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All You Need To

Know About Digital


India

Aashish Chandorkar
Aashish Chandorkar is a Management Consultant based in Pune
and working in Mumbai. He holds diverse interests across politics,
economics, sports and Bollywood. He tweets at @c_aashish.

1. Digital India Great Ambitions,


Hurdles Galore
Digital India is arguably the most ambitious initiative of the Modi government. There are
hurdles on the way, but there are also opportunities. How exactly will Digital India roll
out? Read here in the first part of an explanatory piece.
On July 1st, Prime Minister Narendra Modi launched the Digital India program in Delhi with
much fanfare, supplemented by big investment announcements by the leading industry houses in

the country. The program aims to ramp up the traditional 256 kbps broadband services to 2 Mbps
compatible infrastructure, connect more than 250,000 gram panchayats (GPs) via the National
Optical Fibre Network (NOFN), targeting 600 million broadband connections nationwide and
aims to deliver a host of government services on this telecom backbone. The infrastructure
investment is being made not just to improve the way citizens interact with the government at
various levels of governance aggregation, but also to jump-start new businesses which require
connectivity for remote service delivery.
Digital India is by far the most ambitious indigenous program PM Modi has launched with a farreaching impact connecting Indian hinterland to the government services as well as to the rest of
the country leveraging technology. The program also faces a series of hurdles, which are
onerous, and every hurdle in its own right can derail the entire program.
The Connectivity Conundrum
India has a unique pattern of Internet-driven technology adoption. The Internet user base has
multiplied around 30 times in the last 15 years and a bulk of near 200 million online Indians are
today using mobile to connect with the rest of the world. In most developed countries, the
predominant exposure to Internet via mobile tends to be between 20% and 30%, with broadband
calling the shots. In India, this figure is close to 65% two-thirds of all Indians access Internet
predominantly through mobile devices. This explains the growth of smartphones at various price
points in India and the cut-throat pricing wars which several Indian and Chinese companies are
leading to capture a share of the growing pie. After all, there are still almost a billion Indians
who are not using the Internet, and this is the largest unconnected market to address globally
today.
But beyond this exciting market dynamic on mobile, theres also the harsh reality that the wired
Internet connections in India have lagged in a big way. The reason is the lack of connectivity
infrastructure, with optic fiber networks present in most districts, but present with patchy
linkages and low rate of utilization by the players providing the last mile connectivity (telcos and
cable companies mainly). Until a year ago, India classified data transfer at the rate of 256 kbps
(kilo-bits per second) as broadband, though the globally accepted threshold is 512 kbps. Even
with that leniency, the last mile connectivity tends to be of varying quality, relying on Digital
Subscriber Line (DSL) technology and its variants often of poor implementation quality and
line conditions. Finally, a handful of players control this last mile service, often leaving
consumers very little to choose from not every player operates in each state in fact most
players conveniently leave out covering several parts of even metro cities given the lack of
commercial potential.

click to enlarge
Source (2015 data): Telecom Lead
In summary, Indias Internet connectivity is full of disparity. On one hand, theres a huge
untapped market which is not connected at all (~1B). On the other hand, theres another huge
market which is connected (~200M) but via poor data quality 2G networks or patchy and yet to
be fully rolled out 3G networks. And both these markets are ripe for using higher quality
connectivity origination points smartphones and tablets continue their march with an estimated
650M smartphones and 19M tablets to be in use by 2019 (as per a Cisco survey).
While the digital economy continues to grow in India battling the enormous infrastructure
challenges, shouldnt the government also leverage this untapped potential of delivery of public
services electronically? Shouldnt the government to citizen (G2C) and government to business
(G2B) transactions be digital, faster, transparent and open to greater scrutiny and accountability?
In that direction lies the genesis of the Digital India program.
Digital India Program Structure
The program has 9 pillars, each addressing an ambitious target related to various aspect of
making the country technology savvy.
Digital Foundation Layer: This is the building block pillar, without which the rest of the
program cannot stand its ground. This part covers:
Broadband Highways: addressing broadband across Indias urban and rural areas and creating a
national information infrastructure.

