Editorial Articles

Issue no 01, 02-08 April 2022

Role Of Digital Infrastructure In The Post Pandemic World

Neeraj Sinha & Naman Agrawal

 The coronavirus has provided a new start for digital infrastructure development. Digital infrastructure has emerged as a significant infrastructure necessity vis-àvis traditional infrastructure necessities such as buildings, roads, power and water supplies, etc. Using the cloud, big data and AI applications creates room for industries to develop and build new business models that help citizens withstand the severity of pandemic and ensure preventive measures. The COVID-19 pandemic has provided a major impetus to the ever- expanding digital infrastructure. The article outlines the need of digital revolution in India, in today's age and world, and the initiatives of the Indian Government thus far. The article also touches upon various enabling opportunities for India, by innovating and learning by doing, by investing public funding to help finance research and development in critical areas.

 Economies across the globe are charting ways to make their digital infrastructure, comprising physical resources necessary for the use of data, computerized devices, methods, systems, and processes, more resilient, agile, and futuristic. Digital infrastructure has become indispensable for the functioning of a society and the quality of life of its citizens. All over the globe, countries have leveraged their digital infrastructure to proactively respond to the ongoing pandemic. Going forward, the resilience of a nation's digital infrastructure can be pivotal to successfully address adversities such as the COVID-19 pandemic. India, being one of the most populous countries in the world, is uniquely positioned in the global landscape and has the potential to become a leading digital force in the emerging world order.

The nearly half a billion internet users in India, a host of indigenous digital services, platforms, applications, content, and solutions, are expected to transform India's digital ecosystem. India could potentially see a five-fold increase in economic value from digital transformation by 2025 representing an attractive opportunity for global and local businesses, startups, and innovators to invest in emerging technologies (like AI, blockchain, or drones) in ways that are customized to India's needs. Although there has been rapid adoption of frontier technologies such as artificial intelligence, block-chain, and internet of things (IoT), the COVID-19 pandemic has put the digital infrastructure under immense pressure. It has led to an inevitable surge in the use of digital technologies due to social distancing norms and nationwide lockdowns. People and organizations all over the world have had to adjust to new ways of work and life.

An increase in digitalization is leading firms and educational institutions to shift to work-from-home (WFH). Blockchain technology will become important and will entail research on design and regulations. Gig workers and the gig economy is likely to increase in scale, raising questions of work allocation, collaboration, motivation, and aspects of work overload and presenteeism. Workplace monitoring and techno stress issues will become prominent with an increase in digital presence. Online fraud is likely to grow, along with research on managing security. The regulation of the internet, a key resource, will be crucial in the post-pandemic era. Digital money, too, with contact free usage, assumes importance in crisis situations and research will address their adoption, consequences, and mode. Aspects of surveillance and privacy gain importance with increased digital usage.

Digital Revolution: Need of the Hour

India's digital divide is narrowing fast as less affluent states and sections of society leapfrog to catch up with more affluent states. India can create up to $1 trillion of economic value from the digital economy by 2025 with half of the opportunity originating in new digital ecosystems that can spring up in diverse sectors of the economy. E-commerce platforms are expected to drive recovery of electronic consumer products - mobile devices, smart TVs, LED lighting, etc. - faster, and having a robust manufacturing ecosystem is essential to adequately address the rise in indigenous demand. An immediate need is to develop local supply chain networks, and efforts in this direction could result in enhanced indigenous electronics manufacturing.

Industry should develop quarterly short term strategies and calibrated decision making to address disruptions caused due to the COVID-19 pandemic. The 'Atmanirbhar Bharat' policy could give a much-needed fillip to the country's disrupted business operations by promoting indigenous manufacturing, export competitiveness, encouraging substitution of imports of low-technology goods, and encouraging local produce at lower prices (Electronics B2B, 2020). It is the need of the hour to promote and create a framework for the development of robust digital infrastructure especially connectivity and wide access, which could facilitate the adoption of emerging technology areas such as 5G, IoT, artificial intelligence, machine learning, drones, robotics, additive manufacturing, photonics, nano-devices etc., and their applications in areas such as defence, agriculture, health, cyber security, smart cities, and automation, with special focus on solving real-life problems.

