an end state of healthcare that looks something like this (cut by population type on the left):

These ideas were presented by the team recently to Bill Gates in a closed-door meet last month (who said he was excited to see what we could accomplish!)

We need your help!

To help shape our ideas and make them a reality, we need more volunteers — particularly those with the following expertise:

  1. Technical Experts (e.g. microeconomists or engineers): We have a few building blocks with broad design principles that need fleshing out – for instance, a Matching Engine to between individuals and doctors/hospitals. If you are a microeconomist (especially if you have thought about bidding/auction design for a matching engine, and more generally want to solve for misaligned incentives in market structure) or you’re a techie interested in contributing to solve a problem at a national scale, please reach out! Prior expertise in healthcare is not a prerequisite. Also, if you’ve looked through the document and find a block where you think your technical expertise could help us build, certainly let us know. 
  2. Current and Future HealthTech Entrepreneurs: Often, a successful health tech startup requires some public infrastructure to be successful. For instance, a powerful rating and recommendation app need a trusted electronic registry of doctors and hospitals providing core master data. Many of our Health Stack modules are designed to catalyse private sector participation and market potential for better products and services, which in turn produce better outcomes for individuals. If you are interested in helping design public infrastructure that your company could use or are a potential health tech entrepreneur interested in learning more about the ecosystem by building for it, please let us know!
  3. Healthcare Policy/Program Implementation Expertise: Field experience in healthcare delivery is invaluable – it gives us a true sense of the real challenges on the ground. If you’ve worked in delivering healthcare programs before with government, a non-profit, the private sector, an international organisation, or philanthropy and have ideas on what’s needed for an improvement in the sector at national scale, we’d love to hear from you. 
  4. Market making/ Health Stack Evangelisation: Any technology is only as good as its adoption! As some building blocks of the health stack get implemented, we are looking for volunteers who can help evangelise and drive its adoption.

India’s potential in the health sector is tremendous – partly because we have an opportunity to redesign not just the technology foundation (which is a near-greenfield) but also the market structure. With the right team, we hope to orchestrate an orbit shift in the quality and affordability of healthcare across the country.  

To volunteer, please reach out to [email protected] and [email protected] 

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Announcement: iSPIRT Foundation & Japan’s IPA to work together on Digital Public Platforms

Information-technology Promotion Agency, Japan (IPA), Japan External Trade Organization (JETRO), and the Indian Software Product Industry Roundtable (iSPIRT) have shared common views that (i) our society will be transformed into a new digital society where due to the rapid and continued development of new digital technologies and digital infrastructure including digital public platforms, real-time and other data would be utilized for the benefit of people’s lives and industrial activities, (ii) there are growing necessities that digital infrastructure, together with social system and industrial platforms should be designed, developed and utilized appropriately for ensuring trust in society and industry along with a variety of engaged stakeholders and (iii) such well-designed digital infrastructure, social system and industrial platforms could have a great potential to play significant roles to improve efficiencies of societal services, facilitate businesses, realize economic development and solve social issues in many countries. 

Today, we affirm our commitment to launching our cooperation and collaboration through the bringing together of different expertise from each institution in the area of digital infrastructure, including mutual information sharing of development of digital infrastructure, in particular, periodic communication and exchange of views to enhance the capability of architecture design and establishment of digital infrastructure. We further affirm that as a first step of our cooperation, we will facilitate a joint study on digital infrastructure, such as (i) the situation of how such digital infrastructures have been established and utilized in India, Japan and/or other countries in Africa or other Asian regions (the Third Countries) as agreed among the parties, (ii) how the architecture was or can be designed for digital infrastructure as a basis for delivering societal services in the Third Countries and (iii) what kind of business collaboration could be realized, to review and analyze the possibility of developing digital infrastructure in the Third Countries through Japan-India cooperation. We may consider arranging a workshop or business matching as a part of the joint study to figure out realistic use cases.

Our cooperation is consistent with the “Japan-India Digital Partnership” launched between the Ministry of Economy Trade and Industry, Government of Japan and the Ministry of Electronics and Information Technology, Government of India in October 2018. We will work closely together and may consider working with other parties to promote and accelerate our cooperation if necessary.

