Time for India to focus on becoming global electronics manufacturing powerhouse

Time for India to focus on becoming global electronics manufacturing powerhouse

Several global electronics companies (from consumer electronics to aerospace) have embarked on a China+1 and even a China replacement strategy for manufacturing.

Published: 30th March 2023 08:41 PM  |   Last Updated: 30th March 2023 08:41 PM

By G Krishna Kumar

Commerce minister Piyush Goyal recently said that Apple has a target of moving 25% of their phone manufacturing to India. Several global electronics companies (from consumer electronics to aerospace) have embarked on a China+1 and even a China replacement strategy for manufacturing. Hence, India has witnessed significant interest from global companies in electronics manufacturing. In addition, India’s domestic demand for consumer electronics/appliances is seeing significant growth and is expected to touch USD 21.18 billion by 2025 (from USD 9.8 billion in 2021).

Can we capitalise on this demand? India needs to implement a multi-pronged strategy to emerge as a global powerhouse in electronics manufacturing. Before we delve into this, a quick look at the global electronics manufacturing services (EMS) scenario. 

The industry has evolved over the past 30 years as global brands found it beneficial to outsource the manufacturing of their products to EMS companies.

A recent report indicates that the global EMS market is projected to reach USD 1145 billion by 2026, at a CAGR of 5.4% during the forecast period 2021-2026. Although there are over 1000 EMS companies globally, over 53% of the market is held by ten companies based in China, Taiwan and the USA.

China leads the EMS market with 47% market share, while India stands at 2%. Southeast Asia accounts for about 7%, with Vietnam, Cambodia, Malaysia, Thailand and Indonesia aggressively growing their market share. India is estimated to grow fourfold to USD 80 billion by 2026. China has witnessed rising labour costs and labour shortages due to increasing aspirations amongst workers to pursue high-tech jobs.

India should capitalise on the challenges faced by China and emerge as a credible alternative. The government’s “Make In India” and Atmanirbhar Bharat initiatives have certainly given the much-needed impetus for electronics manufacturing. The Production Linked Incentive scheme, Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors, Merchandise Exports from India Scheme, Modified Electronics Manufacturing Clusters Scheme, among others, are important steps.

A recent study conducted to assess the feasibility of manufacturing an existing consumer electronics product (that is made in China) indicates that over 75% of the components are available within India. The supply-chain ecosystem of component suppliers has to be strengthened for cost efficiency, quality and scale to meet global standards. However, it is encouraging that India has achieved much localisation. We still don’t have the semiconductor chip fabrication capability for producing high-end electronic chips that perform critical functionalities. Chip manufacturing is a crucial parameter for determining the strength of a country’s manufacturing ecosystem.

The government has established several initiatives to encourage chip manufacturing. Three companies have announced plans to establish a large chip manufacturing set-up in Karnataka, Tamil Nadu and Gujarat. It will take a few years to see “Make in India” chips. Till then, we will depend on Taiwan, China or the USA.

A recent research report comparing the total cost of production (including manufacturing and logistics) in India and China shows that India is about 7-8% costlier than China. Of this, 4% is due to the financial incentives provided by China to manufacturers. Perhaps the Indian government, too, could consider additional tax benefits to encourage indigenous manufacturing. The government would do well to extend the SPECS scheme beyond March 2023.

For electronics manufacturing to thrive, India needs a solid infrastructure for smooth logistics handling. India’s road infrastructure has significantly improved over the past decade and is comparable to China’s. India may reach 1.8 lakh km of highways by 2025. Regarding ports, China has seven of the top 10 container ports in the world. India stands 36th. India’s current capacity of 1534 million tonnes annually is a fifth of China’s port capacity. Port expansion needs considerable improvement.

India’s demographic dividend should be used for creating a high-quality, trained workforce. The government must accelerate plans to implement the National Skills Qualifications Framework (NSQF) aligned to the skill requirements in electronics manufacturing. With the current turmoil in the IT sector, we must reduce dependency on it for employment. Through a strong industry-academia collaboration, students can be attracted to pursue jobs in the electronics manufacturing industry. We must have focused courses enabling industry-ready students for technology, operations and logistics.

While electronics manufacturing is labour-intensive, there is a clear trend towards automation of repetitive jobs using robots. Even complex tasks can be managed through collaborative robots (co-bots), which coexist with humans.

A recent World Robotics 2022 report shows that the annual installation of robots in manufacturing has seen a 31% increase in 2021 compared to the previous year and is expected to touch 6.9 lakh new installations by 2025. The electronics industry had the highest annual robot installations, with 26% of all robots in 2021.

India is at the cusp of a technology revolution with 5G deployment. Artificial intelligence, extended reality and robotics would help improve productivity and overall manufacturing competitiveness. Collaborative R&D efforts between the industry and premier technology institutes could help disrupt electronics manufacturing through advanced robotics and optimise the supply chain in the country through hyper-automation. India should aim to be a leader in Next-Generation Manufacturing (NGIM) through human-cyber-physical systems (HCPSs) by using artificial intelligence, machine learning (ML), big data and IoT for the co-existence of humans and machines and to achieve high productivity.

