In Spite of Having So Much Data, Why Isn’t India Using It Better Than the USA or Japan?

India is often called the world’s data capital. With over a billion people rapidly coming online, India generates a mind-boggling amount of digital information every day. From mobile usage, social media, e-commerce, payments, health records, and government databases, the sheer volume of data being produced is enormous. Yet, when it comes to harnessing this data for innovation, economic growth, and societal benefit, India still lags behind countries like the USA and Japan. Why is that the case? Let’s dive deep into the reasons, using simple, human words.

India’s Data Explosion: The Numbers Tell a Story

First, let’s appreciate the scale. Between 2018 and 2022, India saw a 170% increase in internet users. The country now leads the Asia-Pacific region (excluding China) in data center capacity, overtaking Japan, Singapore, and Australia. Investments in data centers have crossed $40 billion, with global giants and Indian conglomerates betting big on the nation’s digital future. India’s mobile data usage is among the highest in the world, and data is more affordable here than in most countries.

But despite this massive digital footprint, India is not yet the global leader in using data for advanced applications like artificial intelligence, precision healthcare, or smart governance. The USA and Japan, with smaller populations, seem to extract much more value from their data.

Where Does India Stand in Data Usage?

So, if India has the data, the infrastructure, and the users, why isn’t it ahead?

1. Infrastructure: The Foundation Still Needs Work

While India has made huge strides in building data centers and digital infrastructure, there are still gaps:

• 5G Rollout Is Slow: India ranks 33 out of 39 in the 5G Connectivity Index. The USA and Japan have much higher 5G penetration, which enables faster, more reliable data transfer. This is crucial for real-time applications like autonomous vehicles, telemedicine, and industrial automation.

• Device Affordability: Data is cheap, but the devices to use it—especially 5G-enabled smartphones—are still expensive for many Indians. This limits the ability of the average person to generate and consume advanced data-driven services.

• Internet Quality: While urban centers are well-connected, rural areas still struggle with patchy connectivity and slow speeds. This digital divide means a large chunk of India’s population is not fully participating in the data economy.

2. Data Quality: Not Just Quantity, But Usability

Having a lot of data is not the same as having useful data.

• Fragmented Data Silos: Data in India is often scattered across different government departments, companies, and platforms. There is no seamless integration, making it hard to get a complete picture or run advanced analytics.

• Lack of Standardization: Data collected by different agencies or companies may not follow the same formats or standards, making it difficult to combine or compare.

• Incomplete and Inaccurate Data: Many databases have missing, outdated, or incorrect information. For example, government records may not be regularly updated, and private companies may not verify user data.

In contrast, the USA and Japan have invested for decades in building reliable, standardized data systems that can be easily analyzed and shared.

3. Policy and Regulation: Still Evolving

India’s data policies are still catching up with the digital revolution.

• Data Localization Confusion: India has debated requiring companies to store data locally, but the rules are inconsistent across sectors. While local storage can help with privacy and security, unclear or restrictive rules can also scare away foreign investment and limit innovation.

• Privacy Laws Still Maturing: The USA and Japan have well-established privacy and data protection laws. India’s laws are still evolving, creating uncertainty for businesses and individuals.

• Slow Legal Processes: When law enforcement needs access to data, the process can take months due to international legal hurdles. This slows down investigations and reduces the effectiveness of data-driven governance.

4. Talent and Skills: The Human Factor

• Shortage of Data Scientists: While India produces a huge number of engineers, there is a shortage of highly skilled data scientists and AI experts who can turn raw data into actionable insights.

• Brain Drain: Many of India’s best tech minds move abroad for better opportunities, especially to the USA, which continues to attract and retain top talent.

• Limited Industry-Academia Collaboration: In the USA and Japan, universities and companies work closely on cutting-edge research and data-driven innovation. In India, such partnerships are still rare.

5. Innovation Ecosystem: Startups and Big Tech

• Nascent Startup Culture: India has a booming startup scene, but most startups focus on consumer apps or services rather than deep-tech or data-driven products.