The global electronics market is estimated to be over US$ 2 trillion. Although India's share in global electronics manufacturing has grown from 1.3 percent in 2012 to 3 percent in 2018 (Invest India, 2020), it is still considered to be minuscule as compared to some other countries. The electronics industry is a crucial part of the digital ecosystem of a nation, the industry and the government must make concerted efforts in this domain. Semiconductors, being the building block of electronics, are central to the global electronics ecosystem. The absence of a state-of-the-art semiconductor fab in India has been a major capability constraint. Semi-conductor manufacturing is a complex capital intensive and R&D intensive sector defined by rapid changes in technology - which require a sustained R&D and investment commitment. Semiconductors are not only at the heart of electronic products, but they also constitute a significant part of the total value of the final products.

The recent expression of interest for setting-up or expanding existing semiconductor wafer/device fabrication (fab) facilities in India or acquisition of semiconductor fabs outside India by the Ministry of Electronics and Information Technology is a welcome step. It is believed that acquiring a second-hand fab of 28 nm could take care of a large part of India's current need instead of going after the most modern fab (Financial Express, 2020). This will not cost more than US $500-700 million. In addition, a thrust on semiconductor fab manufacturing, including a Gallium Nitride (GaN)fab, with a milestone-based, time-bound approach, is also important.

The Initiatives of the Indian Government Thus Far

India has set itself an ambitious target of building a $5 trillion economy by 2024. Global macroeconomic factors coupled with a cautious outlook and muted domestic consumption poses a serious challenge to achieving that ambition. The moment has now come to think out of the box. It is necessary to break the old paradigms of economic growth and development by harnessing technology-led innovation. The digital economy alone can support 60-65 million jobs in the future (Financial Express, 2019), fuelled, of course, by enabling government policies, support, and initiatives. Some of the major initiatives include:

·         The Digital India programme is one of the major initiatives of the Government, which has had a tremendous impact on the national digital infrastructure. Under this programme, the government aims to provide high-speed internet connectivity across the length and breadth of the country. In addition, it also aims to expand and leverage the unique identity (Aadhar) as a mode to ensure digital identity, financial inclusion, benefit distribution, and easy access to the common services centres (CSCs). The network of 3.59 lakh CSCs with a presence in 2.3 lakh gram (village) panchayats has become a robust mechanism for the digital delivery of services. The CSCs are delivering 50 Central and more than 300 State services. In this process, the CSCs have generated employment for more than 1.2 million persons in rural areas (Economic Times, 2019).

·         The Government has set up National Centres of Excellence (CoEs) at the Indian Institute of Technology (IIT) Bombay for technology solutions in internal security and at the IIT Kanpur for flexible electronics. The Government has also set up a Centre of Excellence in Bangalore in collaboration with the National Association of Software and Services Companies (NASSCOM) for Internet of Things (IoT). These measures are also expected to bring in cutting edge technologies. (Ministry of Electronics & Information Technology, 2019)

·         The Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme has been notified in April 2020, to address gaps, by providing support for the creation of world-class infrastructure along with common facilities and amenities, including Ready Built Factory (RBF) Sheds/Plug and Play facilities for attracting major global electronics manufacturers along with their supply chain to set up units in the country (Ministry of Electronics & Information Technology, 2021).

·         The Scheme for Promotion of Manufacturing of Electronic Components and Semi-conductors (SPECS), April 2020, will help offset the deficiencies in domestic manufacturing of electronic components and semiconductors and strengthen the electronics manufacturing ecosystem in the country (Ministry of Electronics & Information Technology, 2020). z The Production Linked Incentive Scheme (PLI) for Large Scale Electronics Manufacturing, April 2020, offers a production linked incentive to boost domestic manufacturing and attract large investments in mobile phone manufacturing and specified electronic components, including Assembly, Testing, Marking and Packaging (ATMP) units (Ministry of Electronics & Information Technology, 2021).

