Two critical aspects budget 2019 must address for a $1 trillion Digital Economy by 2025

The union budget 2019 is around. Looking at some of the developments globally as well as in India, this is the time when the budget should act as a vision document for technology domain. This is a very important time period for technology domain in India. All the marquee programmes directly or indirectly linked with technology are due for an upgrade.

Acquiring the Emerging

All the programmes launched to primarily push digital technology value chain in India starting from promoting start-ups, attracting manufacturing, skilling resources, creating infrastructure and enabling financing, are now at least 3 years old. These 3 years have been phenomenon globally for technology.

World over, several concepts actually have got crystallised in the past 2 years. Be it Artificial Intelligence, Immersive Technologies, Block Chain, Industry 4.0, 5G, Machine Learning and many such emerging technologies have shaped up, uses cases defined and some of them have already seen a roll out or are on the verge of it.

India is on the journey of $1 trillion digital economy by 2025. For all practical purposes this era will be in the time when these emerging technologies will be mass technologies used widespread. This means all our national flagship programmes, which are considered to be the fundamental pillars towards India becoming a trillion-dollar digital economy, will not serve the purpose for which they are conceived. At least, they will not perform to the optimal. There will be a difference between our competencies and the requirements of the time.

This technology lag has always been there, essentially since we saw the west rapidly emerging as the hub of innovation and technology development. But that never means we cannot leap jump. In fact, this is the time when we can plan for such a leap. The reason being all the emerging technologies are fundamentally different and are not just a simple upgrade to the previous version and we shall have to necessarily follow the path.

The Budget 2019 for technology domain in India holds very critical. This budget should actually give a roadmap of how these emerging technologies would be enabled in the fundamental pillars of $1 trillion Digital Economy, creating a plan which has proximity to global realities. For instance, if Industry 4.0 is not integrated in Make in India, it has all the risks of falling flat. Similarly, if there is no integration done of AI, ML and Block Chain in Digital India, it will never transform governance. If 5G is not embedded into the networks, we will never see a smooth journey towards future technologies including immersive technologies, HLTS (Human-Less Technology Systems), etc.

Holistic Localisation

The way technology is moving, hardware is hard-value. We have already seen this in some segments of the legacy IT, where the models moved from premise-based ownership of hardware to platform driven cloud-based services. There is very little value for the hardware. Even for a ‘glorified’ hardware like a Smartphone, apps are the value creators. India has proven track record of software, right from design, development, sales to software enabled services. This competency could become India’s primary strength in an era when software has an all-time high contribution in terms of value of a product. Take for instance, example of IoT, Smart City, Industry 4.0, Block Chain, 5G or for that matter any emerging technology, the real value and differentiator is due to the software that completes the solution. Otherwise, plain hardware is just meaningless.

In the past few years, the localisation endeavour has been mostly confined to manufacturing. This has given us some success, which should be celebrated, but we are not moving up the value addition. Other than absence of the entire component ecosystem as an impediment, what is keeping the domestic value addition low is also that we are not looking at it holistically. For example, there is no credit given to any app which is designed and made in India in terms of the value add it does to the overall offering. If apps are also accounted in the domestic value add equation, we will not only see the local app ecosystem getting its stature but, even the hardware guys could get the real value of their efforts. There are many such examples of apps which are not getting any credit for whatever efforts they have been putting. For instance, Hike, Jio Chat, Jio TV, Hotstar and many others. These local apps add a lot of value to the consumer, but are nowhere accounted in the local value addition. This is what needs to be looked at holistically. From a pure user perspective, perhaps JioPhone would score highest on the local value addition. This is for its not just a hardware, but a complete app driven ecosystem designed and developed in India tops it and user is able to derive as much value as required from a real ‘Make in India’ experience.

Conclusion

We have 6 years for achieving $1 trillion Digital Economy. If from vision and direction point of view, 2019 is not utilised properly, it would be difficult to achieve the goal. 2020 and 2021 would go into development of infrastructure and capacity building, while 2022 onwards, we could see the actual implementation towards commercialisation. Only, this will help us achieve the target within the deadline set. Else, we shall have to continue shifting the goal post.

Budget 2019 has unique opportunity, a kind of once in a while, where it can play the enabling contribution in shaping the Digital Economy of India. However, as general elections are around and there has been a precedence of tabling a ‘casual’ budget just before it, we may not expect some visionary bold steps in it.

By Faisal Kawoosa, Founder and Chief Analyst, techARC