Digital India : Business Opportunities

The ongoing “Digital India” program is an ambitious and robust blueprint for transforming the digital identity of the country. The rising digital footprint of the country has transformed the way we live and communicate. In the past year, the government has initiated measures to advance communication infrastructure, and enhance connectivity the results of which should start becoming visible soon.

The government’s Digital India initiative is a $1 trillion (Rs. 66 Lac Crores) business opportunity across IT and IT-enabled services, telecom and electronics manufacturing, communications.

“Nearly $400 billion (Rs. 26Lac Crores) will be added from the electronics manufacturing, including mobile phones, solar panels etc. while $350 billion (roughly Rs. 23 Lac Crores) opportunity will be presented by the IT and ITeS sector” the minister said at the inauguration of FICCI-Frames 2016 Media & Entertainment Industry Conclave.

Digital India provides business opportunities primarily in the following sectors:

Electronic Manufacturing
Information and Communication Technology
Telecom
Infrastructure
Agriculture
Media
Finance, and
Marketing
Electronic manufacturing

The objective is to increase electronics manufacturing in the country with the target of NET ZERO Imports by 2020.

National Policy on Electronics (NPE)

Government of India has launched National Policy on Electronics which is holistic, investor friendly and market-driven towards creating a conducive environment to attract global and domestic companies to invest in the growing Electronics System Design & Manufacturing (ESDM) sector in India. This will help for value added manufacturing. The highlights of the policy initiative taken by Government of India include:

Modified Special Incentive Package Scheme (MSIPs) subsidy of 25% of capital expenditure is available and all excise/CVD paid on capital equipment is reimbursed.
Electronic Manufacturing Clusters Scheme. Government of India (GoI) is targeting for 200 Electronic Manufacturing clusters by 2020.
Preference to domestically manufactured goods in Government procurement.
Export of domestically manufactured Set top boxes and other electronic products are eligible for 2-5 % incentive.
Electronic Development Funds for Research & Development and Innovation in Electronics sector is under active consideration to support start-ups in electronics and IP (Intellectual Property) generation in the area of electronics.
Department has accorded approval for setting up of two semiconductor wafer fabrication manufacturing facilities in the country.
To promote greater research in electronics and IT, GoI will fund PhD students in Universities across the country for research in industry specific needs. 3000 PhDs will be generated through this program in the area of electronics & IT/ITES (IT-enabled services).
Providing opportunities for skill development for the private sector.
Opportunities for investment in testing laboratory infrastructure.
Several State Governments, including Andhra Pradesh, Karnataka, Kerala and Punjab have already announced complementary incentives as part of their State Electronic Policies.
The devices industry, primarily the smartphones, tablets, laptops, etc., is a major driver of the electronics industry. Growth of communication hardware and software – content, data handling, connectivity, data storage – mutually support one another. The expansion of the smartphone and tablet market has also led to a massive rise in the data traffic—this in turn has led to the development of high-speed communication networks in the developed countries. As India is home to a large youth population and a burgeoning middle class, it is natural for the electronics sector to see rapid growth.

The government is also giving a boost to the electronics sector through several policy initiatives such as larger government spending on laptops and tablets for schools.

IT sector

In recent months, companies across sectors are expressing interest in ‘going digital’ aggressively. This trend has been further encouraged by the Government’s ‘Digital India’ program. A key area of investment under this initiative is to improve the government to citizen interface for various service deliveries. The government is serious about automated delivery of services and we can see it in the JAM paradigm – Jan Dhan Yojana for direct benefit transfers based on Aadhaar infrastructure and mobile interface for banking. The government has saved Rs 13,000 Crores (US$ 2 Billion) in cooking gas subsidies last fiscal putting technology to use and now proposes to extend technology to other benefits distribution schemes. There are a number of examples where progressive State Governments too are saving millions of Rupees using JAM, plundered until now by way of displaying inflated number of beneficiaries eg. misuse of meals to school children, free bicycles to girl children, distribution of pension to retired state government employees and so on.

For technology companies, Digital India opens up a number of opportunities such as building the broadband infrastructure; creating identity solutions, payment systems, web or mobile-based delivery structures and so on. More wide-spread the use of digital technologies, more are we exposed to cyber-crimes. Cybersecurity is another key area of focus. It is imperative that organizations of all sizes invest significantly in securing their products and services. M2M (Machine-to-machine) and IoT (Internet of Things) will also create substantial opportunities in Testing and Quality Assurance. Healthcare is undergoing its own digital transformation globally, and in a country like India, telemedicine will likely play a huge role in driving universal accessibility to quality healthcare.