As we aim to become a leading electronics manufacturing hub, the entire manufacturing supply chain must be encouraged to adopt sustainable manufacturing practices like zero waste reuse, recycling, refurbishing and repurposing.

How about using solar power to meet 80% of factory energy requirements? Reports suggest that Samsung has already achieved 100% renewable energy in their US and China manufacturing sites.

India should research and implement the use of low-toxic components and even biodegradable materials in electronics manufacturing. Government-led efforts around green manufacturing would propel India to become a global leader in the industry.

(G Krishna Kumar is an ICT professional and columnist. Views are personal.)

India@100: World’s innovation capital

 We need to create research mindset among students in schools & colleges. We need to create an environment that can aid in producing subject matter experts who are equipped with multidisciplinary skill

Published: 19th August 2022 07:33 AM  |   Last Updated: 19th August 2022 07:33 AM

By G Krishna Kumar

In his Independence Day address, Prime Minister Narendra Modi called for India to become a leader in Innovation. His “Jai Anusandhan” (Hail Innovation) slogan is timely. 

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India significantly lags behind the world’s top economies in Innovation/Inventions and Intellectual Property Rights (IPRs)—including patents, trademarks, trade secrets and copyrights. While India’s ranking in the Global Innovation Index has improved significantly from 81 in 2015–16 to 46 in 2021, it is a long road ahead for India to dominate in innovation.

A recent report analysing data from the International Monetary Fund (IMF) suggests that India pays a huge amount of money to foreign entities (for using the latter’s IPRs), compared to what India earns for IPRs held in India. For example: In 2021, India paid $8.6 billion and earned just $800 million. Back in 1981, the out-go was $15.1 million and earning was $0.11 million.

As India aims to be one of the top three economies in the world, we must have a multi-pronged approach to strengthen our position in Innovation and IPRs. Let us look at how India can improve its innovation and invention capabilities through patents. 

For the uninitiated, a patent is defined by WIPO (World Intellectual Property Organisation) as an exclusive right granted for an invention, which is a product or a process that provides, in general, a new way of doing something or offers a new technical solution to a problem. Patents are territorial rights—this means that the patents are to be filed in each country where the inventor seeks patent protection. World bodies (like the Paris Convention and Patent Cooperation Treaty, etc.) assist inventors in filing patents in other countries. 

The Indian patent system dates way back to the 1856 Act on the protection of inventions. It has undergone several modifications and enhancements post-independence and more so since 1999.

Over the past decade, the government’s ‘Make in India’, ‘Start-up India’, ‘Digital India’, ‘Atal Innovation Mission’, ‘Skill India’ and the ‘NIPAM’ (National IP Awareness Mission) have certainly helped in spurring innovation in the country. To encourage startups to file more patents, the government provides incentives—startups recognised under the Startup India programme get up to 80% rebate on patent filings.

There are several examples of Indians driving innovation. For example, a Maharashtra-based company has a patented tamper-proof painting technology that can be applied on uneven and rough surfaces. This technology would have global demand. 

Patent filing has significantly increased over the past decade. For example, 58,502 patents were filed in 2020–21, compared to 39,400 patents filed in 2010–11. Nearly 28,391 patents were granted in India in 2020–21 compared to 7,509 in 2010–11. 

However, when we look at the global scenario, 5.3 lakh patents were granted in China, while 3.52 lakh were granted in the USA, 1.7 lakh were granted in Japan, and South Korea granted 1.35 lakh patents. We are significantly lagging behind these leading economies. The main issue is India’s low Research and Development spending of 0.7% of GDP. In comparison, the USA spends 3%, Israel spends 4.5% and even China spends 2.6% of GDP. 

It is heartening to see the share of Indian residents in total applications has increased to 40% in 2020–21 from 20% in 2010–11. It is encouraging to see academic institutions filing over 2,500 patents during the last year, spread across Information Technology, Biotechnology, Ayurveda and Basic Sciences. 

India fares poorly on time taken for patent granting. The time taken in India is about 42 months. This has dropped significantly from 64 months in 2017. However, this is way below the global benchmark. USA, China, South Korea and Japan take about 15–20 months to grant patents. 

The delays can be attributed to the number of patent examiners in India. India has 615 examiners compared to 8,132 in the USA and 13,704 in China. The whole process of patenting involves three critical aspects—the inventors, the patent agents and the examiners granting the patents. 

Firstly, we need to create a research mindset among the students in schools and colleges. We need to create an environment that can aid in producing subject matter experts who are equipped with multidisciplinary skills. 

The NEP 2020’s vision for encouraging entrepreneurship and innovation can help if implemented effectively through strong feedback and a continuous improvement mechanism. Much more awareness must be created among the students and the youth in the country. The NEP’s focus on building multidisciplinary skills can encourage students to think about research and innovation instead of just focusing on standard jobs. 

