Why India Isn’t Buying NFTs (Yet)

2022 is expected to be the year of non-fungible tokens (NFTs). At $40 billion, the global market capitalization for NFTs is inching closer to the entire global art market cap of $50 billion. However, one of the potentially largest markets for NFTs – India – is facing teething troubles.

Tanvi Ratna, a CoinDesk columnist, is the founder and CEO of Policy 4.0, a research and advisory body working on new policy approaches for digital assets.

Indian experiments with NFTs have grown rapidly in the last eight months or so. In June 2021, WazirX, India’s largest cryptocurrency exchange, launched an NFT marketplace predominantly for Indian artists. In the time since, multiple Bollywood celebrities and sports stars have launched NFTs. The largest global NFT sale to date, the $69 million Beeple sale, was incidentally also purchased by a buyer of Indian origin, Vignesh Sundaresan, also known as MetaKovan. But oddly enough, Indians have not started buying into NFTs just yet.

There is a fairly large supply and demand gap in the Indian NFT market. NFT creators here are proliferating while collectors remain nonexistent. Both sides paint a different picture of how they see the NFT opportunity in India.

From the creator perspective, opportunity abounds. The talent landscape for art and digital art in India is vibrant – from graphic designers and illustrators, to specialized visual effects (VFX) artists working for Hollywood and Bollywood, to a rich traditional art heritage spanning many diverse styles. The young and savvy have already taken to the NFT space and the numbers are growing. WazirX has an active Indian creator community of 1,300 artists and has a waitlist of 20,000 artists waiting to be onboarded into the marketplace.

SamosaRani is one such successful creator with over 18 NFT sales and three collections under her belt across OpenSea and other markets. An art therapist and artist for two decades, she has found a great niche for her art in the NFT space. However, none of her dedicated collectors are Indian, and only a small fraction of her one-off buyers are from India. "Finding collectors is a difficult task for most Indian artists," she told me.

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Interestingly, Indian NFT creators have migrated into becoming NFT collectors and traders. CreatiWitty, a top performer on the Kalamint platform, started off as a creator but now spends 100% of his time flipping NFTs. His story is the kind that motivates many artists across the country to enter the NFT space. He used to be a freelance graphic designer in a small town in the Indian state of Gujarat, designing logos and branding for companies. “It used to take me three days to design logos with customers complaining and constantly needing changes. Now, in a matter of minutes, I can flip an NFT and earn two times, three times what I used to make with three days of effort,” he said in an interview.

From a mass adoption perspective, however, NFT collectibles are not quite finding a product market fit in India. A limited set of Indian collectors leverage NFTs for speculative uses. This small Indian collector community cites a preference for high liquidity NFTs, with PFP (photo for profile) art and photos as the best performing categories.

Sandeep Sangli, the founder of NFT platform Kalamint said: “Historically Indians have not been collectors. Art is something Indians haven’t really warmed up to as an asset class. For NFTs to work in India they need to have utility.”

Indeed, different players in the market are coming to terms with the real value in India being for utility-based NFTs. Sangli said one of the higher performing segments in Kalamint is for brands and entrepreneurs to cross promote and sell NFTs that can be redeemed on their site for goods. WazirX experimented selling NFT tickets for a music festival in its marketplace. These sold out in record time.

It is not for lack of trying that NFT collectibles have not taken off. Bollywood and cricket are two rich cultural categories, and it was only natural that celebrities in both spheres gravitated towards NFTs. Between June and December 2021, several movie stars and cricket players released NFTs. But these launches saw a relatively lukewarm response.

Amitabh Bachhan, Bollywood’s biggest superstar, affectionately known as “Big B,” launched an NFT collection with several thoughtful collectibles, including poem readings and even a Big B CryptoPunk. The entire collection sold for just under $1 million. While this is not bad, it does not compare to big ticket NFT sales we have seen around the world, especially given that Big B is India's biggest superstar by a mile with cross-generational appeal. Single CryptoPunks (the original must-have NFTs) have sold for many multiples of this, from $3 million to $12 million. The sale also pales in comparison to NFTs by other celebrities. Mila Kunis’ Stoner Cats collection, which gave access for a series that has not even launched, pulled an easy $8 million.

Celebrities are now expanding beyond pure NFTs into full metaverse plays. One of the first to experiment deeply with this has been Bollywood star Kunal Kapoor who is now building out the LoveABot/LABverse project. “I wanted to do something to change the narrative around the tech dystopia and a tech-driven future that we fear,” he told me. He is on a mission to build a creative metaverse for technologists where a tech-positive narrative can be created.

Another actor, Rana Daggubati, of the iconic “Baahubali” movie franchise, is venturing into an ambitious Indian metaverse, with the Ikonz project. CEO Abhinav Kalidindi believes that “we need to drive a change in mindset, but with it, India would be one of the largest metaverse and NFT markets in the world.”

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It has placed a bet on a unique metaverse with Indian characteristics, having secured IP rights to the “Baahubali” franchise, as well as widely read and loved Indian comic brands, “Tinkle” and “Amar Chitra Katha.” But in line with experience from other Indian projects, Kalidindi said “building NFTs with utility at value-conscious price for Indians” will be key to their success.

With this backdrop to India’s budding NFT sector, all stakeholders are now looking to India’s gaming sector for that ultimate product market fit with NFTs. India’s gaming sector has exploded in the last year, recording 170% growth between 2020 and 2021 alone, and the market is expected to triple by 2025. With over 450 million gamers, industry players are betting this will create the right growth market for NFTs.

Indian creators and collectors have started looking into gaming NFTs. Some interviewees have already started experimenting with gaming skins and related NFTs. They often presell NFTs that will be used in games as a form of fundraising. “With enough hype around these games, we see a lot of collectors buying ahead and flipping these NFTs,” said Kalamint's Sangli. He believes a gaming and content utility might be the most preferred by Indians.

Ikonz’s Kalidindi put it accurately when he said, “NFT collectibles may have value globally but not for Indians. Crypto gaming is massive and in India play-to-earn games do really well. This is where India might find the right product market fit for NFTs.”

As experimentation in the country accelerates, it will be interesting to see how Indian attitudes to NFTs evolve.