For any clarification, please reach out to [email protected]

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Indian Software Product Registry – All That Product Companies Need to Know

Earlier this year, National Policy on Software Products was rolled out to create a robust, participatory framework to bring together industry, government and academia on a common platform to make India as a global hub for software products development. This is a much-needed initiative to provide holistic and end-to-end support to the Indian software product ecosystem. The registry is the first step among many towards solving the real problems of the industry and nurturing the software product companies. If done right, this initiative will have immense potential and far-reaching impact to benefit the industry.

Under this policy, one of the key initiatives is the set-up of the Indian Software Product Registry (ISPR) through industry ownership. It is a collaborative platform which will act as national coordination, facilitation and inter-connected centre for all activities related to the Indian software product ecosystem.

The main purpose of this policy is to focus towards the promotion of Indian software products which are defined as under for implementation:

  • Indian Company: As per sub-section 26 of section 2 of the Income Tax Act, 1961, “Indian company” means a company formed and registered under the Companies Act, 1956 or Companies Act, 2013,  provided that the registered office or, as the case may be, principal office of the company, corporation, institution, association or body in all cases is in India.
  • Indian Software Product Company (ISPC):  An ISPC is defined as an Indian company in which 51% or more shareholding is with Indian citizen or person of Indian origin and is engaged in the development, commercialisation, licensing and sale /service of software products and has IP rights over the software product(s).

ISPR aims to create a platform to enable discovery of Indian Software Product Companies and their products while simultaneously giving automatic access to the Government e-Marketplace (GeM) platform. This will enable the government to identify Indian companies as part of their buying process. However, more work on specific allocation of government buying and redeveloping of RFP’s in government for products will also be initiated so that the government can finally buy Indian products.

Secondly, by listing on exchange on ISPR will enable MEITY to get a better understanding of the industry so that specific product-related interventions like recurring payments for SaaS companies, credits for R&D to enable Indian companies to invest in research and development, and facilitation of Indian software product industry for providing fiscal incentives, if any, at a later stage among others will also be achieved.

Thirdly, ISPR will also enable Indian Software Product Companies to list their products here and connect to buyers across the world. Since this is a government-backed platform, it provides a high level of trust and authenticity in the global market. 

Indian Software Product Companies can register here.  For any more queries, please feel to reach out on [email protected].

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The Global Stack: A Manifesto

In 1941, soon after he had secured an unprecedented third term as President of the United States, Franklin D. Roosevelt mobilised the US Congress to pass the Lend-Lease Act. Its context and history are storied. British Prime Minister Winston Churchill famously wrote to FDR requesting material assistance from the United States to fight Nazi Germany — “the moment approaches when we shall no longer be able to pay [to fight the war]”. FDR knew he would not get the American public’s approval to send troops to the War (Pearl Harbor was still a few months away). But the importance of securing the world’s shipping lanes, chokepoints, manufacturing hubs and urban megalopolises was not lost on the US President. Thus, the Lend-Lease Act took form, resulting in the supply of “every conceivable” material from the US to Britain and eventually, the Allied Powers: “military hardware, aircraft, ships, tanks, small arms, machine tools, equipment for building roads and airstrips, industrial chemicals, and communications equipment.” US Secretary of War Henry Stimson defended the Act eloquently in Congress. “We are buying…not lending. We are buying our own security while we prepare,” Stimson declared.

The analogy is not perfect, but FDR’s Lend-Lease Act offers important lessons for 21st century India’s digital economy. Our networks are open; our public, electronic platforms are free and accessible to global corporations and start-ups; our digital infrastructure is largely imported; and — pending policy shifts — we believe in the free flow of information across territorial borders. India has made no attempt, and is unlikely in the future, to wall off its internet from the rest of the world, or to develop technical protocols that splinter its cyberspace away from the Domain Names System (DNS). While we have benefited immensely from the open, global internet, what is India doing to secure and nourish far-flung networks and digital platforms? The Land-Lease Act was not just about guns and tanks; a quarter of all American aid under the programme comprised agricultural products and foodstuff, including vitamin supplements for children. The United States knew it needed to help struggling markets in order to build a global supply chain that would serve its own economic and strategic interests. Indeed, this was the very essence of the Marshall Plan that followed a few years later.

In fact, India’s digital success story itself is a creation of global demand. When the Y2K crisis hit American and European shores, Indian companies stepped up to the plate and offered COBOL-correction ‘fixes’ at competitive rates. In the process, Western businesses saved billions of dollars — and Y2K made computing ubiquitous in India, which in turn, added great value to the country’s GDP. 

