Thank you, Kanwal, and it's really great to be here at Fireside Ventures. I'll present to you the context of, I mean, you guys are all talking about consumption and all that, but what is happening on the digital side, and what's the connection of that to the consumption story that you're all behind.
Now, India's digital transformation has been happening for more than a decade now, and it's something which has made a huge impact on lives, but also on the way business is conducted and so on. The important year in India's digital journey was 2016. 2016 was the inflection point.
Now, when we were in 2016, we didn't realize we were in an inflection point, but in hindsight, this was a transformational year, because many things happened in 2016. On April 4th, Aadhaar reached 1 billion people with an Aadhaar number. On April 11th, UPI was launched. It was a small launch in a hotel in South Bombay. Not many people noticed that there was even a launch of something called UPI.
On September 2nd that year, RBI launched something called account aggregator, which is a remarkable idea which is transforming credit and so on. On September 5th, Jio was launched. Jio was launched by Mukesh Ambani, and dramatically changed the cost of data in India. On November 8th, we had demonetization. On December 30th, the Prime Minister launched the BHIM application.
Imagine so many things happened in one year. Some of them by government, some of them by regulator, some of them by private companies, but all this laid the foundation for India's digital transformation. And one more thing happened in 2016. Fireside was launched.
I don't know that Kanwal had some premonition, or he was in the know of what's going on, but great timing to launch Fireside in the same year that India's digital transformation was taking off.
This actually has had three phases. In the first phase, the foundational phase, we had ID services. Aadhaar went to, as I said, to a billion users. Smartphones happened, thanks to Jio and then Airtel. And then, in the last 10 years, we have seen a dramatic explosion in the startup economy. Many of you are representatives of that. India went from a few thousand startups to 100,000 startups.
India began formalization. More and more people joined the formal economy. You had both our income tax and indirect tax system, GST, were built on a technology platform, leading to digital-first taxation. Account aggregator allowed you credit. So, you could see the build-up. And now, I believe we are reaching an exponential phase in the next 5 years, which are going to see massive expansion of MSME credit, which applies to all the retailers and others in your ecosystem. New commerce formats, I'll talk about that. And ultimately, a 5.6.5 trillion dollar economy by 2030. So, you can see the slow build-up of how technology evolution over so many years brought us to this stage.
Now, we are defining something called alpha, which is what is the alpha over regular factors of growth. Because, you know, India has many things going for it. It's a young country. It's aspirational. As incomes go up, people have a larger proportion of disposable discretionary income. India is going from unbranded to branded. So, all these are happening as part of any society which is getting better and richer.
But, that is being further amplified by the digital infrastructure that we have. And we call that, we talk about it in two phases, but alpha one is how did digital public infrastructure amplify all this? Now, there were three foundational layers here. Identity, which 1.43 billion people in Aadhaar, which eliminated onboarding. People could get a bank account quickly. People could get a mobile connection quickly, and so on. So, that removed, that brought in formalization, and so on.
And then, of course, UPI. I talked about the launch of UPI on April 11, 2016. In October of 2016, UPI had reached 100,000 transactions a month. And then, as I explained, November 8th was the demonetization, and then the whole app business took off. PhonePe, Paytm, Google Pay, all that. And today, this system is doing 21 billion transactions a month. 21 billion. It's the world's largest payment system.
And it's zero cost. It's very important. It's no cost. If I pay somebody 10 rupees, they get 10 rupees. There's no fee. And it's all instant real-time transfers. And it's from anywhere to anywhere. I could be using PhonePe, you're using Google Pay. I may be HDFC Bank, you may be SBI, and I can do a real-time 10 rupee transaction. So, that's fundamentally transformational.
The third thing that happened was the data got sorted. We have DigiLocker, which has few hundred million people. 9.5 billion documents are there. So, people have their Aadhaar card, their driver's license, the passport has come onto DigiLocker. Suddenly, all your documents are in your phone. You don't need anything else. And then, account aggregator, we remember I told you this was launched on September 2nd, 2016, allowed people to use their digital footprint to get access to credit and so on. So, this is the what's the three things that are building blocks.