Universal Access to Mobile Connectivity: addressing the plans to extend mobile services to every
corner of the country with special focus on areas like North East and Left Wing Extremism
affected states.
Public Internet Access Programs: leveraging post offices to morph into multi-services centers
and creation of Common Service Centers (CSCs).
Citizen Interface Layer: The pillars here deal with improved experience of dealing with the
government offices, reducing paperwork, digitizing communication and records, creating easy to
understand workflow models and providing greater transparency in service delivery. This part
covers:
e-Governance: Reforming Governance Through Technology: addressing the need to simplify and
digitize government processes.
e-Kranti: Electronic Delivery of Services: addressing the areas which were part of the erstwhile
National e-Governance Plan, with addition of new services.
Information For All: addressing the need to create a public data architecture available via open
tools and on demand.
Early Harvest Programs: a collection of various programs and projects undertaken by individual
departments to facilitate better citizen services.
Business Facilitation Layer: The pillars here will explore improving business environment and
technology led delivery options to extend gains of IT/ITeS businesses to small town India.
Electronics Manufacturing: to promote indigenous manufacturing across a range of products,
with the aim of becoming import net neutral by the turn of the decade.
IT For Jobs: Enabling services firms to deliver from lower cost remote locations leveraging fast
connectivity.
Each of the 9 pillars strives for lasting, significant impact, and touches the boundaries of multiple
government departments and agencies.
Digital India Programme Management
The government has created a well defined structure to ensure the right focus on the program.
The Cabinet Committee of Economic Affairs (CCEA) will approve all investment decisions. The
program will report into a Monitoring Committee chaired by the PM himself, also including the
ministers whose ministries are rolling out digital solutions.
An Advisory Group which will have representation from the states and union territories will
chart out the course of the program this is critical because the citizen initiatives wont work
without the active participation of states. Involving states at the highest level of the program is

another step by this government to maintain a true federal decision making structure. This group
will be headed by the Honble Minister of Communications and Information Technology Mr.
Ravishankar Prasad.
His department DeitY Department of Electronics and Information Technology will be the
key implementation agency for the program and will be accountable to the Advisory Group and
the Apex Committee. This Apex Committee, reporting directly to the Monitoring Committee,
will be chaired by the Cabinet Secretary will be accountable for the process reengineering
initiatives and day to day decision making.
Interestingly, the programme envisages the role of a Chief Information Officer (CIO) to
coordinate between DeitY, various other ministries and all state governments and union
territories. This role is similar to what the USA has created in the last few years a domain
expert looking holistically at all government technology touchpoints.
This structure lends itself well to decision making as well as direction setting at various levels,
though the role of the CIO and the Cabinet Secretary will be crucial to get things moving on
initiatives which require actual process changes.
Implementing the Nine Pillars
The Digital India program will continue to leverage past investments made in various pillars,
including the plan for establishing a National Optical Fiber Network (NOFN), which is running
woefully behind schedule. The NOFN roll out which has been piloted variously in Rajasthan and
Andhra Pradesh during the UPA-2 rule and in Kerala after the Modi government took over, aims
to connect 250,000 gram panchayats (GPs) via fiber. The program launched in 2011 was to
complete by 2013 with incremental fiber roll out over 600,000 kms, but the end date has now
been revised to March 2017. Creation of this fiber network dubbed BharatNet, is the first and the
most critical step to realize the full ambitions of Digital India.
In the next article, we will look at the implementation of the Digital Foundation Layer and the
challenges the government is up against.

2. The Foundations Changing


Tyres On A Moving Car
The government is attempting to change all four tyres of a moving car that is fast running
out of fuel. It will need tremendous planning and management skills, cooperation from
political parties not friendly to the government and dollops of luck to get this part of Digital
India completed.

In the first part of this series of articles on Digital India, we looked at the overall program
framework of nine pillars that will have to come together to make this program successful. The
building blocks of the program lie in the Digital Foundation Layer, which comprises of three
pillars they deal with creating the physical fiber and telecom infrastructure required to enable
the service delivery components, which make up the rest of the Digital India program.
While creating an optical fiber-based broadband infrastructure across the country is the central
tenet of this initiative, the government has implicitly also added wireless telecom infrastructure
as one of the foundational pillars.
Achieving the targets set by the government for these pillars is, however, the toughest hurdle
facing the Digital India program. If Digital India were a track and field event, getting the digital
foundation right is the steeplechase of the program the toughest and most intricate element.
Broadband Highways

