THE INTERLOCKED TROIKAS

In the last couple of months of 2011, the government seemed to be working like there was no tomorrow. May be this was to compensate the time lost for legislation due to the controversy surrounding the Lokpal Bill and FDI in multi brand retail. As always there was always something to cheer about after a period of prolonged gloom. Well the cheer was in the form of flurry of encouraging government policies for the ICTE (Information & Communication Technology and Electronics) industry. The draft policy on Electronics (NPE) was unveiled on 3^rd October, 2011 and that on IT (NPIT) was unveiled on 7^th October, 2011. To add to that other policies like the draft NTP 2011 was released on October 10 and the National Manufacturing Policy (NMP) and National Optical Fibre Network (NOFN) were approved by the Union cabinet on 25^th October 2011.

ICT and Electronics industries have been the beacon on which the Indian economy has scripted marvelous success stories. Now it is time these industries synergize more which has the potential to produce spectacular and unprecedented success.

Now considering these three sectors, the challenges faced by Electronics sector (ESDM industry), lesser known of the trio, are something which needs to be taken up as top priority and hence the widespread interest in these policies from the industry.

NPE 2011

NPE 2011 envisions creating a globally competitive Electronics Systems Design and Manufacturing (ESDM) industry to meet the domestic as well as International demands. To accomplish this vision, many policies have been enlisted. The most important objective is to achieve a turnover of Rs 20 lakh crores by 2020 with an investment of Rs 5 lakh crores and thereby creating employment of around 2.8 crore by 2020. Of the total turnover targeted, Rs 2.75 lakh crores is expected from chip design and Rs 4 lakh crores from exports by 2020, an increase of more than 1000% from the current figure. NPE 2011 also aims to develop high-quality electronic products at affordable prices for inclusive adoption and deployment to improve productivity, efficiency and ease of operations in other sectors and also promote global best practices in use and disposal of electronic products. It also aims to provide incentives for setting up of over 200 Electronic Manufacturing Clusters (EMCs) with world class logistics and infrastructure and easy to do business facilities. The consequence of such a policy would be a boost to other sectors like automotive, industrial, medical, and also communications.

NPE 2011 can be a lifeline for the telecom ecosystem. In early 1990s when the wave of liberalization hit our country, the government wanted to develop the software industry as quickly as possible. The fallout, the idea of indigenous manufacturing of equipments took a backseat. These events started off a self defeating cycle where in dependency on imports increased manifold. Today the same government bemoans the lack of manufacturing capabilities in India. So we can see that poor policies for the sake of immediate returns will cost more in the future. Just consider these facts emanating from the industry circles. The demand for telecom equipment is estimated at around Rs 54,000 Crores in 2011 and is expected to increase to around 2.5 lakh crores in 2020, which is the second highest in the import bill after oil. With India being the fastest growing telecom market, the need for telecommunication networks will also increase. Trying to meet this need through imports puts tremendous strain on the exchequer’s coffers and presents substantial security issues. Hence the guidelines laid down in NPE 2011 gives impetus to manufacturing in telecom sector. Another enabling policy is to declare mobile phones specifically and other electronics products for data communication as goods of special importance under the Central Sales Tax Act. The policy aims to significantly scale up human resource creation to 2500 PhDs annually by 2020 in the sector.

NMP 2011 complements the NPE 2011. NMP 2011 also aims to increase the manufacturing share of GDP by 22% in 2022 and create 10 crore additional jobs by 2022.

NPIT 2011

The software/IT industry has been the darling of our economy. It has been a key factor in India emerging as a knowledge based power house. The Indian IT industry as of 2010 is worth Rs 4.5 lakh crores with nearly 80% of revenue coming from exports. The industry employs around 25 lakh skilled people. The current crisis in the developed countries have brought with it challenges as well as opportunities. This means we should start looking within our economy. There are encouraging sign of increasing IT usage due to gaining popularity of ICT industry.

Some of the major objectives include increasing revenues of IT/ITeS to around Rs. 15 lakh crores and expand exports to Rs. 10 lakh crores. Also more focus is laid on service delivery through e-Governance. NPE and NPIT together enable an ecosystem for mobile internet and mobile value added services.

Summary

The triads – IT, Telecommunications & Electronics have been significantly contributing to the growth of the economy. ICT can in fact help to reach out to the masses in the hinterlands enabling them to be hit the wave of development. ICT industry also gives ESDM sector a much needed push due to well known reasons. But to achieve that the government has to build up the brand image of the ESDM sector as it always taken a back seat to accommodate the more glamorous IT sector.

Aakash, an android tablet, is a product developed by IIT Jodhpur in collaboration with Datawind. It costs as low as Rs.2500 (commercial version costs around Rs 6000). This is an example of how innovation within the country can lead to cost effectiveness. The most interesting part is that the tablet was manufactured in India and not in China which was a cheaper option (import of finished goods attracts lower duty than the raw materials). Datawind CEO once said that since it was an Indian design, he wanted the phone to be manufactured in house. The point I want to drive home is the sense of pride and satisfaction in creating something in our own backyard. This can also be a trigger for breathtaking success in the near the future with appropriate enablers.

IT and Telecom have achieved tremendous growth in the past and now with collaboration with ESDM sector can look forward to exponential growth given the opportunities available in our country. For all this to happen the government should continue to play the role as an “enabler” and drive home the point that the policy statements are not mere statements of virtuous intentions but those which will enable the engine of the economy to chug along merrily.

L.KISHAN CHAND

Class of 2013