And this will give you the scale of what is happening. 1.43 billion Aadhaar issued. And then, Aadhaar was linked to the bank accounts. DBT was instant transfer of money. Since the beginning, half a trillion dollars has been transferred into people's bank accounts. Every time there's an election, there's some money transferred.
And then, DigiLocker, as I said, has 9.5 billion documents. The Bharat Bill Payment System, which is a system built by NPCI, does 260 million monthly bill payments. FASTag, another system which I was involved with architecting 15 years back, does 373 million transactions a month. And this, it was designed for highway, so when you go through the highway, you pay. But, it's now used for parking. It's used for congestion charges. It's a platform for charging a vehicle for something or the other.
And then, of course, for many of my friends, their first encounter of this was DigiYatra. Till then, they said, 'Oh, what is all this stuff you're doing? I don't understand it.' But, the day they were able to go to an airport and go straight to the plane, they said, 'Oh, now I know what you're doing.' So, DigiYatra has 19 million users across 24 airports, and is leading to people going through the fast track. So, this is real impact. It's happening at scale, and moving the needle for a billion people.
Now, UPI, as I explained, went from nothing to 21 billion transactions. In FY25 alone, there were 186 billion transactions on UPI. And what's important is 50% of that was under 500 rupees, which means the small vendor, so the person selling vegetables in the cart, the guy selling coconuts on the street, they were all taking UPI payments. Many people say, 'No cash, only UPI.' So, it changed the whole game. Zero cost of transaction, and then laid the foundation for other things. Access to credit, insurance, and so on. So, this was putting basically a payment terminal in every pocket. So, today, if I have a phone, if I have UPI, if I have my ID is in my DigiLocker, that's all I need. I don't need a wallet. I can pay. I can show my ID. I can do everything. So, this is a transformation that has happened.
So, this has led to this leapfrogging. So, Jio collapsed the data cost in 2016, and Airtel followed suit. Identity removed onboarding friction. UPI created zero friction payments, and that laid the foundation for consumption. So, this is important. It's not just the fact that we were young audience, and people are going to branded. These are the enablers that laid the foundation for consumption. And that's really what happened in the DPI journey.
Now, look at what happened with the mobile side. Today, we have 815 million internet users, 675 million smartphone users, and 470 million people on some social media. And the price per GB has dropped dramatically since 2016, around this time when it got launched. You can see the drop. And this is, India still continues to be among the lowest cost data networks in the country. So, imagine cheap data, and no cost of transaction for payment. What else do you want in commerce, right? So, all that is happening.
Now, the other big shift is because of the rise of this, how people saw things changed. You see the television penetration between 2019 to 2025, it hardly inched up. But OTT monthly users went up to twice telephone. In other words, for most people, for 400 million people, their first source of video feed is on their phones and only 200 million have TVs and so too with Instagram. So this is a whole mobile first, YouTube and video on your phone first audience that we're talking about.
Now this in turn led to a wave of e-commerce. And if you look at it, if you divide India into metros, the big cities Bombay, Bangalore, Hyderabad, Delhi, Chennai and so on. And then you have tier one cities, maybe the ones with more than a million population. And then you have tier two plus, the smaller towns.
In these, the population is lower. About a little 100, 150 million and their per capita annual spend is about $1,200. But in tier two and three, the population is almost a billion people and their per capita spend is about half of these guys. So it's less spend per person, but many more people buying there. And the estimate is that by 2030, the tier two plus consumption will be 750 billion dollars, which is about half of what's going to happen. In other words, the future of consumption is going to be in tier two plus cities. More buyers, less purchasing power per buyers, but their total buying equal to all the buying in metro and tier one.