This is the most critical foundational pillar of the program. And the government is already on the
back foot even at the budget and resource allocation stage, given the legacy of the National Optic
Fiber Network (NOFN) initiative.
Based on a Telecom Commission recommendation, the NOFN was launched by UPA-2 in the
year 2011. The target was to cover 2,50,000 villages, spread across 631 districts, with broadband
connectivity by 2013. The implementation was to be done via a special purpose vehicle called
Bharat Broadband Network Limited (BBNL). This was set up as a new PSU, not directly linked
to the existing players BSNL or MTNL to ensure that the existing resource constraints and
operational constraints did not plague the NOFN roll out. BBNL was to leverage the existing
fiber of three big PSUs: Bharat Sanchar Nigam Limited (BSNL), RailTel and Power Grid
Corporation of India Limited (PGCIL), with provision to lay extra fiber to reach the designated
villages.
However, it took almost 18 months to get all the states and union territories on board via signing
a multipartite memorandum of understanding (MOUs) to start the work on laying the fiber-optic
cables. Even today, the MOUs with Tamilnadu and Lakshadweep are not in place. And at the
time of the Digital India program roll out, only a handful of gram panchayats (GPs) had
achieved fiber connectivity. The following data, sourced from the BBNL website demonstrates
the sloppy pace of work between 2011 and 2015 with just over 1% of the connectivity targets
achieved thus far after a time overrun of 2 years.

Under Digital India, the government has now set the target of laying the fiber-optic cables for
BharatNet the new avatar of NOFN which involves improved technology, multiple access
modes other than fiber and improved quality of fiber by March 2017.
The work involves laying almost 600,000 kms of cables in just about 21 months or an average of
950 kms of cables every day starting immediately. This is what has been achieved in the past
four years in total! There are several obstacles to this ambition. The three PSUs involved in the
fiber work do not have the right of way outside their own network set up to add the last mile
connectivity. Any land acquisition or land reuse involved becomes a state government task to be
facilitated and with the Land Reforms Bill hanging in limbo, this aspect remains a hard
constraint with no solution in sight. Unless the individual states show gumption, it would not be
possible to extend the fiber connections available at district or tehsil level to the GPs.
Additionally the program now envisages using a different type of optical fiber which can work
over 50 kms without the need for amplification. Procurement and testing of the fiber in local
conditions is another hurdle BharatNet should cross. Not all GPs have proper terrestrial access
and the government will have to plan for radio or satellite connectivity for almost 25,000 GPs.
Solar power based radio connectivity is being experimented with high-frequency bands that are
license exempt for these GPs.
Overall, it appears that getting all the pieces of the puzzles for BharatNet is a herculean task. The
government is attempting to change all four tyres of a moving car that is fast running out of fuel.

It will need tremendous planning and management skills, cooperation from political parties not
friendly to the government and dollops of luck to get this part of Digital India completed.
While there are several end use scenarios of BharatNet just within the government sphere,
another issue to deal with is that the private players are now moving towards high-speed wireless
connectivity investments. Two of the largest players Airtel and Reliance Jio are now
committed to providing 4G telecom services. Airtel is already live in multiple cities, and
Reliance Jio expects to go live by the end of this year.
While these services are still predominantly urban in nature, the economics of government
offering the BharatNet backbone to private players continue to become unfavorable. Private
players in some circles may want to use BharatNet for their retail services, but the top 3 or 4
players in the telco space will most likely not be interested this raises questions on the
economic viability of BharatNet and its maintenance which will require year on year
government funding support.
Universal Access to Mobile Connectivity

Several parts of the country today are not connected on mobile networks, let alone getting
broadband connectivity. This pillar addresses extending mobile services to every corner of the
country. The government plans to lay extra emphasis on North East and Left Wing Extremism
affected states. In an earlier Swarajya article, this author had written about the North East
telecom focus in the first year of Modi government.
Digital India continues to extend that focus, with a provision of 16,000 crores separately for
this implementation to the Department of Telecommunications. This allocation of budget will
span over four years, and the target is to provide complete radio connectivity across India by
2018. This target is slightly behind the new revised BharatNet / NOFN completion date but the
extra time budgeted is understandable given the difficult terrain and the security challenges to be
dealt with to complete the project.
Given the explicit targeting of mobile towers and infrastructure this year in Jammu and Kashmir,
it is clear that the militants consider connectivity and improved speed of government reaction
their enemy. It is quite conceivable that similar issues will play out in the North East and in
Chhatisgarh and Odisha, where the bulk of the connectivity improvement projects will be
targeted. The government will also be challenged to protect the installations and again the active
involvement of the state governments and their cooperation will be key to achieving the goals set
under this pillar.
Public Internet Access Programs

Under this pillar, the government plans to leverage post offices and existing multi-services
centers to create a network of Common Service Centers (CSCs) where citizens will be able to
transact government business over the Internet, with reduced exposure to actual day to day
bureaucracy.

