India Inc. forecasts business trends to look out for in 2022
How India Inc. will operate and grow in 2022, while following and working with the post-COVID norms, discuss field experts.
Anushruti Singh December 23, 2021
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Nothing ever remains the same. Over the last two years, India Inc. has undergone a significant transformation. Every industry has been disrupted in some way, from retail to fashion to housing, and from small businesses to enterprises. Technology has played a large role in every case.
As we enter a new year with new hopes and new goals, the industry experts are forecasting new trends that we can look forward to in the coming year.
It will be repeat mode for the start-up IPOs
The global economy has witnessed a lot of unrest in the last year and a half with industries shutting down and many start-ups choosing to shut shop as well. But we also witnessed angel investors taking the plunge and supporting the Indian start-up ecosystem in a financially crucial phase by investing in start-ups and giving them wings.
Many start-ups have been receiving continuous support from the investing community and are growing rapidly. And many have reached a stage where they are able to leverage the opportunity of applying for an IPO, to grow further and to raise capital from public investors. This benefits not only the start-up but also its existing private investors.
According to an EY research, 72 IPOs were listed on the Indian stock exchanges between January and September 2021. This streak will continue as we approach 2022, says Vinay Bansal, Founder & CEO of Inflection Point Ventures.
“2021 has been a blessing in terms of IPOs. Witnessing the market from Freshworks, to Nykaa to Zomato, this entire experience has been quite a learning for everyone in the industry. Despite many fluctuations in the Indian stock market, the pandemic, in particular, did not affect it majorly, hence 2022 is being viewed as an extension of 2021 in terms of the IPO success of many start-ups. 2022 already has some big IPO launches lined up, like Delhivery’s, Byju’s, and Ola’s. This will continue the IPO streak in the coming year, maintaining the current buzz in the Indian stock market along with keeping the start-up investor sentiment positive,” he says.
AI to become more accessible
There’s no limit when it comes to technological innovations and there is always something new afoot in this arena. Artificial Intelligence is the same.
AI technologies have been growing at an incredible pace for the past couple of years and will continue to do so in the coming year as well. With the advent of AI as a SAAS offering by players like AWS, Google, and Microsoft and a lot of good work done by the open-source technologies, AI and ML technologies have become more and more accessible, and that should improve its rate of adoption by small and medium businesses.
“This would mean that adding ‘smart’ capabilities to the existing offerings would be possible without breaking the bank,” says Akhil Gupta, Head of Technology at Faballey.
The popularity of voice-based devices and smart assistants like Alexa and Siri means that people have warmed up to the idea of AI-powered devices and this will present an opportunity for a lot of SMEs to build similar features into their products.
Talking about the new year and tech trends, he adds, “As more and more throng towards the internet and online services in this post-COVID world to fulfil their requirements and make their transactions, it would be pragmatic for the providers of these services to adopt AI-powered tools – be it for customer interaction, analytics, or even fraud detection.”
“To be able to recommend and upsell new products to a customer based on their history is invaluable and can be easily accomplished using AI. And this won’t be limited to just the D2C businesses but also the B2B ones, who will be able to create a major differentiating factor in their offerings by adopting AI and ML. Any task that pertains to working with data on a large scale could and will be greatly benefitted by using new ML techniques,” he further adds.
Adding in his thoughts, Mandeep Arora, MD, UBON, a consumer electronic gadget brand says, “The consumer electronics market has experienced incredible growth and AI is going to play a pivotal role in the coming years. The growing customer awareness about innovative technologies and the rapid growth of the consumer electronics sector will continue to expand the customer base. Mobility, connectivity and personalization remain the most important current trends within consumer electronics, as technology has been moulded to help the users connect in a seamless and meaningful way.”
Online classrooms to look more real
Since 2020, online education has been the way of life for students and for the people in the education sector.
The education industry was able to keep standing due to the help of technology. As we move into a new year, Indian educators talk about the need to make education more employable and to reach every region with better infrastructure and technology integration. Along with making the youth self-reliant through skill-based education as envisioned in the National Education Policy 2020.
Dr Silpi Sahoo, Chairperson, SAI International Education Group, says, “2022 will put more emphasis on the policy that gives additional impetus to vocational education by introducing vocational subjects and training at the school level.”
Talking about the trends in the education sector, she feels that the educators will work on the inclusion of new technology tools like blockchain, AR cloud and even Metaverse in and around their systems.
“The use of blockchain in education is still in its nascent stages but in the future, it will be used as a tool for data security. Gartner’s survey of 2019 reveals that in the next two years almost 20 per cent of higher educational institutes will be using blockchain. It will help streamline the tedious processes of verifications, transfers of records, maintaining employee records and students’ unique credentials, making them easier and error-free,” says Dr Sahoo.
Metaverse or ‘mirror world’, or the ‘spacial internet’, or even the ‘AR cloud’-a virtual learning experience with enhanced physical reality, will be the future of education in the coming years.
