Manufacturers’ Association for Information Technology or popularly known by its acronym MAIT is recognized by both government and the Industry for its role in the growth and development of the IT Hardware industry in India. Ahead of this year’s Union Budget of India; IDG India spoke to Anwar Shirpurwala, executive director, MAIT at length on the present state of Indian manufacturing sector, expectations from government, collaboration for big government programs.
There is no choice but we as an industry body help government initiatives like Digital India and Make in India become successful as per him. “It is an equal responsibility on the industry and government. The Government has great inclination which they have initiated to a certain extent. But the true realisation and dedicated support has to be executed from within the industry to move ahead,” says Shirpurwala at MAIT.
What’s the update on the present state of manufacturing of IT products in India?
The manufacturing sector under MAIT caters to a complex chain spread over various organisations and across various product lines. Most technology vendors do not have one product (though PC could be prime product) but a varied portfolio of product offerings. ‘Only PC’ companies have more or less exited from the business or they are focusing on new form factors like mobiles, tablets etc.
From MAIT perspective it is extremely important that digital India project now sees day of light faster leading to more consumption of products and solutions. The vision is great and the motive is right. But there is urgent need for acceleration and on-ground translation for more adoption to take place.
In our last year’s annual report ITOPS that tracks IT industry performance in India, there was a positive trend of an increased demand for PCs in rural areas. Urban India is becoming bit saturated in this regard and kind of hitting a plateau.
The first preference devices are now laptops and not desktops. Desktops are now converted into hybrid computers / AIOs and tablets are gaining popularity. Computing is completely getting distributed among multiple devices. From one family and one device to access the internet, each individual has at least couple of devices (laptops, mobiles or tabs etcetra) for internet access at any given time.
Do you expect decent PC market (desktops and laptops) growth in India than most parts of the globe?
Yes. PC penetration in India at ten to eleven percentile - as per various reports - is not a great number. Developing nations like India are at twenty five to thirty percent. The low numbers in India are a concern area purely because of slow speed of Government programs in the past. And hence when Digital India program was announced, the clear focus by the authorities meant an expected upsurge in PC adoption in the country.
Foxconn and other manufacturers announced big investment plans for India last year. Does ‘not so good’ global sales and palpable China meltdown make India the golden manufacturing hub for technology OEMs?
The national policy on electronics introduced in 2012 did not witness much movement for almost one and half years. With the new central government in India and the whole ‘Make in India’ program announcement has gained lot of momentum the world over.
There is lot of manufacturing happening in mobile and tablet segment in India due to the segment’s favourable duty structure. Digital India’s objective is connecting every citizen, every household, and every small business to the internet. To be part of Digital India, bouquet of products will be consumed including PCs, smart phones, tablets, consumer premise equipment, small switches, routers, dongles, smart televisions etcetra. Will this big demand to empower Digital India be sufficed by imports or local manufacturing? This therefore makes an absolute case for ‘Make in India’ program.
MAIT believes that the duty differential should not be restricted to couple of products. Digital India needs the gamut of dozen odd products to be deemed eligible for duty differential which is our most vital recommendation for this year’s budget.
Will ‘Duty Differential’ demand by MAIT lead to ‘Make in India’ shining brighter in 2016?
From that perspective, this year’s budget (later this month) is exceedingly important. If duty differential is introduced for PCs, laptops and notebooks, the biggest advantage is that four players –HP, Dell, Lenovo and Acer- have their manufacturing facilities in India. It is a ready facility but it is fairly underutilised.
Government will not have to give any capital subsidy or anything as the investments have already been made. Government saving money on that front can give that incentive and PC players with ready facilities can start the production instantly with that advantage. The industry is also ready to commit for next three to four years that hundred percent import substitution can be done.
Today a base of 80 to 90 million PCs in India. We expect twenty five to thirty percent PC penetration considering Digital India program rolls out in the right timeframe. That means thrice the present PC penetration rate (approx. 10%) which calls for a huge case for manufacturing in India.
How is MAIT helping the government stakeholders’ across the bouquet - Make in India, Digital India, Skill India, Startup India and others?