The government plans to establish 1 CSC in every GP. Running each CSC is a challenge in itself
requiring much more than connectivity, either over optic fiber or radio. The infrastructure will
require a robust pakka building, constant power supply, power back up, trained operators, a fall
back plan in case of the systems or the connectivity failure and physical security. To get all these
elements right on a day to day basis in steady state operations will require active private
participation.
Will the government be able to attract private players in high-risk zones where safety is a
privilege? How will the government deal with the all pervasive absenteeism, which plagues the
government service delivery from schools to district magistrate offices? If the government plans
on running the CSC itself, it will result in a bloated workforce, thus kicking the can down the
road in terms of recurring operational expenditure required to keep the lights on.
Additionally, the experience in this space has not been encouraging. Several Indian cities have
experimented with variants of CSCs to allow citizens to pay local taxes, get birth and death
certificates and pay utility bills at neighborhood kiosks. These experiments have only been
modestly successful. If such kiosks cant work in Indian metros, how would the government
ensure constant service uptime for rural hinterland?
Even the Indian Post is grappling with its transition to a bank or payment bank and despite many
years of time, process and IT investments, a clear direction is yet to emerge. In this situation, will
Indian Post be able to assume the extra burden of running CSCs and how will RBI approvals
play out in the event of banking operations coexisting with these CSCs?
These are fundamental design questions that need to be addressed before big bang service
provisioning is put in place.
Perhaps the government will take a state-specific view of the BharatNet roll out, enabling a few
states to move towards achieving the full program benefits. In general, any sentiment other than
cautious optimism will be an overstatement when it comes to getting the foundations of Digital
India right. Based on how these pillars fare, the government to citizen or G2C interface will
succeed or fail. The next article in this series will cover these G2C pillars.

3. Citizen Services Delivery


Technology enablement that will facilitate Government to Citizen (G2C) interactions can
be hugely beneficial. But this can be made to work only if the processes are rationalized, a
challenge that must be met and conquered.
In the first two articles on Digital India, we looked at the program overview and the challenges in
creating the broadband infrastructure to enable the whole program. Once the infrastructure is in

place, the objective is to move the bunch of Government to Citizen (G2C) interactions online.
That will make the experience better and reduce the pain of dealing with the unpredictable
government offices. This Citizen Interface Layer of the program hinges on four pillars.
e-Governance: Reforming Governance Through Technology
This pillar aims to rationalize government processes and simplify administrative procedures. It is
a good sign that the government has realized the need to rationalize the underlying operational
environment in addition to planning the technology initiatives.
In the corporate world, business-IT alignment is a given. Various departments work with the CIO
organization to ensure that the IT investments not only improve interoperability between these
departments but also drive simultaneous operational improvements, process rationalization, and
organizational redesign as required. Every business aspires to divide its technology investments
between the core and the front end in a judicious manner, and not just depend on the band aid of
prettier user interfaces when a back-end overhaul is required.
That the government is thinking in that direction demonstrates that professional thinking is at the
core of the program. However, the change management associated with such transformation is
never easy in a government set-up. For starters, the organizational structure that almost always
changes when a corporate undertakes a transformation program is a given fixed monolith in the
context of the Indian government.
The concept of fiefdoms and creating organizational silos is not alien to the corporate world
either. But with respect to the Indian government, there are two key additional obstacles. Firstly,
unlike in the corporate setting, a top-down intervention in the Indian government is more likely
to result in union strikes or worse, voter disenchantment, rather than in behaviour change.
Secondly, the range of incentives available for the government to induce change is a much
smaller one.
Nevertheless, Digital India promises all the right things integration of services and myriad
government platforms, online workflows, tracking, storage and reporting of all citizen
interactions and very importantly, simplification of forms and paperwork.
Digital Initiatives: A Beginning
One of the early areas where these Digital initiatives have taken shape is Employee Provident
Fund Organization (EPFO). The Ministry of Labour has created online access to check provident
fund balances and initiate fund transfers between employers. The roll out of Universal Account
Number (UAN) will additionally help in tracking the PF across employers without employer
intervention. Anecdotal evidence shows how this much-required change has yielded only mixed
success without the EPFO office not being transparent.
Today, if a user transfers PF balances from employer A to employer B, the EPFO portal
promptly helps in registering the request, generating a tracking ID, and sending it to the
employer A in almost real time. Assuming that the employer processes the request in the