“Online learning will be more real with the help of Metaverse which involves the concept of Augmented and Virtual Reality (AR & VR). The year 2021 had large format virtual, almost realistic platforms for hosting school events and with the coming of Metaverse, these events as well as the online classrooms will look more real than ever,” she asserts.
EV manufacturing to get high
India’s mobility future is electric. The electrification of Indian transportation is on a roll. Most of this growth is stemming from light electric vehicles (LEVs), particularly 2 and 3 wheelers.
They are the lowest hanging fruit as their charging requirements are comparatively minimal. Moreover, the current range of these LEVs is already viable, both technically and commercially, for the vast majority of use cases like urban commutes.
With the upcoming release of EVs such as Ola’s electric scooters next year, Omer Basith, CEO of Virtual Forest, an ESDM player specialising in EV hardware feels that the Indian EV market is at an inflection point. “EVs are close to reaching critical mass and becoming mainstream. Disruptive companies like Ola and Ather are driving the narrative and experts are eager to see how the established automotive companies will respond,” he says.
Indian manufacturers have an opportunity to meet this rapidly growing demand for EVs, but they will need a robust domestic manufacturing ecosystem to secure a supply chain for the critical components, he says.
“Motor controllers, which are the neurocentres of EVs and unlock the unique advantages of EV power trains, are one such component. The domestic market opportunity for EV motor controllers (2 & 3 wheelers) in 2021 was roughly 8 million dollars. Conservative industry projections indicate that it will grow by 3000 per cent to 267 million dollars by 2025. Similar growth for other electronic sub-assemblies like Battery Management Systems (BMS) and interface electronics will be critical in ensuring the growth of the domestic EV industry,” he adds.
E-commerce to keep gaining ground
The pandemic was a serious game changer for the e-commerce industry. According to Shopify, over 150 million people made their first ever online purchase in 2020.
With this, the Indian e-commerce market is expected to grow to US$ 111.40 billion by 2025 from US$ 46.2 billion as of 2020. By 2030, it is expected to reach US$ 350 billion. The experts believe that there will be some new trends to watch for in 2022. Social e-commerce is going to be one such promising trend. E-commerce brands will engage in personalised offerings and experiences to differentiate themselves from others. They will find creative ways to market themselves. And will also leverage AI for a better customer experience.
Besides that, just as India is witnessing a rush in the B2C e-commerce arena, it will witness the same in the B2B e-commerce segment as well.
Rahul Goel, CFO, Moglix, a B2B e-commerce platform says, “With the deeper penetration of smartphones among rural and suburban users and digital financing, India has a digital dividend. With a target of growing to a US$ 10 trillion economy by 2030, the Make in India initiative in conjunction with initiatives like onboarding 2.5 million registered sellers on the GeM and the digital transformation of B2B commerce will be the key to unlocking the potential of people and family-owned businesses in tier 2 and tier 3 cities, towns, and villages. How we navigate infrastructure development challenges, enable financing through loans with minimal documentation, and education on both the customer and supplier sides will be the key factors. The way forward should be to focus equally on large- and small-scale suppliers, enable payment digitisation, build a better infrastructure for last-mile deliveries and connect all of these to a single digitised catalogue to create a plug and play experience for B2B ecommerce users.”
Trends in D2C
India is having a D2C moment and is it going to continue in 2022 as well.
According to KPMG, there are over 800 D2C brands and the market is projected to grow by $100 billion by 2025.
Aditya Ruia, Co-founder, Beco, a lifestyle D2C brand says, “The D2C sector in India is becoming more community driven. The shift is increasingly moving towards further segmenting and slicing the audience to target consumers based on their locations, interests, and purchase behaviour (e.g., customers who haven’t bought a particular product in 6 months but have a high order value capacity) while addressing consumer needs.”
The recent development of data trends and AI controlling customisation will further help D2C brands to understand consumer needs, thus elevating the customer experience. Also, with the changing times and increased awareness regarding climate change, sustainability and conscious living have paved the way for mindful living which is an emerging trend in the D2C sector.
“Consumers are now making more informed choices, and more are inclined towards brands which are correlated with sustainability. With the new normal, we have observed a great demand for eco-friendly products and a growing inclination towards sustainable living which will persist.” he adds.
Luxury real estate: ESG and sustainability quotient are in
We just witnessed people globally talking about climate change and how to handle the economy around it. According to global studies, buildings account for more than 30 per cent of global greenhouse gas emissions and consume roughly one-fifth of the world’s energy.
In India, the construction industry accounts for up to 22 per cent of total emissions and is one of the largest consumers of natural resources. As a result, in the country’s fight against climate change, the real estate sector has enormous potential to reduce emissions through sustainable practices in design, construction, and operation.
According to Rohit Gupta – CEO, Mantra Properties, several real estate firms have made a concerted effort to adopt high-quality environmentally sustainable practises and wellness initiatives. And are pledging to reduce emissions and achieve a net-zero carbon footprint.
“When implementing ESG policies, water conservation, clean energy, waste management and disposal, and urban afforestation are all important factors to consider. And this is going to be the trend for 2022,” he says.