MAIT work is ongoing on all these fronts. Due to ITA, inversion and other issues the existing manufacturing died or slowed down. But we have been strong advocates of manufacturing in India since last three decades.
Make in India is a modern term but local manufacturing always existed. Even Digital India has been there in form of push for e-governance, computerisation etcetera. MAIT has contributed in not only making policies, but also talking to our members, companies, our counterparts outside India on various manufacturing related aspects. It is a continuous dialogue for effective development of the ecosystem development.
There was serious issue regarding Government procurement when Digital India program was announced. The procurement was dipping since few years for various reasons. We are pushing for government procurement reforms. On the central level, model RFP version 2.0 is created with a template and toolkits that are used by procurers for RFPs. We are working with 15 state governments and we are writing IT procurement procedures for them. This is the basic strong foundation needed to ensure the successful roll out of various programs.
On Skill India part, MAIT as part of Electronics Sector Skills Council of India (ESSCI) works closely on what skills are required for industry, creation of skills, occupational standards etcetra. We feel there are excessive people exploring Startup India program. Software start-ups is a much easier than hardware product start-up. There are many home grown manufacturers which should also flourish with big players in start-up program. There is definitely scope for MAIT but we will see how this program pans out.
What is the rationale behind ‘Digital India Action Group’?
To roll out these large –scale IT -centric programs, MAIT created Digital India Action Group. The idea is how you can help supplement government in terms of on ground action and the implementation of a company’s good solutions to be part of digital India. MAIT showcases those solution to make people aware of the technology. If the solution is not available in the market, we have a competent think tank of industry experts and domain stalwarts to source that solution. Based on our collective knowledge, we put forward the recommendations to the government - for example projects like UID or ADHAAR.
We are helping Government where many existing solutions can be immediately implemented for Digital India and the industry is also prepared to provide many products to Government on low cost too.
How realistic are these government programs for the mammoth scale of India’ s geographic expanse and population size compared to less populated ‘digitally empowered’ countries?
Many of the projects like CCNTS, passport, MCA-21 have been successful in India. Individual projects in states like land records have been effective too. I don’t see why Digital India and Make in India should not become a success too. We are in the age where technology is the backbone for efficiency, productivity and cost-savings. That is the only path forward and I am confident on implementation of these projects.
On the manufacturing front, ease of starting business is different than ease of running a business. Starting a business in India might lead to delay of license, registration etc. which are manageable at times. But issues like logistics, cost of finance during business operations are a challenge.
Where do you see rubber hitting the road?
There is no choice but we as an industry body help government initiatives like Digital India and Make in India become successful. It is an equal responsibility on the industry and government. The Government has a great inclination and they have initiated to a certain extent. But the true realisation and dedicated support has to be executed from within the industry to move ahead.
Everybody is bullish including industry associations like MAIT, vendors like Dell, Intel, HP to name a few because we do not see any negative vibes whatsoever.
Your wish list from India government.
Introduction of duty differential for PCs, mobiles and notebooks to accelerate the manufacturing industry. Revamp of the entire procurement reforms in terms of IT products and services bought into the country.
More efforts for ease of doing business in India should be enhanced (by at least 10x than present) because many ground issues are still unresolved. There is a large gap between a policy maker and the implementer. There is need for huge amount of capacity building which we are helping with. The understanding of the implication of technology and how technology industry works is not perfect many a times.
Can you stick out your neck to predict IT penetration for India in next couple of years?
Two years is a short window as there would be a marginal difference in adoption rate. Flash forward to year of 2020 or 2021 with the ambition of every village connected on internet. But it will require lot of work by the Government. Connectivity in many parts of urban cities of India still results in call drops. Hence we are far behind from the bandwidth issue and internet connectivity.
I would like to see the PC penetration in India touch around 30% in the next five years – almost triple than the present rate. It is proven record by World Bank Report that every ten percent increase of PC penetration leads to an increase of 1.3% in a country’s GDP. India can then have a healthier GDP with a 4% increase if PC penetration occurs at the expected pace.
And of course IT penetration leads to socio economic development, productivity and efficiency of the processes and the nation at large.