This enthusiastic approach leaves no doubt that India is placing a significant bet on Web3 in its journey towards becoming a $10 trillion economy by 2030. In doing so, India is also aligning itself with Japan, South Korea, Hong Kong, and other Southeast Asian regions that have demonstrated greater openness to Web3 technologies. After all, Web3 offers an innovative approach to address the urgent challenges of today. It is fostering tech-driven innovation on a global scale and giving rise to disruptive solutions in various sectors. By integrating Web3 with existing legacy systems, governments can now unlock new opportunities across industries like finance, health care, supply chain management, e-governance and digital content creation, to name a few.

For India, embracing Web3 offers a chance to bridge the digital divide and democratize opportunities across its geography. Till date, a vast majority of India’s population lives in Tier III towns and remote areas. Web3 technologies can help provide access to financial services, education, healthcare, and marketplaces by transcending geographical barriers. Moreover, decentralised applications have the power to streamline government services, improve public service delivery, and enhance transparency and accountability in governance, contributing to a more efficient and citizen-centric administration. With the transformative potential of Web3, India can embark on a path towards inclusive growth and prosperity. By embracing the decentralised and interconnected nature of Web3, India has the potential to pave the way for an inclusive and sustainable digital economy.

Nonetheless, despite the immense potential of Web3 and its emerging technologies, its adoption in India faces a twofold challenge – a restricted understanding of Web3 coupled with the absence of a conducive framework. Unlike its global counterparts, India is yet to establish policy frameworks and guardrails that define and enforce a governance structure for the nascent Web3 ecosystem. An enabling policy framework is critical for promoting innovation and facilitating the growth of the Web3 ecosystem along with simultaneously addressing associated risks.

In the Indian context, a hub and spoke policy framework is an ideal approach for regulating Web3 technologies. The proposed governance framework would entail setting up a central regulatory "hub", ideally housed within the Ministry of Electronics and Information Technology, which would collaborate with sector-specific spokes. These sector-specific spokes would focus on addressing the unique challenges of governance of each sector, such as issues of licensing and registration, consumer protection and investor education, regulatory sandbox approach, international collaboration and continuous review and adaptation of emerging technology. These sector-specific spokes will work closely with the central regulatory hub to implement policies and regulations that align with the overarching vision. Such coordination would ensure effective oversight and governance of Web3 technologies while fostering innovation and maintaining consumer protection. An effective hub and spoke model will seamlessly align with recent legislations like the Digital India and Digital Personal Data Protection, and will effectively tackle platform liability concerns, address security threats, and establish a robust framework for data privacy and security in decentralised applications.

From a developer and provider perspective, India is swiftly emerging as one of the foremost nations in the realm of Web3. As indicated in research conducted by NASSCOM, a remarkable eleven percent of the global Web3 talent is concentrated in India, making it the third largest talent pool in this sector, trailing only behind the United States and China. This talent pool is experiencing the fastest expansion worldwide, projected to grow at a remarkable rate of 120% over the next couple of years. To capitalise on the competitive advantage this offers to the nation and to position India as a frontrunner in Web3 within the Southeast Asian market, the establishment of a supportive policy framework becomes a prerequisite.

The emergence and adoption of Web3 technologies is not merely a trend. It presents a transformative force with profound implications for India's digital future. By embracing the immense potential of Web3, India can revolutionise its existing systems, making them more transparent, secure and efficient.

This article is authored by Spriha Pandey, senior associate and Gaurav Chaudhary, account director, Chase India.