The development of smart cities, where infrastructure is organised more efficiently in the form of reliable and greener transportation, robust communication networks, and optimization of energy consumption, water supply, and waste management, is another example of the ESG impact on real estate and infrastructure.
Gupta goes on to say that there has been a noticeable shift in luxury home buyers’ mindsets, which will drive the luxury home market in 2022.
“Sustainability, rather than hard factors like price, is driving the future of luxury, with an emphasis on more delicate aspects like building emotional connections and relishing the sense of doing good for the environment. Buyers with a more conscious mindset are looking for amenities that emphasise holistic health and environmental conservation. This entails energy efficiency, water conservation, clean air, and buildings that have received the highest level of environmental certifications. Furthermore, buyers are increasingly seeking homes that provide the experience of a getaway in a green oasis in the heart of the city,” he elaborates.
Smart living is in
Consumers today not only want their homes to be luxurious, but they also want them to be smart. That’s where the consumer appliances market is going to witness demand in 2022.
Vipin Aggarwal, Co-founder, Candes, asserts, “Technological advancements have led to an era of development for smart living, which has opened ways for smart appliances and is expected to drive the growth of the household appliances market in 2022. The trend for all things domestic to become smart and capable of connecting with each other in more useful ways will continue in the upcoming year as well. Rapid growth will be seen in the sales of washing machines and smart TVs. Candes has always strived to exceed the benchmarks in quality and best practices, which we will continue to do in the next FY as well.”
WFH and hiring trends
Remote work, especially in the digital and tech industry is here to stay.
According to a survey by Nasscom and job portal Indeed, around 70 per cent of IT companies are trying to make the hybrid model work effectively. The survey found that 66 per cent of the respondents reported higher employee satisfaction due to working remotely.
“To me, the hybrid model is here to stay in 2022 but it is going to be sector-specific. Many companies in the IT and allied industries will continue to work with a hybrid model and grow at a rapid pace as they have adapted to the hybrid set-up quickly,” comments Yugandhar Penubolu, Founder & CEO, Winzard, a talent & performance development solutions provider.
Whereas Tuomo Virkkunen, CEO of Boardio, an advisory recruitment platform feels that if balanced well, it can be a favourable ‘way of business life’ for both businesses and their talent pools.
“This also means a change in the way businesses look at talent acquisition and how skilled experts look at creating opportunities for their areas of expertise. Asset light business models, contractors and on demand experts will be at the core of the fundamental business strategies in 2022,” he adds.
Meanwhile, when it comes to the hiring trends for 2022, Virkkunen believes that geographical boundaries no longer matter.
“With an increasingly remote and borderless business landscape, we will see companies actively tap into an advisory talent pool to scale, innovate and stay on top of the emerging opportunity areas. Highly skilled professionals will increasingly prefer an independent career path due to the changing business outlook,” he says.
Besides that, virtual hiring will remain the norm, and recruiters will now focus more on diversity, equality and inclusion goals.
Lounge wear is the new office wear
No doubt work from home is not going to end anytime soon.
Since the past two years, professionals have been working in comfortable clothes while on video calls. Raj Rana, Founder & CEO of Sexy Beast, a lounge wear brand, predicts that in 2022 it will be okay to wear lounge boxers and pjs with bold prints while visiting a bank, grabbing a takeaway, taking your dog for a walk, or even on an online call while working from home.
“Who has the time for different outfits for all these occasions! That’s why, our focus is on products and apparel that allow you to express yourself with confidence and swagger when working from home or when you are out and about. The products are versatile in their design and construction so they can be worn in pretty much any situation. As we come out of the tailwind of COVID devastation, I believe we will see people being much more laid back, with less judgment about what someone is wearing,” he avers.
Also, the pandemic has turned the spotlight on to what is most important for us as individuals and communities.
Rana personally feels that the present time is all about self-care and finding joy in every moment. “The absence of physical connections has almost been removed from us. Nobody is going to judge you on your appearance when they see you. They’ll just be glad to see you and connect with you on a very real basis,” he says.
Clothes to get expensive
From January, the GST rate on apparel made of man-made fabrics and MMF textiles, will be 12 per cent, regardless of their value. Previously, it was 5 per cent on garments costing up to Rs 1000. This clearly implies that clothing will become more expensive.
“Due to price hikes, demand for clothes might go down,” speculates Piyush Gnatra, Co-founder & Sales and Financial Head at Veirdo, an Ahmedabad based apparel brand.
In his opinion, even before the increase in the GST rates, the textile market was already expecting a price increase of 20-25 per cent in apparel costs in the coming season due to the hike in yarn and packaging material prices. The government’s decision to raise the GST rate has only made this hike more visible to consumers.
“The GST hike will have a major impact as the industry is facing inflationary pressure due to the rise in the prices of raw materials, especially yarn, packing materials and freight fees,” he adds.
In addition to these nine trends, there will be more in 2022 across various sectors and many new developments will take place. Until then, please keep reading SME Futures.