stipulated time usually, 45 days at the most the cheque with the funds goes to EPFO. The user
is notified as well.
That is where the trouble begins. The EPFO then does something the portal isnt useful at all in
explaining what to generate some paperwork and to send the cheque to Employer B with credit
instructions. Through this duration of EPFO processing, the portal keeps showing the status of
the request as In progress without any updates at all. As soon as the paperwork reaches
Employer B, the portal becomes active again and gives near real-time information until the
cheque hits the PF account that Employer B maintains.
Is the concept of UAN and the portal great? It is. Can we rationalize the process to eliminate the
part where EPFO intervenes sometimes for as long as four months? Thats what this pillar of eGovernance needs to address. Alternatively, at least, the Digital investment in this case, the
EPFO portal needs to intertwine better with the underlying operational process within the
EPFO. That might mean getting frequent updates on files from EPFO employees, creating
service level agreements (SLAs) for them for each step of file processing and measuring their
output. Thats easier said than done.
e-Kranti Electronic Delivery of Services
India started digitization of land records almost two decades ago. The National eGovernance
Plan (NeGP) was launched amidst much fanfare in 2006, focusing on 31 Mission Mode Projects
(MMPs). A decade later, many citizens or businessmen are still unsure of how to avail the
benefits of these programs. Anyone buying property would rather rely on a bank search process
to ascertain the legitimacy of title and clearances rather than consult a government portal.
Digital India aims at introducing technology interventions in 44 G2C areas, with some of them
still under design and development. Some are only partially active right now. The 15 G2C areas
are fully operational, including Aadhar, EPFO, Passport, e-Visa and Income Tax.
In his seminal 1991 book Crossing The Chasm focusing on marketing of High Tech products,
Geoffrey Moore had explained how the target audience adopts technology products and how the
widespread success of these products depends on delivering solutions and convenience, not just
the technology platform itself. The figure below explains Moores model of defining the chasm,
which a technology product needs to cross to adopt mass success.

(click to enlarge)
http://platformsandnetworks.blogspot.in/2011/07/business-model-analysis-part-8-crossing.html
Today, we have a range of e-Kranti services, which are attracting users and simplifying the life
of the citizens in their small ways. Maybe some like e-Visa for foreigners aiming to visit India
have even crossed the chasm to attract the early majority pragmatists after all, the number of
tourists seeking electronic travel authorization to come to India has seen a 770% jump since the
launch of the program. However, most of the 15 live and 11 partially live services today continue
to be useful for innovators and early adopters, but not many from the majority may have
discovered the full power of these services.
This is not to say that these investments arent productive, only that G2C initiatives cannot be
transformational without the majority of pragmatists and conservatives coming on board. Until
the technology is seen as a proof of convenience, that wont happen. Who would not want to
avoid going to a police station or a police commissioners office for a check when renewing a
passport? Which MSME will not like to pre-qualify for a tender based on a central repository of
registration documents rather than uploading them, sometimes in different formats, on each state
government website before a tender process?
Some of the ideas under e-Kranti can be revolutionary, despite not being new ideas. That list
includes interconnected crime and criminal databases across states, counter-terrorism
information sharing across agencies, health records for citizens via a central repository, single
view of all municipal taxes and so on. However, this requires dedication and commitment from
every layer of administration and governance. The government may do well to roll out the full
suite of 44 e-Kranti services to, say, five states or five metros with 100% coverage to make a
real, demonstrable impact, alongside the underlying process rationalization in place. Otherwise,
the vast scope may mute the effectiveness of the incremental roll-outs of these 44 services.

