Union Budget 2021: Incentives needed for operators to view fiberisation as opportunity, not challenge

Kiran Kumar
·5 min read

India's digital divide is narrowing fast and in terms of the total number of digital consumers, the country is currently among the top three global economies. The country's digital competitiveness has witnessed significant progress in the recent past, both in terms of its knowledge and readiness to adopt digital technologies.

UPI, a home-grown technology, has served as a great example with over 80 percent of transactions in the country expected to become digital in the next five years, according to Frost & Sullivan's analysis. India is poised to become a country with a billion internet users by 2030. However, for India to reap the full benefits of digitisation and be self-reliant, the government has to play a stellar role in minimising the pain of transitioning to a digital economy.

Road to 5G

India currently ranks among the lowest in internet quality even as it continues to be one of the most affordable internet economies in the world. Now, of all times, the broadband infrastructure will play a bigger role as almost everything has moved online due to the pandemic. The ubiquity of smartphones and the onslaught of over-the-top (OTT) platforms have led to a substantial rise in mobile data traffic and with that India is in a dire need to deepen fibre penetration.

The Government of India will have to look at measures and a suitable package of incentives for operators so that the private sector does not see fiberisation as a challenge but as an opportunity. With the transition to 5G networks which is largely dependent on radio technology, the government should look to sort allocation of E&V bands, as they remain critical to building a robust backhaul (in the absence of fibre coverage).

Rising importance of telehealth

Technology is making significant advances with regard to how healthcare is being delivered to people. While there are many issues plaguing India's healthcare sector today, COVID-19 has exposed the lack of available resources including trained healthcare providers and adequate physical infrastructure.

Economic survey results in the past have indicated that the doctor-to-patient ratio in India is roughly 1:1,450, which is significantly lower than the prescribed WHO norms. In such a scenario, it becomes important to leverage technology to make better use of available resources and to improve health outcomes.

Telehealthcare has witnessed exponential growth post-pandemic in India. Medical institutions and healthcare service providers are increasingly required to adopt and invest in cloud-based solutions and collaborative digital tools in providing quality care across the country. Adequate measures by the government in the form of tax breaks (GST waiver) and tax incentives for building digital/ smart healthcare systems would provide a much-needed impetus to this sector.

Bolstering data protection regulation

In light of growing awareness and concerns around protecting personal data, a clear data protection policy that meets international governance standards is a must. India needs to play a broader role in standard-setting bodies and consortia around the globe. The country needs a fundamental re-imagination of its citizens' jurisprudence of privacy. The government could provide a benchmark to entities operating in India on the basic requirements that need to be taken to eliminate privacy concerns. It is an opportune moment to review the government's approach to data protection regulation and help secure the future of India's digital economy.

When it comes to data localisation, concerted efforts are required to develop infrastructure in India for data storage and processing. Around the world, governments provide several incentives to companies to help them set up data centres, such as tax rebates, lower property tax, and a substantial reduction in power tariffs, among others.

In order to handle the increasing data volume from data localisation efforts, India would need to ramp up its data centre capacity by at least 15x over the next five years per industry estimates. There is also a need to ease regulatory hindrances in establishing data centres.

Accelerating readiness for Industry 4.0

Though concepts like Industry 4.0 and smart factories are now a reality, the adoption of digital technologies by Indian manufacturers is still at a very early stage and currently has a limited application scope. Manufacturing automation with the use of digital technologies such as 3D printing, robotics, and Machine Learning will be an unavoidable and irreversible trend in the coming years.

If India's manufacturing economy has to reach $1 trillion by 2025, manufacturing units need to incorporate these technologies, which can have a significant impact on efficiency and overall business. The government should step up its efforts by working in tandem with industry associations, promote venture funds, and set up public-private partnerships to support the development of digital technologies in the manufacturing sector.

To realise India's goal of becoming a $1 trillion digital economy, adequate investments supported by a stable policy roadmap and a widespread digital infrastructure are important. There is a growing concern that most often the policies drafted by the government of India are vague in nature and are interpreted differently by various stakeholders involved. India's Digital Tax, being a case in point. As a result, it is important to eliminate ambiguity in drafting policies, make it easier to implement programs and policies, and develop a practical governance framework that is required to overcome implementation challenges faced by enterprises across the country.

Private players and startups should be incentivised to encourage greater participation in order to develop infrastructure, provide services and promote digital literacy. In order to achieve true Digital Atmanirbhar, India needs to act, and act faster to drive holistic and sustainable development.

The writer is Research Manager, TechVision, Frost & Sullivan

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