New opportunities in India’s digital economy because of Covid: Meity Official
“India desperately needs rupee capital”
29 May 2020, New Delhi
The MSMEs are the backstop for making India a trillion dollar digital economy, says Mr Rajiv Kumar, Joint Secretary, Ministry of Electronics and Information Technology (MeitY), Government of India. Indian companies with cash reserves need to help MSMEs and startups, as India desperately needs rupee capital, Mr Kumar told a panel of Indian tech CEOs in an online webinar organized by All India Management Association (AIMA).
The Joint Secretary said that the Covid crisis had caused a lot of churning in India’s digital economy and created numerous opportunities for tech companies. He credited the rapid scaling up of work from home for allowing India’s IT and BPO companies to continue their services with less than 5% staff in the office after the lockdown was announced. He mentioned education, healthcare, finance, agriculture and cyber security as the areas with expanded potential after Covid. Mr Kumar also asked Indian companies to take advantage of the incentives for local electronics manufacturing. “We need inhouse capacity,” he said.
Mr Sanjay Kirloskar, President, AIMA said that with a swift and sweeping shift to online working, a lot of the output will shift to the digital economy. He mentioned that in his company, Kirloskar Brothers Ltd, the dealer meetings had moved online.
Ms Rekha Sethi, Director General, AIMA thanked the government officials and CEOs for joining the discussion and pointed out that AIMA had been quick to create digital platforms for management dialogue and learning.
Dr Ganesh Natarajan, Chairman, 5F World, moderated the discussion and he expressed optimism that the predictions of doom will prove wrong again as in 2008 when Indian tech industry had beaten the gloom and eked out a growth.
Mr Vijay K Thadani, Vice Chairman & Managing Director, NIIT Ltd, said that Covid had changed the environment for digitization. “After Covid, you do not have to explain how technology will help,” he remarked. He argued that education had to be digitized and without digital education there would no digital India. “Remove the artificial barrier to who can do it and who cannot,” he said.
Mr Partha DeSarkar, Executive Director & Global CEO, Hinduja Global Solutions, highlighted the work from home as a game changer for Indian tech industry. “Work from home kept the lights on for the IT and BPO industry…it is the key to the trillion dollar digital economy,” he said. He stressed that connectivity was the key to enabling workforce from the tier 2 and tier 3 cities to contribute to India’s digital economy. He sought change in the Shop & Establishment Act to allow flexible working and work from home. He also recommended a hub and spoke model of co-working spaces which would allow workers to avoid commuting to office and also help those workers who cannot work from home.
Mr Rajesh Nambiar, Chairman & President, CIENA India argued that a good digital infrastructure was essential for a trillion dollar digital economy. He counted spectrum allocation and pricing among the impediments to a sound digital ecosystem. He pointed out that India still had only 20%-25% fibre connectivity compared to more than 70% in the developed countries. “India needs telecom reforms,” he said.
Mr Ajey Mehta, Vice President – APAC & India Region, HMD Global, said that India will see a huge shift from feature phones to smartphones in the coming months and years thanks to new low-cost, high-quality smartphones and consumer financing. About 400 million Indian mobile phone users were yet to taste the internet, he pointed out. Mr Mehta appreciated the progress of the phased manufacturing programme of mobilephones in India which had resulted in production of 330 million handsets in India in 2019, but he sought building of a component manufacturing ecosystem in the country. He asked for incentives, infrastructure, implementation and investment. He pointed out that India was two years behind in 5G adoption and argued that all use cases of digital economy required low latency connectivity and without 5G that would not be actualized.
Mr Deepak Garg, Founder & CEO, RIVIGO said that Covid had expedited infusion of technology in logistics. He said that logistics’ share in India’s GDP was 14% but it needed to be brought down sharply. He pointed out that the USA had reduced its logistics share in GDP to 7% by using technology.
Dr Ajai Garg, Director, MeitY, Government of India said that while Covid had accelerated India’s momentum towards a trillion dollar digital economy, it was to be seen whether India created value or it merely became a consumer of digital technologies developed elsewhere. He also stressed that to build a data driven economy, the regulators and the judiciary had to understand that the country could not get confused by privacy issues.
Ms Anu Madgavkar, Lead Partner, McKinsey Global Institute (MGI) made a presentation on the potential of India’s digital economy and highlighted that there would be real productivity gains through use of technology – 30%-40% reduction in operating costs and 10%-15% reduction in supply chain costs. “Digital will transform work,” she said, adding that about 40 million workers will have to be reskilled and redeployed to achieve a trillion dollar digital economy. However, Ms Madgavkar argued that such an economy would involve 60-65 million jobs.
The panel discussion was broadcast through AIMA’s channels on all the leading social media platforms.