Information For All


This pillar aims at providing open access to government data as well as increasing citizen
participation in various areas via exchange of ideas and thoughts. It is a pillar where some
progress has already been made even before Digital India was formalized. An Open Data
platform with some useful data visualization built in is in place. MyGov, a citizen engagement
platform is live and being adopted rapidly with associated recognition in July, top contributors
got a chance to meet the Prime Minister himself in place.
The logical end state of this initiative should be something like the European Union Open Data
Portal which is a single repository for a humongous range of data points across all member
nations.
Today, individual central ministries, forget state governments or municipalities, struggle to
produce simple reports like where they are spending money and what measurements are in place
to gauge effectiveness. Any investment banking economist trying to measure the success of
fiscal expansion or a doctoral student attempting to the research effectiveness of governance
programs can vouch for how difficult it is to get simple, relevant data sets. Try tracking a welfare
scheme of a state government. It is nearly impossible to understand how funds are being utilized
to reach intended beneficiaries and what difference are they making.
The good news is that government is seeking professional assistance to improve. The Digital
India program has attracted industry professionals, who are seeking quantum changes to the way
government data is used and shared. As a first step, a National Policy on using Government APIs
was created in May this year by DeitY (PDF file) to create standards around publishing and use
of such data.
Early Harvest Programs
This pillar represents a collection of catch all initiatives that the government has taken to take
or will take in future across departments to enable the delivery of e-Kranti services. Some of the
low-hanging fruits are already in place or in progress like biometric attendance for central
government offices, the rollout of Wi-Fi in all central universities and standardization of
government websites, emails, and design process.
While these appear trivial, a large part of the management attention in the initial stages of Digital
India will be spent on such initiatives to improve the consistency of service delivery.
Additionally, there are some fast tracked department specific initiatives that are part of this pillar.
The Department of Women and Child Development has launched a Lost and Found portal for
tracking missing children and reducing trafficking, based on an initiative first launched by the
UP Police. It has been successful with over 1,500 children saved from potential trafficking since
launch.
The Department of Commerce has digitized the entire process to seek FDI in India. The Ministry
of Environment and Forests has put the entire clearance process for new infrastructure projects

online. The Department of Labour has improved the process of labor inspection using
randomized allotment of units, which will be checked by the inspectors involved, followed by
online report filing in 72 hours.
This pillar will continue to promote bottom-up changes, which will deliver delta improvement to
the citizen experience via standalone projects.
As stated in the first part of this series on Digital India, the government seeks to appoint a Chief
Information Officer (CIO) to coordinate between approval authorities as well as various
government departments to run the program.
The G2C initiatives will succeed if the CIO runs this transformation program like similar
programs in the corporate sector. Theres a need for a far-reaching vision, an ability to
fundamentally improve government IT architecture, an ability to keep rolling out quick wins
without losing the sight of long-term objectives and above all, to unify the citizen experience
across multiple layers of governance. Most importantly, the CIO cannot lose sight of the
operational process improvements, even though decision making on them is not the remit of that
role.
If, in the next four years, Digital India makes an incremental change to the NeGP, the program
would have done a disservice to the ambitious vision with which it is designed.
In the fourth and concluding article in this series, we will look at the avenues of industry
participation in Digital India program.

4. Employment Push Across


Manufacturing And Services
Employment generation, a planned collateral benefit of the Digital India program, can help
in correcting the balance between workforce (agrarian), share of GDP (low on
manufacturing) and urban predominance (services economy).
In the first three articles on Digital India, we looked at the program overview, the challenges in
creating the broadband infrastructure to enable the whole program and the plans and challenges
around Citizen Services Delivery. This article looks at the thrust on employment generation, a
planned collateral benefit of the Digital India program.
The government has dedicated two pillars for the Business Facilitation Layer one in the area of
manufacturing and one in services.