Therefore, there are both security-related concerns and economic consequences that should prompt India to develop “digital public goods” for economies across Asia, Europe and Africa. Can India help develop an identity stack for Nigeria — a major source of global cyberattacks — that helps Abuja mitigate threats directed at India’s own networks? Can we develop platforms for the financial inclusion of millions of undocumented refugees across South and Southeast Asia, that in turn reduces economic and political stress on India and her neighbours when confronted with major humanitarian crises? Can we build “consent architecture” into technology platforms developed for markets abroad that currently have no data protection laws? Can we nurture the creation of an open, interoperable and multilateral banking platform that replaces the restrictive, post-9/11, capital controls system of today with a more liberal regime — thus spurring financial support for startups across India and Asia? Can India — like Estonia — offer digital citizenship at scale, luring investors and entrepreneurs who want to build for the next billion, but do not have access to Indian infrastructure, markets and data? These are the questions that should animate policy planners and digital evangelists in India. 

The Indian establishment is not unmindful of the possibilities: in 2018, Singapore and India signed a high-level agreement to “internationalise” the India Stack. The agreement has been followed up with the creation of an India-Singapore Joint Working Group on fintech, with a view towards developing API-based platforms for the ASEAN region. As is now widely known, a number of countries spanning regions and continents have also approached India with requests to help build their own digital identity architecture. 

But the time has come to elevate piecemeal or isolated efforts at digital cooperation to a more coordinated, all-of-government approach promoting India’s platform advancements abroad. The final form of such coordination may look like an inter-ministerial working group on digital public goods, or a division in the Ministry of External Affairs devoted exclusively to this mission. Whatever the agency, structure or coalition looks like within government, its working should be underpinned by a political philosophy that appreciates the strategic and economic value accrued to India from setting up a “Global Stack”. In 1951, India was able to successfully tweak the goals of the Colombo Plan — which was floated as a British idea to retain its political supremacy within the Commonwealth — to meet its economic needs. Working together with our South Asian partners and like-minded Western states like Canada, we were able to harvest technology and foreign expertise for a number of sectors including animal husbandry, transportation and health services. India was also able, on account of skilful diplomacy, to work around Cold War-era restrictions on the export of sensitive technologies to gain access to them.

That diplomacy is now the need of the hour. The world today increasingly resembles FDR’s United States, with very little appetite to forge multilateral bonds, liberal institutions, or rules to create effective instruments of global governance. It took tact and a great deal of internal politicking from Roosevelt to pry open the US’ closed fist and extend it to European allies through the Lend-Lease Act. India, similarly, will need to convince its neighbours in South Asia of the need to create platforms at scale that can address socio-economic problems common to the entire region. This cannot be done by a solitary bureaucrat working away from some corner of South Block. New Delhi needs to bring to bear the full weight of its political and diplomatic capital behind a “Global Stack”. It must endeavour to create centripetal digital highways, placing India at the centre not only of wealth creation but also global governance in the 21st century.

The blog post is authored by Arun Mohan Sukumar, PhD Candidate at The Fletcher School at Tufts University, and currently associated with Observer Research Foundation. An edited version of this post appeared as an op-ed in the Hindustan Times on October 21, 2019.

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#7 Healthcare leapfrog – but where is the problem?

When was the last time you skipped a movie for a workout, or chose a salad over a pizza? Or, actually got your annual tests done – annually? Or, visited a doctor without seeking a second opinion? Or, took your pills without constant reminders?
These are problems even for someone who can afford the time and access to read blogs online. Now let’s move on to Bharat (i.e., all Indians except the affluent ~30 million families). 

Remember the Gorakhpur hospital deaths last year? Or, the recent Bihar encephalitis crisis? Here are some more boring stats – more than half the doctors in the country practise without any medical qualification, less than 20% of our population has access to secondary and tertiary care, more than 7% get pushed into poverty because of expenditure on healthcare every year. Be it tuberculosis, diabetes, anaemia or cancer – India shares one of the highest, if not the leading, burden of disease globally.

So, where is the problem? It’s everywhere! 

Let’s step back a little. There are constraints, and then there are problems. Problems are those that can and should be addressed. Constraints, however, are things that are almost impossible to change. For example, there just aren’t enough qualified doctors in the country. Or, a single-payer and provider system (i.e., our public health system) simply cannot address all the healthcare needs of the country. It is impossible to create a large pool of doctors in a short amount of time. Similarly, we are bound to have multiple payers and providers, each of whom has fundamentally misaligned incentives. These constraints are inherent in the system.