And now we know aspiration has no zip code. Aspiration is everywhere, no matter whether they live in the smallest town. Digital exposure, we talked about how everybody is using reels, YouTube, Instagram and so on. They're seeing what's happening, they're seeing all the influencers. Their aspirations are matching, they want the same brands, they want the same beauty, same experience. Consumption is following and physical consumption is also going up. So thanks to this Instagram and all that, everybody wants to look better. Salon, spas, wellness centers are booming in tier two plus cities. So because of the nature of this distribution, it is now bringing everybody to the same level of aspiration. This is a huge thing.
Now this is not the first time that somebody used a technology for bringing people who are in smaller areas to have the same aspirations as what people have in the cities. In 1893, Sears Roebuck, Sears are there, Richard Sears launched the first catalog. It was a printed catalog, a very beautiful printed catalog. And he would distribute them to people living in rural America who would then order from the catalog saying, 'I want the same stuff the guys in the city is buying.' So this happened in 1893. So the same thing is happening now in a digital way. So all these people living in tier two plus cities are wanting the same things.
But there are a few differences. One is they are not necessarily all English speakers. They speak Hindi, Marathi, Telugu, Tamil, whatever. They're very value conscious, price sensitive, deal driven buyers. And they look at group, they want ratification by their friends and family. They want voice first capability. So this is what is required for this audience. But they're all aspiring. They all want this and that's why we expect half the consumption in the next five years to come from these areas.
Now Meesho is a good example of a company which has got in this right. They have grown from 136 million transacting users to 251. The frequency has gone up and the number of sellers has gone up. And this has led to a 40,000 crore annualized net merchandise value. So they have tapped into this aspirational market. They have many many buyers who are the first time buyers on their platform, the many sellers and it's really optimized for this segment. So this is a public company, this is all data in their public records.
Now this is very different from the US retail what happened. In the US retail, it took 100 years. As I said, Sears launched his catalog in 1893. Jeff Bezos launched Amazon in 1994. There was a 100 year gap between the first retailer and the latest e-commerce retailer. And in between, Walmart was launched in 1962 by Sam Walton. So it was a 100 year journey. So it was a gradual journey and what you saw that happening.
In India, everything is happening at the same time. It's all happening in 25 years. So you have Reliance which came up in the last 10 years, Dmart 2002, you have many Shoppers Stop, this, that, you have so many guys in physical retail. Then you had the whole e-commerce guys, Amazon, Flipkart, Myntra, Meesho, Big Basket, all these guys. They all came in the last 10 years. Then you had the quick commerce guys, they came in the last five years. Blinkit, Zepto, Instamart and so on. And then of course many of you have your own brand.coms, you places where you sell.
So all these things have happened in the last 25 years or less. In other words, where in the US it was a 100, 125 year journey, now it's crunched into 25 years in multiple formats. So that's what the excitement is there. And this is actually what makes it interesting because you have democratized commerce.
If you're a brand, you have so many choices. You can go direct with a brand.com, you can go through quick commerce, you can go to these big guys, you can do anything. And consumers have choices. Consumers can go to the store, they can order on quick commerce, they can do whatever. So fundamentally because of the fragmented nature of channels, there's opportunity for both buyers and sellers. And I'll come to why something's going to happen to make it even more exciting.
Now this gives the penetration across multiple channels. The good news is every channel is growing. It's not that one channel is replacing another channel. So general trade, you know, what we know of these millions of small shops, they are itself going to go from 760 billion to 1.1 trillion. So that it's a rising tide, every boat is going up. Modern trade, the Reliance and Dmarts of the world is going up from 124 to 281. E-commerce is going up. But the two guys who are really growing very fast, quick commerce, expected to go from 3 billion to 50 billion by 2030. And brand.com direct to commerce from 7 to 33 billion. So quick commerce is growing at a 61% CAGR, e-commerce at 15% and brand.com at 31%. So all these are growing.
And then there are many others happening. There is now a form of a combination of modern trade with general trade where people are opening specific small format stores in small cities. So they're chains, but they're small format like a regular store, but modernized with technology. You have Apna Mart, you have SuperK. There's a four five of them all there. They are going to grow also and create thing. Then there's ONDC which is doing more than 15 million transactions a month which will grow and enable brands to reach consumers. So there's a lot happening in this space. So we have a very exciting journey because every channel is growing and as brands we can access any of these channels.
