How covid transformed tech and where challenges persist, in five charts

Now, five years later, airports, malls and theatres are full again. Students are back at school and companies are whittling down work-from-home options. While the pandemic set in motion big changes, such as the chip wars, there is also a growing realisation that digital transformation is still constrained by real-world factors such as physical infrastructure, regulations, business models and economic logic. 

Here are five areas where this has played out.

Semiconductors

During the pandemic, demand for electronics surged as remote work, online learning and home entertainment spiked globally. At the same time, the world faced a significant semiconductor shortage as lockdowns reduced production at semiconductor factories, mainly concentrated in east Asia.

Industries that were hit hard included automotive, consumer electronics and computing. By 2021 the shortage had become a global crisis, prompting governments and companies to invest heavily in domestic semiconductor manufacturing.

India did, too. In December 2021, the government introduced the Semicon India Programme with an outlay of ₹76,000 crore for incentives and support. The government has spent ₹1,738 crore on electronics R&D since 2020-21, nearly double the previous five-year block. 

Sizeable investments included those by Tata Electronics ($11 billion for semiconductor fabrication) and Micron Technology ($3.2 billion for assembly, testing, marking and packaging). However, India’s semiconductor imports rose from $5.2 billion in 2019-20 to $12.7 billion in 2023-24.

Fintech

The pandemic also disrupted traditional banking and cash transactions, pushing individuals and businesses toward digital alternatives. The interest in fintech surged. Venture capital investments into fintech jumped nearly five-fold to $8.1 billion in 2021 compared to 2020.

Fintech companies, especially digital lenders, capitalised on the demand for quick, unsecured loans through mobile apps. Small-ticket lending surged. At the same time, complaints about predatory lending, exorbitant interest rates, aggressive recovery tactics and inadequate customer data protection began surfacing. 

In September 2022, India’s central bank issued guidelines that curbed the role of fintechs as intermediaries. It also cracked down on first-loss default guarantee (FLDG) arrangements, in which fintechs absorbed initial loan losses. Many digital lenders found their business models untenable, and either shut down or pivoted to other businesses. VC investments in fintech dropped to $1.3 billion in 2024.

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UPI and other digital public infrastructure

Even as fintech startups faced headwinds, one fintech segment continued to grow – the Unified Payment Interface (UPI). About 16.1 billion UPI transactions were conducted in In February 2025, from about 1.3 billion in February 2020. 

Other elements of India’s digital public infrastructure (DPI) have also gained momentum since covid. For example, digital payment systems helped the government transfer cash to beneficiaries during the pandemic, while the CoWIN platform helped with vaccination scheduling and certification.

Now, India’s DPI covers a range of infrastructure for financial information, healthcare, commerce, education and travel. The account aggregator (AA) network, which lets individuals share their data with institutions digitally, had processed a total of 143 million transactions as of December 2024. 

The idea of DPI could become one of India’s influential exports. During its 2023 G20 presidency, India positioned DPI as a scalable, low-cost solution to bridge digital divides and enhance service delivery.

Agritech

India’s agricultural sector also faced several challenges during the pandemic. Disruptions in transportation and logistics delayed the movement of produce, and market access became an issue. There were also labour shortages. This led to an examination of how the system could be improved. In a briefing note in 2021, Bain & Co outlined three potential plays for companies in the agritech ecosystem: setting up an integrated agritech platform, creating an incubation wing for new business models, and reinventing current businesses.

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Bain said the changes in technology and regulations could create an estimated $30-35 billion value pool in agri-logistics, offtake and agri-input delivery by 2025. There are currently about 1,500 agritech startups in India, and the five most valuable among them have raised about $1.3 billion. Some of the early exuberance among investors has faded in the past five years, partly because of the funding winter and inherent challenges with some business models.

Healthcare

The pandemic’s impact on healthcare was more complex, as the industry grappled with resource reallocation, overwhelmed facilities, and restricted access to routine medical care. Telemedicine surged. The government allowed registered medical practitioners to provide remote consultation and launched a national telemedicine platform.

The pandemic also exposed gaps in public healthcare, prompting private players to invest in capacity expansion, medical equipment and digital health solutions, backed by private equity and venture capital. Such investments have now fallen, but AI’s promise could revive them. In a report last October, Bessemer Venture Partners, quoting Rock Health data, said that VCs were allocating 38% of new investments in healthcare to AI-enabled technology. 

“While the notion of AI replacing doctors remains a distant prospect, we are excited about the potential for AI to augment and enhance clinical capabilities. We envision AI as a tool to give healthcare providers ‘superpowers’, enabling them to deliver more efficient and effective care,” it said.

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