The Aatmanirbhar Bharat vision can unlock significant economic benefits for the country by helping establish India as a global telecom manufacturing hub and a prominent player in the supply chain ecosystem. Reducing the reliance on imports for critical technologies and equipment is important in this regard. At a recent virtual session organised by the Broadband India Forum, Amitabh Kant, chief executive officer, NITI Aayog, Government of India, spoke about the policy, and regulatory initiatives being taken and the actions needed to strengthen and optimise the national mission and its progressive objectives. Edited excerpts…
The Covid-19 pandemic has been extremely disruptive in terms of economic activity and loss of human lives across the globe. At the same time, this crisis has presented us with unique opportunities that can be leveraged to rebuild differently and innovatively. India’s urban population will double in the next decade. More than half a billion people will live in Indian cities and there will be a need for very rapid growth, which will pose several social, economic and environmental challenges.
This is also an opportunity for India to take the lead in building new industries that will accelerate growth and create jobs. This transformation will be feasible when we advance technology, foster innovation and become champions in emerging areas of global growth. If you look at Japan, South Korea and Taiwan, and in recent times, China, they have focused on sunrise sectors, unleashed a wave of reforms and embraced innovation to grow on a sustained basis for long periods. Even in India, the key to a disruptive transformation lies in getting into sunrise areas of growth; and telecommunications has been recognised as a very important tool, not merely for advancement, but also for socio-economic transformation.
India is the second largest telecom market in the world, with over 1.2 billion wireless connections, and has the world’s second largest number of mobile subscriptions. It is the fastest growing broadband market in the world with over 747 million broadband users. According to analysts, the Digital India plan could boost GDP by about Rs 1 trillion by 2025. In fact, growth in digital infrastructure and a steep rise in the uptake of broadband services could lead to the digital economy reaching Rs 1 trillion by 2024. Therefore, this sector can play a key role in macroeconomic factors such as growth, employment generation, labour productivity, and revenue for the government. 5G will bring about a paradigm shift, moving beyond the traditional cellular ecosystem to interconnect people, control devices, objects and machines, and ensure faster and better communications, all of which will be the backbone for the Industrial Revolution 4.0.
With 5G, user experience will be enhanced significantly. The data rate will see a 10x jump, spectrum efficiency will be 3x higher, and latency will get reduced to milliseconds. The technology will be able to connect 1 million devices per square km as compared to a mere 100,000 devices in 4G. It will drive internet of things (IoT) technology, carry huge amounts of data, and enable a smarter and more connected world. If, as has been said, data is the new oil in the digital era, then 5G is the set of pipes that will deliver it.
With the steadily rising number of broadband users, there is an ever-growing demand for stronger digital infrastructure, which is an imperative in not only urban areas but also rural ones, to revolutionise communications and e-commerce. In the past, the unprecedented increase in teledensity and a sharp decline in tariffs in the telecom sector have contributed significantly to the country’s economic growth.
With the concept of Aatmanirbhar Bharat, the idea is to make India an integral part of the global supply chain. The Aatmanirbhar package has been accompanied by economic reforms and infrastructure building through a focus on local manufacturing. The aim is to strengthen the economy, reduce the dependence on imports, give a boost to exports and make the country a dynamic powerhouse of manufacturing and exports.
To this end, one of the schemes conceptualised by NITI Aayog was the production-linked incentive (PLI) scheme. The objective is to make companies grow in size and scale through incremental sales on production for a period of five years. The government will provide incentives calculated on the incremental sales of manufactured goods over the base level. The government will support companies, subject to their achievement of a minimum threshold of cumulative incremental investment and sales. This will incentivise companies to provide backward and forward linkages for the production of telecom core transmission equipment, 4G, 5G, next-generation radio access network and wireless equipment access, customer premises equipment, IoT, access devices, and enterprise telecom equipment such as switches and routers.
This is a unique scheme that envisages close to Rs 121.95 billion in investments for the telecom sector over the next five years. The scheme aims to attract both global and domestic manufacturers to invest in India by enhancing their manufacturing capabilities, and to cater to both domestic and international demand. The PLI scheme has received huge interest from the electronics sector, and I expect similar motivation for developing telecom manufacturing in India. This would require a collaborative approach between the government and the industry. The government is willing to partner with the industry to ensure that this opportunity is well utilised to make India a big telecom manufacturing hub so that it is able to not only meet its domestic demand but also become a hub of exports.
The government is determined to make India atmanirbhar with a world-class manufacturing infrastructure and transform it into a competitive global manufacturing destination, an important part of the global supply chain. Aggressive duty reforms and various incentive schemes have been introduced to encourage domestic manufacturing and thereby help reduce the import bill in high-value sectors. The PLI scheme for telecom will provide a big boost to local manufacturing in the device ecosystem as well, and be a critical driver for our Digital India goals.