The question is – can problems be solved while operating under these constraints?

If we were to look at the problems, they would broadly be classified as the following:

  1. Supply (quality, affordability and accessibility): Improving quality, affordability and accessibility is indeed a necessary first step. While it is important to strengthen the existing infrastructure, certain initiatives and technologies can help accelerate this process. For example, the Ayushman Bharat Yojana is already addressing affordability at secondary and tertiary care levels for the vast majority of the population. Similarly, the combined use of low-cost screening and diagnostic devices, telemedicine and clinical decision support systems can enable even minimally trained professionals to deliver care, especially at the primary care level – making it good, affordable and accessible.

  2. Demand (health-seeking behaviour for preventive care and adherence): Even an excellent care delivery system would fail if people didn’t avail the services or didn’t stick to the recommendations offered as part of these services. This is precisely the problem in healthcare. Very few people actually engage in preventive care or adhere to the recommendations or treatment plan prescribed by a caregiver. It would require a very savvy use of point-of-care devices (that enable convenient at-home/doorstep testing, monitoring and instant diagnosis at affordable prices) and behavioural economics hacks (nudges) to bring about this behavioural change.

  3. Misaligned incentives (between provider-provider and payer-provider): An eye-care provider that I spoke to explained this to me. Even though this provider focused on cataract surgeries, it often ended up carrying out screening camps and post-op follow-up care for its patients. This was because of a lack of referrals – even if small providers/ general practitioners detected disease in the patient, they would not refer the patient upward for fear of losing to another provider. In other words, upward referrals don’t happen because downward referrals don’t happen. Similarly, the fundamentally misaligned incentives between payer and provider (which we talked about at length in this post) result in issues like procedure inflation and delayed intervention. How can this be addressed?

What’s missing?

As mentioned in one of our previous posts, we think the answer might lie in the concept of care intermediaries. As the name suggests, these will be new types of independent entities that are different from payers and providers. They will act as agents of the patient and aid in decision making. Specifically, they will play the following roles: (a) aggregation, (b) nudges, (c) referrals, (d) audits. With care intermediaries in the picture, let us understand what the new normal would be:

  1. The care intermediary predicts preventive care-seeking behaviour, disease incidence and adherence patterns. It uses this intelligence to distribute appropriate gamifier policies to customers. As an aggregate buyer of these policies, it is able to provide them at reasonable costs to the end consumers while also providing for its own sustenance.
  2. Every person who has a gamifier policy is now nudged by the care intermediary to seek preventive care. The care intermediary also carries out appropriate screening and diagnostic tests for its consumers.
  3. For the consumers identified with a need, the care intermediary then becomes a part of the referral workflow, and makes recommendations to the patient for both procedure and provider selection. 
  4. Lastly, the care intermediary facilitates downward referrals and nudges the patients to adhere to the prescribed post-treatment care plans. 

There could be many manifestations of the care intermediary – for example, it may partner with local community health workers to carry out screening and adherence management. Or, it could partner with primary caregivers for providing the actual referral recommendation to a patient. In other cases, such as seeking a major tertiary care treatment like surgery, the patient may directly consult the CI for recommendations.

What’s next?

What will the business model of a care intermediary be? How will it make credible recommendations?  Who will it partner with? What are the checks and balances required? What is needed from a privacy perspective?

The idea of a care intermediary is new, and a lot still needs to be worked out!
If you would like to share feedback or volunteer with us to help with this effort, please reach out to me at [email protected].

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Data Empowerment and Protection Architecture Explained – Video

More commonly known as the ‘Consent Layer of the India Stack’, Data Empowerment and Protection Architecture (DEPA) is a new approach, a paradigm shift in personal data management and processing that transforms the currently prevalent organization-centric system to a human-centric system. By giving people the power to decide how their data can be used, DEPA enables the collection and use of personal data in ways that empower people to access better financial, healthcare, and other socio-economically important services in a safe, secure, and privacy-preserving manner.

It gives every Indian control over their data, democratizes access and enables the portability of trusted data between service providers. This architecture will help Indians in accessing better financial services, healthcare services, and other socio-economically important services.The rollout of DEPA for financial data and telecom data is already taking place through Account Aggregators that are licensed by RBI. It covers all asset data, liabilities data, and telecom data.