• Lack of Big Tech Giants: The USA is home to Google, Amazon, Microsoft, and Apple—companies that set the pace for global data innovation. Japan has Sony, SoftBank, and others driving technology. India, despite its size, has yet to produce a global tech giant of similar scale and influence.

• Risk Aversion: Indian companies and investors are often more cautious, preferring proven business models over risky, data-driven innovation.

6. Government Use of Data: Progress, But Not Transformation

• Digital India Initiatives: The government has launched ambitious projects like Aadhaar (biometric ID), UPI (digital payments), and the National Digital Health Mission. These generate valuable data, but the use of this data for proactive, predictive governance is still limited.

• Limited Data Sharing: Government departments often work in silos, reluctant to share data with each other or with the private sector. This limits the potential for cross-sector innovation.

• Focus on Compliance, Not Value Creation: Much of the government’s data policy is focused on compliance and control, rather than on enabling innovation and value creation from data.

7. Economic and Social Factors

• Digital Divide: A significant portion of India’s population still lacks access to digital devices or the skills to use them. This limits the diversity and richness of the data being generated and used.

• Low Trust in Digital Systems: Concerns about privacy, data misuse, and cybercrime make people hesitant to share personal information or use digital services fully.

• Informal Economy: Much of India’s economy is still informal and cash-based, generating little digital data that can be captured or analyzed.

8. International Comparison: What Are the USA and Japan Doing Differently?

Let’s break down some of the key differences:

USA:

• Massive Investment in R&D: The USA invests heavily in research and development, especially in data science, AI, and cloud computing.

• Mature Digital Ecosystem: Decades of building robust, standardized data systems across sectors.

• Strong Legal Frameworks: Clear privacy laws, intellectual property protection, and data-sharing agreements.

• Global Tech Leaders: Home to the world’s biggest tech companies, which set global standards for data usage and innovation.

• Talent Magnet: Attracts the best minds from around the world, including India.

Japan:

• Focus on Quality and Precision: Japanese companies are known for their meticulous approach to data quality and reliability.

• Advanced Infrastructure: Early adoption of high-speed internet, 5G, and IoT technologies.

• Government-Industry Collaboration: Strong partnerships between government, industry, and academia to drive innovation.

• Cultural Emphasis on Privacy and Security: High public trust in digital systems due to strong privacy protections.

What’s Working in India’s Favor?

Despite the challenges, India has some unique advantages:

• Youthful, Tech-Savvy Population: A large, young population eager to adopt new technologies.

• Affordable Data: India offers some of the world’s cheapest mobile data, driving rapid digital adoption.

• Growing Investment: Billions of dollars are pouring into data centers, cloud services, and digital infrastructure.

• Government Push: Initiatives like Digital India, Aadhaar, and UPI are creating a foundation for future data-driven innovation.

What Needs to Change for India to Lead?

To truly harness the power of its data, India needs to focus on a few key areas:

1. Build Robust Infrastructure:
Accelerate the rollout of high-speed internet and affordable devices, especially in rural areas.

2. Improve Data Quality and Integration:
Standardize data collection and encourage sharing across sectors while protecting privacy.

3. Clarify Data Policies:
Create clear, consistent rules for data storage, privacy, and sharing that encourage innovation while protecting citizens.

4. Invest in Talent:
Expand training in data science, AI, and related fields. Encourage industry-academia collaboration and retain top talent.

5. Foster an Innovation Ecosystem:
Support startups working on deep-tech and data-driven solutions. Encourage risk-taking and provide funding for high-impact research.

6. Promote Data-driven Governance:
Use data proactively for policy-making, public health, education, and disaster response, not just for compliance.

7. Bridge the Digital Divide:
Invest in digital literacy and inclusion to ensure all Indians can participate in the data economy.

India stands at a crossroads. It has the data, the people, and the ambition. What it needs now is the vision and execution to turn this raw material into real-world value. The USA and Japan show what’s possible when data is treated not just as a byproduct, but as a strategic asset—integrated into every aspect of society, economy, and governance.

India’s journey is just beginning. With the right investments, policies, and mindset, there’s no reason why India can’t become a global leader in using data for good. The world is watching, and the opportunity is immense. The next decade will decide whether India can turn its data goldmine into a true digital revolution.