One case study, a company of yours, The Sleep Company, is also shown how you can combine physical and digital very well. This was a company which built a brand through digital first channels, but then used the data of where the demand was to figure out where they should open stores. Now these are not stores in the classical sense you go and buy a product. These are experience stores where you experience the mattress. You lie down, you fall asleep, you say this is I want to buy this mattress.
And then you place the order which is done through the regular warehouse and so on. So it's really experience store led. And today this company is doing 180 experience stores, more than 180 experience stores, 800 crores of annual run rate revenue. And majority of the revenue is from the people coming to the store, experiencing the mattress and buying it. A good example of digital and then going to physical. And more and more brands are figuring out the right combination of digital and physical, direct brand selling to selling through channels. So the whole thing is everybody's trying to figure out what's going to happen.
Now so far we talked about how we have the turbocharging alpha from digital public infrastructure. Now there's a new game in town. What will agentic AI do to this? In other words, you already have one booster coming from digital public infrastructure payments UPI. And now we have another booster coming from agentic AI and I'll try to explain, I'll try to hypothesize what is likely to happen.
Now this is an example of a live application which has been built as part of something we are working on called the India energy stack. And basically saying can people buy and sell electricity? Now that sounds like a very weird thing because you know you have a connection you go to your local provider you pay a monthly bill and all that. But what is this business of buying and selling electricity? The thesis is that as more and more people have their own production of electricity, as more and more people have rooftop solar for example and India has a plan to have 10 million households with rooftop solar, all the solar you have the energy you can produce you may not consume yourself.
And so far what you did was you tried to sell it to the grid. And there's something called net metering where you sell it to the grid and you get a credit for that. But that takes three to six months. What do you do? So is there a way to sell to your neighbor or to sell to somebody else? And we call that peer-to-peer energy trading. It's a whole new idea because we didn't have this before. And India is building a national platform for peer-to-peer energy trading. So today a farmer in UP who has a rooftop solar has excess energy can sell to a tailor in Delhi who reduces electricity bill by buying power from you. And you can do that now.
But how the hell do you sell electricity? I mean it's very complicated and it's peer-to-peer it's not even about brand selling it. That's where agentic AI comes in. So this is possible because an agent is there on both sides. There's an agent for the seller, there's an agent for the buyer. And both of them can be activated by voice. And both of them, the complexity of selling electricity is hidden behind in the app. So you can give a simple voice command to sell and you can give a simple voice command to buy.
So this because of using this agentic AI properties suddenly you're able to make a new and complex idea of selling small chunks of sachets of electricity you can make it a phenomenon. And that is the power of agentic AI that you can essentially simplify. Remember we talked about the fact that these tier two towns it's about Hindi Tamil Marathi and all that it's about voice. So all that can now be enabled by agentic AI and that's what we have shown in this live example.
So the next big advantage is how do we use agentic AI to bridge the gap to untapped consumers. Now this is already coming on a number of things that have happened. We have GST which has created a single market for India. So you don't need a warehouse in every state you can design your warehouses based on your needs, seamless commerce. You have FASTag I talked about that you can go through highways very quickly, e-way bills which can be shown on a state border you don't have to open the truck you can just show the e-way bill. You have digital payments we talked about that and many many logistics companies have come the whole e-commerce thing is created delivery and shadow facts and e-cart and all that. So there all these companies are coming up, Rozana, right? So all these are coming up to reach your last mile.
And then thanks to AI we are able to apply these are all real applications you can apply the AI at the back end. You can intent recognition so somebody says something in Hindi and you'll figure out what he actually wants to buy. You can do intent recognition using large language models you can have complex inventory across multiple SKUs. And of course because it's a remote transaction fraud and all that can be detected.