Smart Cities are another big area of opportunity for technology companies as part of Digital India. Building out the infrastructure, getting various public sector departments online, providing a bouquet of services to citizens, all hold out significant potential for technology companies to work closely with the Government. As newer technologies like 3D Printing, robotics, augmented reality, artificial intelligence come to fore, the Digital India initiative offers a solid platform for preparing citizens, companies and the country as a whole to be prepared to benefit from them.

For addressing the issue of geographical imbalances the following measures are being introduced:

IT Trainings to people in smaller towns and villages: The target is to train 10 million students from smaller towns and villages for IT sector jobs over 5 years. DeitY (Department of Electronics and Information Technology) is the nodal department for this scheme.
Spread of IT/ITES in Northeastern States: This component focuses on setting up BPOs in every Northeastern State to facilitate ICT enabled growth in these states.
Early results are very positive, given the recent announcement of a US$ 5 billion investment from electronics manufacturing giant Foxconn in Maharashtra, and the new mobile phone assembly plant for Redmi in Sri City, Andhra Pradesh.

Communication sector

In scarcity lies the opportunity! Scarcity has always been a companion of the country. However, Digital India has a vision and a strong will to get rid of this scarcity.

83% of India’s current demand for handset is met via imports.

India ranks 125th in the world in terms of fixed broadband penetration

18 MHz the average operator spectrum holding in India is amongst the lowest globally.

150 000 additional towers will be necessary to bridge the demand-supply gap for mobile connectivity.

12th Five-year plan projects investment of INR 94 billion (US$ 1.4 Billion) in telecom sector.

USOF (Universal Service Obligation Fund under the Ministry of Communication and IT) contains INR 356 Billion (US$ 5.6 Billion) in unutilized accumulated funds.

The telecom market is characterized by the following trends:

Wireless services have been at the helm of the Indian telecom growth story. With almost a billion subscribers, India is the second-largest wireless market by subscribers after China.
India’s wire line market has been reporting a constant decline for more than a decade now. Many of the new generation may not even know about the landline. Nevertheless, demand for wire line services has witnessed renewal of some interest in the recent past, given its importance in broadband delivery.
Worldwide, cable broadband caters to 20% of the demand for broadband, while in India, only 5% of broadband connections are provided via cable. The Government of India has envisaged driving broadband demand by advocating provision and support of easy, affordable and reliable broadband access to the masses.
4 G services in India were launched in 2012. The current year is witnessing large scale 4G rollout from some key players like Airtel, Idea.
Mobile handsets have played an integral part in the overall evolution of the mobile ecosystem and have boosted socio-economic transformation. Mobile handsets and mobile tablets are expected to play a significant role in bridging the digital divide and connecting the country. They are increasingly being used for banking transactions, making payments, as an educational and multi-media tool and for spreading governance.

Cloud computing can serve as an equalizer. It has the power to transform traditional operations of a business. Organizations are using the cloud technology to increase operational efficiency, improve collaboration, and gain competitive edge by delivering differentiated services. The shift to cloud helps organizations in achieving business agility and scalability. This enables them to be more responsive in the rapidly changing market.

IoT (Internet of Things) is changing the way we live, and the way services are demanded and delivered. IIoT (Industrial Internet of Things) or Industrie 4.0 is changing the face of future factories across the globe. While doing so they are putting heavy demands on our digital infrastructure. All these demands need to be fulfilled if we were to enjoy the fruits of Smart Cities mission and Make in India mission.

Digital India also creates enormous opportunities in the fields of Digital Marketing and Digital Finance. Digital advertisement, Search Engine Optimization, E-commerce, on-line shopping are changing our supply chains, shopping habits. They are making a more level playing field for the innovative and creative amongst us. Digital Finance is finding new ways from online banking to digital wallet, crowd-sourcing to crowd-funding enabling ease of commercial transaction at low cost per transaction. Not only that, digital transactions leave a trail and help us reduce corruption – a serious menace in our country.

Ours is a country still suffering from poverty and malnutrition, corruption and apathy of bureaucrats, illiteracy and ignorance. One may ask – while we are yet to address the basic needs in the physical India, why talk of Digital India? Though digital divide still separates – the “haves” and “have-nots”, digital empowerment has already started to flatten the world. It is precisely against those evils in our society that digital is going to help. Transparency, JAM (Jan Dhan-Aadhaar-Mobile telephony), better reach to the distant underprivileged is helping us deal with the poverty. Again, JAM, better visibility and e-Governance is helping us improve accountability of the bureaucrats and politicians. Digital is enabling a paradigm shift in reducing illiteracy, and spreading knowledge. Places which remained in dark ages for centuries for limitation of physical access to anything modern, are being covered due to the ease of digital access.

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