Electronics Manufacturing
In early July when the Digital India programme was launched, reading through a key tenet of this
pillar with an eye on 2020 that relates to electronics manufacturing Target Net Zero import is
a striking demonstration of intent would have sounded extremely ambitious.
Just a month and a half later, the focus on using electronics manufacturing to create jobs at high
economies of scale aided by government procurement and promoting a few specific items like
fabs, set- top boxes, mobile phones and consumer electronics, medical equipment, and smart
cards seems to be getting traction.
Foxconn, the leading international electronics manufacturer, has committed an investment of $5
billion over the next 5 years in Maharashtra, after the Chief Minister Devendra Fadnavis worked
extra hard to woo the Taiwanese firm to the state, competing not just with other Indian states but
also with other South East Asian countries. This investment is expected to create 50,000 jobs in
the Pune Mumbai industrial belt.
Foxconn also started assembling Xiaomi phones in Sri City near Vizag in Andhra Pradesh earlier
in August, a project that went live in just over six months. Redmi 2 Prime is the first phone
model which can be labeled Assembled in India.
Cricket Semiconductors, the first Indian foundry fab that had committed $1 billion of investment
in its plant in Pithampur in Indore near Madhya Pradesh in February also seems to have taken a
step forward, hiring Aabid Husain, a senior executive working for the foundry giant
Globalfoundries in Singapore.
In the healthcare space, Philips has plans to expand its Healthcare Innovation Center in Chakan
near Pune just one of the six such centers it operates globally including those in the US, China,
and Netherlands. The Pune center, as well as another Bangalore facility, will focus on R&D and
manufacturing of healthcare equipment, eyeing a domestic revenue potential of $1 billion in
addition to exports.
Two other related industries defense and aerospace have also seen several joint ventures (JV)
being announced with the intent to expand India-based manufacturing. Prominent among these
are Anil Ambani- backed Pipavav Defence and Offshore Engineerings JV with Zvyozdochka of
Russia, Kalyani groups JV with Rafael of France and Mahindra Aerospaces JV with Airbus
Group. These JVs while not directly in the area of electronics manufacturing will either source
electronics components locally or invest in their manufacturing, further boosting this Digital
India pillar indirectly.
These investments and proposals have been made possible on account of three major changes
which the government has brought about in the first year of its tenure. Firstly, the government
removed the requirement of defense license for dual use items, letting these items be subjected to
the sectoral cap of foreign direct investment (FDI) norms. That automatically helps increased
foreign investments in dual- use industrial equipment with FDI caps being much higher in many
cases.

Secondly, the government is attacking the manufacturing space via not just Digital India, but
also the Make In India program and the Pradhan Mantri Kaushal Vikas Yojana part of the Skill
India program. This development triangulates the business focus, availability of infrastructure
and clearances and the skills required to make private players successful.
Thirdly, the government had opened up the Medical Devices sector late last year for 100% FDI,
thus encouraging global players to extend their India footprint.
The electronics manufacturing area is incentivized alongside these policy changes via taxation
incentives, creating manufacturing clusters for ease of facilities development, improving IPR
laws to promote R&D and steps to improve MSME participation in the industry. Finally, the
government is tweaking procurement norms, especially in the defense area, to buy more made in
India components which provides an anchor customer for new manufacturing facilities.
States like Maharashtra, Andhra Pradesh, Madhya Pradesh and Gujarat seem to be fighting for
all the new investments in the electronics manufacturing space. The benefits will have to trickle
down in a much broader way over time to achieve the eventual aim of reducing rural reliance on
agriculture and land-based occupations.
IT For Jobs
For over two decades now, India has been a global leader in the IT and IT-enabled services
(ITeS) sectors. These sectors, however, tend to be concentrated in a few cities and the push
towards moving to tier 2 cities has only started in all earnest in the last five years or so. Even
then, most of the country does not directly benefit from the expansion of this sector.
With the plans to extend the BharatNet as described in Part 2 of this series to all gram
panchayats in India, the government senses an opportunity to geographically diversify the
fulfillment of IT / ITeS services across the country. Although Business Process Outsourcing
(BPO) firms have been expanding in smaller towns, where the cost of operations as well as staff
turnover, is low, lack of reliable connectivity has hindered these operations.
Rural BPOs can operate at fully loaded cost structures as low as $5 per FTE (full-time equivalent
employee) per hour as opposed to the larger cities where the comparable cost can be as high as
$15. BharatNet can reduce this connectivity arbitrage and also allow local Indian firms to deliver
outsourced services, not just for the global clientele, but also expand the business for local clients
this is largely an untapped area of business.
Additionally, the government plans to give a fillip to the North East BPO Promotion Scheme
(NEBPS) riding on the back of Digital India infrastructure. The North East region has an
advantage of English skills considered a prerequisite for ITeS sector and a talent pool, which
usually has to migrate to other cities to find job opportunities. This scheme targets creating
12,000 jobs in the North East region over the next five years in the ITeS sector.
India adds about 12 million people to the workforce every year. A thin line of employability and
employment opportunity divides this potential demographic dividend from social chaos. While

the options for self-employment and entrepreneurship increase, rapid job creation at a large scale
has no substitute.
If the interventions from Digital India program can work productively alongside Make In India,
the government would solve an important economic challenge correcting the balance between
workforce (agrarian), share of GDP of economy sectors (low on manufacturing) and urban
predominance (services economy).

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