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While the Narendra Modi government may have gone out of the way to promote the Gujarat International Finance Tec-City (GIFT City), sought to be developed as India’s formidable financial technology hub off the state capital Gandhinagar, just 20 km from Ahmedabad, a recent report, prepared by Tracxn Technologies suggests that neither of the two cities figure in the list of top FinTech funding receiving centres.
Results of city-wise trends on funding raised in first quarter of 2024, released by Tracxn, claiming to be a leading market intelligence platform, showo that Bengaluru topped with $247 million and 44% of all funding received, followed by Mumbai ($194 million or 35%), Hyderabad ($75.0 million or 13%), Gurgaon ($19.7 million or 3%), and Surat – the only Gujarat city to figure in Tracxn’s list of cities -- ($5.0 million or 1%).Offering a comparison of the first quarter of 2024 with the quarterly performance of since Q2 of 2022, the report also indicates that the FinTech startup ecosystem has failed to catch up with the high investment trend witnessed in 2022. Thus, the Q1 2024 result worked out by Tracxn shows that the FinTech sector received a total investment of $550.8 million as against a whopping $1.3 billion in Q1 of 2023.
The trend suggests a sharp downfall over the period for which data has been released: Thus, the Q4 of 2023 received $346.7 million as against $537.4 million in Q4 of 2022; Q3 of 2023 received $476.6 million as against $973.4 million in Q3 of 2022; and Q2 of 2023 received $138.5 million as against $1.6 billion in Q2 of 2022.
Yet, ironically, the report seeks to heap praise the Indian economy, which it says “showed a strong performance in the previous quarter with a growth of 8.4%.” Agreeing that the “this number is expected to decline to 5.9% in Q1 2024 as per government sources”, it insists, “The Government of India has always been focused on promoting the tech ecosystem in the country.”
The declining trend in the funding of the FinTech startup ecosystem has come despite “the announcement of the Startup India Initiative in 2016”, which came up with “multiple schemes and initiatives have been introduced to boost the growth of India’s startup ecosystem”, to quote from the report. Thus, “Around $12 billion was allocated in the Interim Budget for 2024 for providing interest-free loans for 50 years to promote R&D in the private sector in the country.”
The declining trend in the funding of the FinTech startup ecosystem has come despite “the announcement of the Startup India Initiative in 2016”, which came up with “multiple schemes and initiatives have been introduced to boost the growth of India’s startup ecosystem”, to quote from the report. Thus, “Around $12 billion was allocated in the Interim Budget for 2024 for providing interest-free loans for 50 years to promote R&D in the private sector in the country.”
The report quotes the IMF to say that India is “expected to become the third-largest economy in the world by 2027 with a GDP of over $5 trillion”, and “with a large consumer base comprising the world’s largest young population and rising urban incomes, India is set to see good growth in the coming years.” 
However, this comparison, which many would consider incomparable (as the compared periods do not match), also shows that, to quote from the report, “Q1 2024 witnessed a significant 75% drop in seed-stage funding, which was at $9.9 million compared to $39.2 million in the previous quarter. Early-stage funding saw a 35% drop from $227 million raised in Q4 2023 to $147 million in Q1 2024. Only late-stage funding rounds witnessed a phenomenal rise of 392% to $394 million, compared to $80.1 million in Q4 2023.”
It adds, “FinTech has consistently been one of the top funded sectors in the country. Increasing smartphone penetration, the push towards a cashless economy, and other favourable regulatory policies have helped the sector receive consistent investor interest.”
Making a comparison of funding in Q1 of 2024 and Q4 of 2023 instead of Q1 of 2023, the report says, “Banking Tech, the third-highest funded sector, received funding of $85.8 million in Q1 2024, which is a growth of 187% compared to the $29.9 million in funding witnessed in Q4 2023, benefiting substantially from record-breaking UPI transactions and digital banking’s widespread adoption due to rising internet and mobile device penetration in cities and rural areas.”
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