Making sense of the ‘India Stack’
As a country, India has seen a significant tectonic shift of technology adoption over the last few decades positioning itself as the technology services back-office first and now emerging as the hotbed of innovation. This country also has a unique experience of catapulting itself into embracing advanced technology solutions and often witnessing missing one or many steps in between. I have personally witnessed the ‘awe factor’ in the eyes of visiting friends and business colleagues on topics that has become my new normal in the past few years (or things that I have taken for granted) that doesn’t exist in some of the most advanced economies yet — UPI being a classic example.
In this article, we will try to make sense of the amazing architecture commonly referred to as the ‘India Stack’ in the technology and business world. This is probably one of the best examples of a ‘reference architecture’ established at a country level that has the potential to become a playbook for small and large enterprises trying to embark upon their digital transformation journey(s). Given the diversity of the country, a key criteria is to ensure financial and social inclusion for all its citizens coming from a melting pot of a wide variety of social, economic, regional, religious, linguistic strata. Multiple government beneficiary schemes weren’t reaching the intended target due to the inefficiencies in the process, disparate and unintegrated systems coupled with bureaucracy
The India stack established a vision for the world inspired by the principles of open source and interoperability through a layered approach of innovation established via platform approach. At a very high level, the India Stack consists of 3 layers: -
- Identity Layer
- Payments Layer
- Data Layer
Identity Layer
The core underlying philosophy for the identity layer is to “Enroll once, authenticate as many times”. The rollout of the India stack started with establishing an Identity Layer through the very ambitious Aadhaar program that was initiated in the beginning of the last decade. The focus was to give every resident a unique ID enabling them to prove “I am who I claim to be”. Like any large scale change management programs in a country as diverse as India, this had its own share of privacy and implementation challenges, but major ground was covered with establishing the Identity Layer through Aadhar.
Payments Layer
A large percentage of India still stayed a cash economy (only 17% had bank accounts in India back in 2008) and it was important to reduce the cost and complexity of banking to enable financial inclusion. The core vision of the Payment Layer was to allow anyone to pay anyone else digitally in a safe and secured fashion, between banks and other financial institutions, in a quick and cheap fashion. The Payments layer was established through the combination of Aadhar + UPI platform which is now more or less considered as a ‘gold standard’ of retail peer-to-peer payments. Between 2011 and 2018, India massively jumped ahead on financial inclusion (20% to a 78%)
Data Layer
Digital transformation brings forth its own challenges of data security. The whole purpose of the data layer is to enable the secure sharing of data and protect that from landing into the wrong hands. The DEPA (Data Empowerment and Protection Architecture) enables a protected, time sensitive and timebound sharing of data through Account Aggregators (AAs). The AAs enables consumers like you and me selectively share and even revoke data once shared. The AA is a data access fiduciary and the architecture is setup in such a way that they cannot read or resell consumer data.
One of the salient features in terms of technology architecture is the use of APIs and microservices to establish the plumbing between these platform and the open APIs to encourage layered innovation at each levels. If you are a start-up innovator or even a professional with an idea to make a difference, hundreds of APIs are available on API Setu (https://apisetu.gov.in/) that can be readily integrated into your apps which creates a very healthy ecosystem of innovators building out new products to augment the open innovation promoted by the India Stack
In summary, when you look at the layers stacked on each other, the India Stack (simplified in layman’s terminology) looks like the follows: -
Additional reading materials can be found at the following reference at the end of this article
What do you think about the India Stack? Would be glad to hear your experiences
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