·         The National Policy on Electronics 2019 (NPE 2019), prepared after extensive stakeholder consultations, aims at positioning India as a global hub for ESDM with a thrust on exports by encouraging and driving capabilities in the country for developing core components, including chipsets, and creating an enabling environment for the industry to compete globally (Ministry of Electronics & Information Technology, 2019).

The vibrant IT-BPM, telecom, e-commerce, electronics sectors, the explosion of new digital startups equipped with technologies such as virtual reality (VR), augmented reality (AR), Blockchain, Artificial Intelligence (AI), robotics, analytics, automation, cloud, cyber-security, mobile, and social media, could help to achieve close to $250 billion in gross value added by 2025 (Financial Express, 2019). India has set itself an ambitious target of expanding its economy by 2024 to $5 trillion. It has made many efforts to become more digitalized and the Digital India Mission is envisioned to be created on digital security and trust. Building digital trust is a major effort for the whole society, business, and also for people using digital services.

There is a light at the end of the pandemic tunnel as many vaccines have been approved and vaccination has started in most of the countries of the world. India is in fact running the largest vaccination campaign in the world, with over a billion people to be vaccinated in record time. COVID-19 has however, changed our world for good including the way we work, our healthcare, and the importance of digitization. When the world came to a standstill, services and products were adjusted using digital systems to allow continuity of business and life. Speaking at the CoWIN Global Conclave on 5 July 2021, where 142 countries were represented, Prime Minister Narendra Modi offered CoWIN to any and all countries free of charge and as open source software. The software can be customised to any country according to local requirements. India had already made its Covid tracking and tracing app AarogyaSetu open source as soon as it was technically feasible. The Cowin platform had enabled inoculation of a large percentage of the world's population with ease, while simultaneously ensuring complete transparency.

Enabling Opportunities for India

India has been steadily rising in the Global Innovation Index (GII) rankings and currently is ranked in the 48th position 2020). The power of the 3rd largest scientific and technical manpower in the world (India Brand Equity Foundation, 2021) has MNCs like Samsung, Bosch, Microsoft; CISCO etc. have started focusing on India to leverage the capability India has to offer.

A young country with rising expectations: Working age population (between 15 and 64 years) to touch 1 billion, surpassing China by 2030, 65 per cent of India's population is below the age of 35 (ASSOCHAM India, 2015).

·         Employment Challenge: Need 12 million new jobs a year to absorb the growing working population; 50 million people need to be skilled each year, current capacity only 3 million (India Today, 2020). 

·         The growing middle class seeks new value propositions: By 2021, India will have about 900 million people constituting the 'emerging middle and middle class' segment, which will provide new opportunities. 

·         To win in this market, companies will need to deploy a shift in mindset to achieve new value propositions delivered through innovative business models. 

·         India's gross expenditure on R&D (GERD) increased from Rs 65,961.33 crore (US$ 14.07 billion) in 2011- 12 to Rs 104,864.03 crore (US$ 16.27 billion) in 2016- 17. However, it is only about 0.7 percent of GDP and is likely to grow further.

Successful countries have grown their ability to innovate and learn by doing, by investing public funding to help finance research and development in critical areas. Everyone is involved - big and small, public, and private, rich, and poor.

Conclusion and Way Forward

A coalition of stakeholders (private and governmental) are supporting pharmaceutical enterprises with millions in funding to find a vaccine for the virus. To modernize, upgrade and update our digital infrastructure and to tackle this and future pandemics, different financial models will evolve such as Public-Private Partnership and consumption/ outcome-based models to alleviate the financial crisis during the development phase. It is now the moment for countries to fast-track the construction of new digital infrastructure, such as IoT along with AI, in addition to the hastening of vital projects and major infrastructure construction that's already included in countries' financial stimulus plans.

(Neeraj Sinha is Senior Adviser & Naman Agrawal is Senior Associate, Niti Aayog, naman.agrawal@nic.in).

Views expressed are personal Image Courtesy : Google