We, at iSPIRT, organised a learning session on the 18th of May, to give relevant and interested stakeholders a detailed primer on DEPA. We had 60-odd very animated and engaging people in the audience. The purpose of the session was to understand the technological, institutional, market and regulatory architecture of DEPA, it impacts on existing data consuming businesses and how people could contribute to this new data sharing infrastructure that’s being built in India.

The session was anchored by Siddarth Shetty, Data Empowerment And Protection Architecture Lead & Fellow, iSPIRT Foundation (Email – sid@ispirt.in). Please feel free to reach out to him for any queries regarding DEPA.

For other queries, please write to [email protected].

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#6 Healthstack session at LetsIgnite

We had the chance to conduct a discussion on the National Health Stack during the LetsIgnite event organized by the LetsVenture team on 15th June at the Leela Palace. The audience comprised of early stage healthcare startups along with angel investors and venture capitalists having keen interest in healthcare investments. Some notable attendees included Dr. Ramesh (senior cardiologist, MD Endiya Partners) and Mr. Mohan Kumar (Partners, Norwest Venture Partners).

Sharad Sharma (co-founder, iSPIRT), Dr. Santanu Chatterjee (Founder, Nationwide Primary Care), Dr. Ajay Bakshi (Founder Buddhimed Technologies, ex-India CEO Parkway Pantai) and Arun Prabhu (Partner, Cyril Amarchand Mangaldas) had been invited to lead the session, which was moderated by Anukriti Chaudhari and Priya Karnik, both core volunteers at iSPIRT championing the health stack initiative.

The context was set by an interactive talk by Sharad who began by giving a glimpse of the underlying philosophy of the iSPIRT Foundation – the idea of building public goods as digital technology stacks which can be leveraged by private players to serve Bharat. . Sharad described societal change in India being a Jugalbandi between digital public infrastructure, market participants and policy makers to achieve the same. He mentioned how the India Stack was changing the face of fintech in India and that the Health Stack could do the same for healthcare. The audience was more than startled to hear that a day prior to the session, the number of UPI transaction in India were already one-sixth of what MasterCard had done worldwide. ( UPI has only been around for 33 months! ). Sharad then went on to explain the different layers of the Health Stack comprising National Registries, standardised health information flows, an insurance claims management software built upon a standard Policy Markup Language and a gamifier policy engine. He didn’t miss reminding the audience that the Health Stack was being built to solve for the healthcare needs of ‘Bharat’and not the privileged 30 million Indian families already being well-served by the healthcare conglomerates in urban areas.

With the context in place, Anukriti took over to give a background of the healthcare landscape in India. India struggles with a 1:1600 doctor to patient ratio with more than 60% of doctors and hospitals concentrated in urban regions. To add to that, the public expenditure for healthcare is just 3.9% of our annual GDP (compared to 18% in the US) and it’s not surprising that most deaths in public healthcare facilities happen because of poor quality of care. Health insurance penetration barely touches 20% with OOP expenditure dominating the healthcare spending in India. With a huge underserved population, the need of the hour is to leap-frog to scalable solutions that can reach the masses instead of incremental linear growth solutions to address the Indian healthcare challenges. The different layers of Health Stack make it much easier for innovators (both public and private) to develop radical solutions.. While funding in healthcare startups has increased over the last 5 years, it still significantly lags behind areas like fintech, e-commerce, ed-tech, etc. Moreover, the bulk of healthtech investments have been focused on the consumer tech sector. Anukriti ended her views with a futuristic optimism regarding the innovations that Health Stack could open, to make healthcare truly affordable, accessible and high quality.

We were fortunate to have Dr. Santanu and Dr. Bakshi give insights about the Health Stack with their on-ground experiences in healthcare spanning over decades. Dr. Santanu mentioned that for primary care, the national registry of care providers was very fundamental to ascertain ‘which stakeholder provides what’ given that almost every provider is somewhere involved in primary care. On top of that, he stressed about the need for Artificial Intelligence backed clinical support systems that seamlessly integrate with the doctor’s workflow. This is of particular relevance for rural healthcare settings wherein, despite various efforts, there aren’t enough doctors to setup shops in villages . A standardized health information layer, along with data transfer mechanisms, could be the driving force for this. He was, however, wary of how well standard insurance schemes would work for primary care as the insurance business model falls apart given that almost everyone needs access to primary care at some point or the other. Priya resonated with his views and further suggested that for ‘Bharat’, micro insurance policies could be the key mechanism to drive insurance adoption at the consumer level. Such a system could potentially be facilitated by a claims engine platform build upon a standard policy markup language to ‘almost-automate’ (auto-adjudicate) the claims addressal process.

