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What Tech and Telecom Industries Want From the Narendra Modi Government

What Tech and Telecom Industries Want From the Narendra Modi Government

By NDTV Correspondent | Updated: 27 May 2014 12:27 IST

With a new government led by Narendra Modi sworn in on Monday, there are a lot of changes that will follow in the days to come. The Internet and technology industry in India has been a major driver of progress and we spoke to some of the leading industry bodies to get their views on what the new BJP Government can do to benefit the industry.

MakeMyTrip founder Deep Kalra talked about the importance of easing investment, and said, "E-commerce is an inventory based and technology-intensive sector, requiring substantial capital. Furthermore e-commerce businesses usually don't get easily funded domestically by loan or equity. The e-tailing sector also desperately requires access to working capital. So FDI in e-commerce would be a welcome step."

He added, "We would like to see accelerated focus on broadband access - making it more widespread and economical, facilitate payments especially on mobile - by allowing non-banking intermediaries like PayPal. It can change the rules of the game because the cost structure at present is way too high. Tax breaks for the sector since online services are beneficial for the economy. Also there is a need to develop human capital by introducing relevant courses and curriculum in higher education."

Nasscom, the largest industry body for the IT sector also stated the importance of developing policies "to ensure the continued growth of the industry, going forward focus will need to be on long-term policies for sustainable development."

To bring growth and transformation will require certain decisive steps, and according to Nasscom, this will require renewed investments and an overall uniform policy environment to enhance India's competitiveness in the domestic and global markets. Specific projects for the adoption of IT in education, healthcare, agriculture and manufacturing should be considered, to meet development goals.

The spokesperson added, "We at Nasscom are constantly engaging with the Government to ensure that industry will pass through any political scenario. Our Information and Communication Technology (ICT) agenda for the government focuses on technology for governance, development goals, and the need to encourage entrepreneurship and innovative startups in India, and make the overall business environment conducive in India."

To this end, the organisation also feels that institutional reforms must ensure that the business environment is conducive not just to existing businesses but also to new firms and SMEs, and that the government needs to focus on nurturing growth of new services.

One way of doing this, according to the spokesman, is to "draft encouraging policies to encourage IP creation and protection for effective monetisation and provide hassle-free patents registration. There need to be changes in the government procurement norms in order to create more opportunities for start-ups by lowering the cut-off levels."

The Internet and Mobile Association of India (IAMAI) is hoping that the new government will focus on updating laws to take new technology into account, and to ensure that copyright law allows Indian Web developers to innovate. It further hopes that existing projects like the National Optical Fibre Network be accelerated, stating, "Indian broadband policy efforts need to widen their focus to include the promotion of meaningful Internet access coverage in urban areas."

The IAMAI further hopes that the government will provide incentives to mobile app technology development and digital finance, and promote Indian venture capital by ensuring that policy makers study the problems affecting the sector.

Amar Babu, Managing Director at Lenovo India and President of the Manufacturer's Association of Information Technology (MAIT) said, "Although Narendra Modi has actively spoken on manufacturing, we suggest his government put in place a manufacturing ecosystem immediately by ushering in policy reforms, regulatory frameworks and removing inverted duty structure to facilitate investments in the country."

He also remarked, "India is a difficult place to start any business, especially when it comes to enforcing contracts and obtaining building permits. India should restore confidence by addressing these issues and checking India's miserable rank of 134 in World Bank's 'ease of doing business. The Government should consider lowering interest rates on corporate borrowing and a steady transformation of India's complex tax structure."

Debjani Ghosh, Managing Director, South Asia at Intel and Vice President, MAIT, remarked that "Since Mr. Modi has actively advocated technology penetration and digital literacy, we wish the government build an intelligent and confident India by fostering technology adoption, sprucing up infrastructure, ensuring last mile connectivity, reduce VAT and provide access to easy bank loans in the context of ICT."

The MAIT recommends that the government focus on the following key items - an ecosystem for manufacturing; duty reform, amending exchange rate variation clause for IT hardware, and subsidies for PC penetration.

The Cellular Operators Association of India (COAI) added a few points as well, stating the importance of wireless spectrum rollout, and added, "COAI and its members support the use of auctions to allocate spectrum. However, it may be time to determine the elimination of license fees and high SUC charges on the fact that the market price for spectrum has already been paid for."

The spokesperson added, "There is an urgent need to rationalise the taxes and levies in the sector, which aggregate presently to 30 percent of the revenues earned by telecom companies as compared to about 5 percent in other Asia-Pacific (APAC) countries. License fees and spectrum usage charge (SUC) account for about 12 percent of adjusted gross revenue (AGR). Indian mobile operators face the highest regulatory costs including service tax, license fee and graded spectrum usage charges.

These multiple levies significantly deter private investments that are required in the sector especially the broadband connectivity objectives of government, thereby deterring any multiplier effect on the wider economy. The step up in spectrum price on spectrum acquired outside of the present auctions, as presently required in the merger and acquisition guidelines, is a dampener."

The COAI endorses the appeal by Professors from IITs, IIM, and IISc to the Government of India, to urgently set up and operationalise Telecom Research and Development Fund (TRDF) and Telecom Entrepreneurship Development Fund (TEDF) to encourage research and entrepreneurship in the Indian Telecom industry.

In a letter to the Department of Telecommunications (DoT), 35 leading faculty members from premier academic institutions in the country such as Indian Institute of Technology (IITs), Indian Institute of Science (IISc) and Indian Institute of Management (IIM) have urged the DoT to take immediate steps to operationalize TRDF and TEDF to help catalyse the manufacturing eco-system and make India a global leader in telecom technology for commercial and national strategic use.

Rajan S Mathews, Director General, COAI commented, "It is imperative for the country to develop a competent research and entrepreneurship ecosystem in order to nurture and grow the industry in a competitive global environment. It is essential that proper proactive support be provided from the Government as well as industry for a joint effort towards facilitating this much required ecosystem."

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