But what's happening at the front end is very important. First, credit is becoming easier thanks to the account aggregator UPI on credit and all these various things. Credit will be available to a consumer at the point of purchase. Now this means that somebody can borrow and on a EMI or BNPL kind of terms and buy something online.
Now India 15 years back was a prepaid society. If you remember, you may not remember but when we had those feature phones and voice and all that, poor people would pay in advance and buy minutes. And then they would use the minutes and then buy more minutes. That was called a prepaid voice factory. Right? So we went from a prepaid world where we paid in advance to get something because nobody knew who I was, to a world where credit will be on tap for everyone.
So that credit on tap for a billion people using the digital footprint dramatically changes the nature of commerce because now you can buy things in advance. And then along with the credit you have agentic AI. It'll reduce friction make it simple you can onboard very easily you can hide complexity you can do it in any language and voice AI is going to be big. So we are seeing already the number of initiatives we have at XStep about voice AI because we want to make sure that Indian language voice is ubiquitous and it is practical it should have a very high level of confidence that it works. Because Indians don't speak one language they'll mix Hindi English Tamil in one sentence. You don't know what's going on. So AI has to figure all that out. So fundamentally vernacular voice and assisted commerce will all happen. The agent will help you to select go through the catalog and all that.
So this means that you are now creating a whole new paradigm of shopping possibilities where you dramatically lower the cost of doing transactions. The cost and the pain of that. It also has other implications on channels I'll come to that in a minute.
So today if you look at the e-commerce funnel we have close to 875 million users, WhatsApp 700 million, annual e-commerce users about 500 million, daily shoppers is maybe 50 million, monthly maybe 100 million. In other words the number of people shopping is far less than the number of people online. And therefore there is a gap. The gap is because shopping is complex. Shopping is more difficult than sending a mail or making a UPI payment. If you can make shopping as easy as sending a mail or making a UPI payment then every online person is a potential shopper.
So if you get this incremental opportunity to tap into this base and this is only going to grow you can increase. So what if you get this right then you will have so many people who will become buyers. So this is the agentic alpha. So digital technology gives us one alpha over regular things, agentic gives one more layer over that.
But agentic is not just about ease of use. Agentic also changes the dynamics of who has the purchasing power. So tomorrow if you're a brand and you have an agent which can sell, any consumer with a buying agent can talk to you and order stuff. In other words you don't need an aggregator in between. So suddenly your ability for your brand to reach consumers by having the consumer's agent talk to your agent dramatically changes. So the very structure of channels can change. So many of you will find that you can benefit from this by going out to agentic thing and letting other people order. So it's not just that you're making it simpler for people to use the fundamental power structure changes because there's nobody in between sitting and directing traffic to you you can talk to the agent and my consumer agent will search for some product look at your catalog look at somebody's catalog decide what to buy buy it. So the whole thing is changing. So there's a fundamental transition and power shift happening here. And therefore agentic is going to be a very big thing if you can take advantage of it.
So first we said there are macro tailwinds urbanization rising incomes young population branded all that stuff. This to any country. But on top of that you have DPI payments commerce at scale inclusion which is the alpha one over the regular factors. And now we have this new thing called agentic AI which is the next wave. Agentic AI automating and unlocking new use cases. So all this is at play.
So what does this mean? Today we have if you look at the last 2019-2025 the GDP growth CAGR in nominal terms of 6.8% consumption grew at 7%. We expect that in the next five years it will grow at GDP nominal rate that is not nominal 10.2% consumption 10.2%. This means that consumption will grow from 240 billion to 390 billion. In other words, the incremental consumption is 150 billion dollars.
But this does not take into account what Agentic AI can do to all this. Agentic AI can dramatically increase the number of buyers. You'll have more sales and more frequent sales. And if Agentic AI can enable a direct connect between the seller's agent and the buyer's agent, you're opening up new channels. Both these things can happen. It's up to you guys. I'm just giving gyan.
So, if this is true, we're going to have 1.5 trillion dollars of incremental consumption next 5 years. And then with Agentic AI, it'll go even further. So, this is the future you guys have to aim for. Thank you very much.