Dr. Bakshi contended that for a stable society, healthcare and education are a must, as the former secures our ‘today’ while the latter secures our ‘tomorrow’. Having worked as the CEO of three major hospital chains in India, he accepted (without an iota of political correctness) that as a nation, we have failed miserably in providing either. Healthcare is a social good and nowhere in the world has it been solved by private players alone (given the way private incentives are aligned). The public sector in India hasn’t stepped up which is the reason that private players dominate the quality healthcare delivery which could lead us (or is perhaps already leading) to following the footsteps of the US. This is an alarming trend because in the short and medium term, India cannot afford to outsource the entire healthcare delivery to private players. Dr. Bakshi remarked that to set things on the correct track, the Health Stack is a very important initiative and congratulated the iSPIRT team for working ardently to make it happen. He however suggested all stakeholders to be privy of the fact that while fintech transactions are linear (involving the payer and the recipient), a healthcare ‘transaction’ involves multiple aspects like the doctor’s opinion, investigation, drugs, nurses, ward boys and many other layers. This underlying multidimensionality would make it difficult to replicate an India Stack kind of model for the healthcare setting. At the core of the healthcare transaction lies the ‘doctor-patient’ interaction and it is imperative to come but with some common accepted standards to translate the healthcare lingo into ‘ones and zeroes’. He lauded the health information flows  of the Health Stack for being a step in the right direction and mentioned that in his individual capacity, he is also trying to solve for the same via his newly launched startup Buddhimed Technologies.

With two stalwarts of healthcare sitting beside her, Anukriti grabbed the opportunity to put forth the controversial concept of ‘doctors being averse to technology’ which could possibly be a hindrance for Health Stack to take off. Dr. Santanu and Dr. Bakshi were quick to correct her with the simple example of doctors using highly technical machines in providing treatments. They coherently stated that doctors hated Information Technology as it was forced upon them and suggested that IT professionals could do a better job by understanding the workflows and practical issues of doctors and then develop technologies accordingly. This is an important takeaway – as various technologies are conceptualized and built, doctors should be made active participants in the co-creation process.

The idea of a common public infrastructure for healthcare definitely caught the attention of both investors and startup founders. But amidst the euphoria emerged expected murmurs over privacy issues. That was when Arun Prabhu, the lawyer-in-chief for the session, took the lead. He reiterated Dr. Bakshi’s point of the doctor-patient relationship being at the core of the healthcare transactions. Such a relationship is built upon an element of trust, with personal health data being a very sensitive information for an individual. Thus, whatever framework is built for collating and sharing health information, it needs to be breach proof. Arun cited the Justice Srikrishna report to invoke the idea of consent and fiduciaries – a system wherein individuals exercise their right to autonomy with respect to their personal data not by means of ownership (which in itself is an ambiguous term), nor by regimes of negligence or liability but by the concept of a coherent consent mechanism spread across different stakeholders of the healthcare value chain. Moreover, the consent system should be straight-forward and not expressed via lengthy fifty page documents which would make it meaningless, especially for the India 2 and India 3 population. Lastly, he mentioned that just like physical and tangible assets have certain boundaries, even data privacy can have certain realistic limitations. If an information point cannot be specifically identified or associated with a particular individual but can have various societal benefits, it should be made accessible to relevant and responsible stakeholders. Thus, while it is imperative to protect individual health data privacy, there should be a mechanism to access aggregated anonymized health data. There is tremendous value in aggregating large volumes of such data which can be used for purposes like regional analysis of disease outbreaks, development of artificial intelligence based algorithms or for clinical research. Priya added that such a system was inherent in the Health Stack via the Population Health Analytics Engine and the framework for democratisation of aggregate data.

Overall, the session amalgamated various schools of thought by bringing together practitioners, CEOs, CIOs, lawyers, startups and investors on one common discussion platform. This was perhaps an example of the much-needed Jugalbandi that Sharad had mentioned about. A public good is conceptually ‘by the stakeholders, for the stakeholders and of the stakeholders’. This necessitates its active co-creation instead of isolated development. Needless to say, multi-way dialogue is the DNA of such a process. Staying true to that philosophy, we look forward to conducting many such interactive sessions in the future.

Ravish Ratnam is part of the LetsVenture Team – a platform for angel investing and startup fundraising.

He can be reached on [email protected]