A crash course on India’s digital ID: why it has such staunch believers and fierce critics

India’s colorful festival of Holi. Photo credit: FaceMePLS.

India is in the midst of a digital transformation, with a nudge and a shove from the government. And it’s provoking extreme reactions – from activists who have challenged it in the country’s highest court to high profile tech evangelists who swear by it. How this plays out could have a huge impact on consumers and the tech startup ecosystem.

The transformation began with a mobile internet explosion. The influx of affordable smartphones from China set it off a couple of years ago. The latest spark is the rollout of a 4G network with affordable data packs by a new telecom operator, Reliance Jio.

Mukesh Ambani, chairman of Reliance Industries, who is also the richest man in the country, poured US$25 billion into laying out a 4G network and disrupting telecoms. Free data for an initial period was the hook to make users shift from other networks, which had started slashing prices even before Jio’s launch.

Within six months of its launch, Jip signed up over 100 million customers using the Aadhaar ID for authentication.

The key to its success would lie in the speed and scale of its adoption. And within six months of its launch in September last year, Jio signed up over 100 million customers. That’s seven new customers every second.

The secret to such a scorching pace – apart from the obvious eagerness of people to sign up for the data bonanza – lies in a biometric digital identity system called Aadhaar.

Aadhaar assigns a unique number and QR code to every citizen after taking their photographs, fingerprints, retina scans, and proofs of address and identity. Public-spirited tech evangelists – such as Nandan Nilekani, billionaire co-founder of IT giant Infosys – worked with the government to create a scalable infrastructure for it.

Today, more than a billion Indians are on this database. What’s more, Aadhaar has an open API (application programming interface) that can be called on to authenticate a person’s identity.

Sanjay Jain, an ex-Googler who worked with Nilekani on Aadhaar from its formative stage, informs Tech in Asia that 900 million such authentication calls were made in the month of July – that’s 30 million a day on average. Jain, who holds a masters degree in computer science from UCLA, was responsible for creating Google Map Maker, integrated in Google Maps. Now he’s helping build the so-called India Stack, whose primary layer is Aadhaar.

Source: Mary Meeker Internet Trends Report 2017.

Paperless onboarding of customers

Around a quarter of the authentication calls being made with an Aadhaar ID are for a digital KYC (know your customer) – the next layer of the India Stack. With this e-KYC, most of the time-consuming paperwork required for onboarding customers by a bank or telecom operator are going out of the window. That’s how it takes Jio just three minutes on average to issue a new SIM card.

The business use cases for this are many because now anybody with a smartphone and Aadhaar ID can provide two-factor authentication and enable a host of faster digital transactions. But it needed a Jio use case to show the size and speed of scaling that such a system can support, and how fast it can disrupt an existing way of doing business.

Concerns over privacy and security