India’s growth story is inevitably tied to its growth as a leading global technology hub. With more than 4.2 million developers, the country is home to the largest talent pool in the world for developer talent.
A large number of blockchain developers should be an advantage for India when it comes to developing blockchain-based applications or improving existing ones. Some data estimates from 2018 indicated that India had the second-largest number of blockchain developers in the world, just behind the U.S. However, blockchain is not quite the fast-growing tech sector in India as it is in the rest of the world.
Some estimates place the size of India’s developer base at over 20,000. While this is a large pool of developers globally, it is a drop in the ocean compared to the 4.2 million+ might of the overall developer ecosystem. It is a known fact that public blockchain and cryptocurrencies have not attracted the attention of India’s top developer talent to the same degree as AI, ML and other emerging technologies. The stigma around cryptocurrency holds back Indian developers who are skeptical of the country’s regulatory environment.
Starting from 2013, the Reserve Bank of India issued regular cautionary guidance against cryptocurrencies, citing market volatility, risk and no legal recognition for cryptocurrency. The developer ecosystem in India was starting to grow with the bitcoin boom in 2017-2018. However, that came to a halt when, in April 2018, the central bank issued a circular prohibiting the banking system from dealing with entities dealing in virtual currency. The ecosystem went into a veritable freeze and the chilling effects of regulation have been felt for a long time, arguably even today.
In 2019, the central government released a report with its position on virtual currencies, preferring a complete ban on the instruments, with a draft legislation for the same. After the Supreme Court struck down the RBI circular as being unconstitutional, the industry could finally move again.
In February of this year, it appeared that a legislative move for a ban was possible, and recent challenges with banking access have reinforced the image that the sector has far too complicated regulations and may not guarantee job security. In such an environment, both the evolution of the industry and the agility of local pioneers are tested.
Regulations dictates India’s blockchain ecosystem
While India’s regulatory stance on cryptocurrencies has been negative, there has been very vocal support for blockchain technology by policymakers. The focus on distributed ledger technology (DLT) applications created a divergent path for some developers, who chose to focus on enterprise applications.
However, three years on, there are as yet no large-scale enterprise blockchain applications live in India. Most DLT developers have been limited to proof of concepts or pilots for the most part. Some have worked on large overseas projects as an outsourced vendor. The scale for such applications within India remains limited.
India has gone through its own journey in the blockchain hype cycle. The year 2017 saw a large wave in cryptocurrency projects with the initial coin offering boom. By 2018, most large IT majors in India – Wipro, Tech Mahindra, Infosys – had formed blockchain teams, conducting active meetups, conferences, and contributions to code. Various companies were starting to explore pilots and proofs of concept, and even consortium approaches were being experimented with – the most well-known of these was Bankchain, a consortium led by one of the largest banks in India. Most top-tier cities in India saw a rise in developer activity with the adoption of DLT by big conglomerates like Tata and Infosys, along with several crypto trading companies and active blockchain meetups in India.
After the circular of April 2018 and the government of India report of 2019, activity in the ecosystem dropped considerably, with most participants going back to their Web 2 jobs. After the Supreme Court verdict of 2020, the renewed crypto bull run and the rise in global institutional acceptance, the industry in India has seen a new wave of investors and developers.
Anecdotal evidence from some startups suggests that many of the participants in this wave may not be from 2017 but are new participants, either investing or developing in crypto for the first time. Multiple projects are also drawing in new rounds of funding from global investors, adding to the activity in the sector. However, recent developments of a possible ban and issues with bank access, are raising the same questions around legitimacy.
Indian startups operate with multiple challenges
The gray zone under which cryptocurrencies currently operate in India throws up multiple challenges for developers, notably around registrations and the management of tokens. At the same time, good blockchain developers are in short supply.
There is a dearth of high-quality formal training programs for blockchain developers, a direct consequence of regulatory and market forces. This reduces the channels to hire quality developers. In addition, with the high degree of decentralized work in the industry, some firms find it even harder to find the right talent at the right time.
“We spoke to some Indian projects who were hiring engineers from outside India for their projects because they simply couldn’t find developers for their project easily,” said Jason Rodrigues, who handles India operations for Celo, a mobile-first decentralized finance (DeFi) project.
Finding and hiring developers is fairly unorthodox, with a focus on social media and code contributions. “We track Discord discussions and GitHub submissions to identify talent,” says Samyak Jain of Instadapp, a DeFi wallet project. Hackathons have also served as a central plank of building the ecosystem and finding talent in India. A lot of the post-prohibition growth of the blockchain developer community has been sustained through hackathons and community meetups, rather than any structured programs.
Additionally, there exists a strong competition for talent. Because the market is global and decentralized, good developers can easily tap into international opportunities that pay anywhere from two to five times the rates for Indian developers. This creates further pressure on indigenous projects. Most projects have taken on the strategy of upgrading the skills of Web 2 developers for Web 3. This comes with its own challenges because building code is sometimes the least complex aspect of building for blockchain.
A common challenge with Web 2 developers is orienting them to the privacy, security and transparency aspects necessary in a public blockchain. “The idea that you can’t outsource all security to your cloud provider is a different one than what most Web 2 developers are used to,” says Mayur Relekar, founder of Newfang, a decentralized storage platform.
A lot of improving skills of these Web 2 developers often has to do with the new philosophy of Web 3 architecture than the actual code, where concepts such as wallets, key storage, encryption and the security of the network hold the major weight. Understanding the cryptocurrency market, understanding financial products and their composability, being able to create such products through smart contracts – Web 2 developers in India are not actively engaged with these ideas.
Although India has all the capabilities to be a leading hub for blockchain talent globally, developer interest in the technology is yet to go mainstream. Application and software development has been a forte of Indian developers for close to two decades. However, engagement on Web 3 development remains low in the country.