Investment in web3 infrastructure soars amid legal uncertainty in India
India’s web3 ecosystem is witnessing a surge in investment, with blockchain infrastructure emerging as the top priority for investors, despite persistent regulatory uncertainty.
According to the India Web3 Landscape Report 2024 by Hashed Emergent, blockchain startups secured $564 million in fresh funding this year—a 109% increase from 2023. A significant portion of this capital—$437 million—has flowed into infrastructure projects, marking a 224% jump from the previous year.
Investors are betting on layer-1 and layer-2 scaling solutions, decentralized physical infrastructure networks, and middleware platforms, seeing these as the backbone of blockchain’s long-term viability, according to Crypto News.
Infrastructure attracts capital as regulations stall
While web3 gaming and digital collectibles saw a decline in funding, financial services—particularly decentralized finance (DeFi)—have rebounded, securing $86 million in investments. However, despite the renewed interest, large-scale funding remains elusive. No web3 startup in India has secured a $100 million+ investment round since 2022, reflecting investor caution amid regulatory challenges.
High crypto taxes and stringent compliance requirements have driven many startups to relocate operations offshore, seeking friendlier jurisdictions. India’s 30% tax on virtual digital assets, combined with a 1% tax deducted at source (TDS) on every transaction, continues to deter both domestic and foreign capital.
Despite these hurdles, India remains a major player in the global web3 landscape. The country now accounts for 12% of the world’s web3 developers, and enterprise adoption is expanding across industries, from finance to supply chains. Whether India cements its position as a blockchain leader or loses momentum will depend on the government’s ability to provide a clear regulatory framework in the years ahead.
Meanwhile, the European Commission said the EU and India aim to finalize their free trade agreement by year-end to align priorities with global realities.
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