The inventors approach patent agents for filing. The patent agents need to pass the patent agent examination conducted by the Indian government to qualify for patent filing. 

Reports suggest that India has about 4,000 registered patent agents. In contrast, the USA has about 50,000 agents. The number of patent filings per agent is about 14 in India compared to about 7 in the USA. We need to increase the number of patent agents significantly. This can be done by increasing awareness about the role of patent agents. These patent agents must hold a degree in Science and Technology to appear for the patent agent exam. Here again, multi skilled personnel will have a great opportunity to excel. 

Finally, India is lagging significantly behind its global peers with regard to the ratio of patent examiners to the patents filed. Government initiatives to increase the intake will certainly help in reducing the gap. Regular awareness campaigns and celebration of success stories will motivate professionals to become patent agents or patent examiners. India should learn from the European Patent Office’s (EPO) strategy to attract talent as patent examiners. 

Overall, we have an excellent opportunity for the innovation-led ecosystem to work together and enable an efficient patent management system in the country. Such actions would ensure India can produce some of the best-patented inventions in the world before we celebrate India@100. 

Bengaluru-based ICT professional and columnist

COVID-19: Need for improved net infrastructure

While remote learning and remote working are a reality now, a big challenge is the speed of internet connectivity across cities and towns
Published: 02nd April 2020 04:00 AM  |   Last Updated: 02nd April 2020 07:19 AM

By G Krishna Kumar

Prime Minister Narendra Modi’s 21-day lockdown notification to ensure social distancing and prevent the spread of the coronavirus has resulted in businesses and educational institutions shutting down. This means employees and students are dependent on the internet to be productive while staying home. With most people connected to the web for entertainment and social networking, the data bandwidth required is huge. Is our internet infrastructure good enough to handle the surge? Before we delve into this, let us understand how people are gearing up for remote working/learning.

While the concept of working from home or home office (a term more popular in Europe) has been around for decades, it has not gained popularity in India, maybe due to lack of trust between the employee and the employer or cultural issues where physical presence is given importance. There are also proven benefits when employees are co-located in an office and it fosters camaraderie amongst the workforce. In sectors like manufacturing, remote working is impossible. But in industries where the physical infrastructure required is a computer and internet connection, remote working can be enabled. It has other positives like reduced traffic and environmental benefits. Perhaps the government should mandate an annual “remote working week”.

Over the past 10 years, the tech landscape has significantly improved for employees to be productive irrespective of their location. There are many software applications for promoting collaborative working. Organisations’ ability to accept and promote remote working calls for a shift in mindset. The present lockdown would test the maturity of organisations and employees alike. In addition, we could witness a shift towards uberisation of the workforce—freelance work as opposed to permanent jobs. Essentially, experts are hired on a need basis for specific tasks, and they mostly work from remote locations. Workforce uberisation is gaining popularity across the world.

In general, firms try to be prepared for emergencies through a business continuity plan . All threats that could disrupt regular business are determined and mock drills conducted to check the plan’s effectiveness. The pandemic has put such plans to test. This is by far the biggest logistical exercise firms have undertaken for enabling employees to work from home. Industry bodies like NASSCOM are actively involved in bringing alignment between industry and government in enabling remote working.

While industries are trying to adapt to the changing situation, universities and educational institutions have started virtual classrooms. The concept of virtual classroom was spearheaded in May 2012 by Massachusetts Institute of Technology and Harvard University with the MOOC (massive open online courses) platform edX, which boasts 2 crore students globally taking over 2,200 courses online. Virtual classrooms are a boon for the educational system in the country, especially during such shutdowns. In fact, this lockdown should provide a trigger for educational institutions to wholeheartedly support virtual classrooms going forward. Maybe some subjects can be taught exclusively online.

While remote learning and remote working are a reality now, the biggest challenge is the speed of internet connectivity across cities and towns. Low/substandard speed internet means a poor experience in downloading/uploading content, and audio/video calls The poor speed can also be attributed to the fact that per household data consumption in cities and towns has increased significantly. Reports suggest video streaming contributes to about 75% of the data consumed on Indian mobile networks. In order to reduce the stress on mobile networks, OTT players like Netflix, Amazon Prime, Hotstar among others have agreed to scale down their video streaming from high definition (HD) to standard definition (SD) on mobile networks during the lockdown period. While SD consumes about 0.7GB data per hour, HD and 4K streaming would consume anywhere between 4 and 10 times more than SD. BSNL’s work@home, a one-month free landline broadband connection, is a good initiative to encourage people to shift from mobile to landline broadband.

Even if we ignore the current surge in data consumption as an aberration and compare India’s internet speed with the rest of the world, the picture is not pretty. A recent speed test report ranks India 128th worldwide for mobile broadband performance and 69th for fixed broadband speeds globally. On mobile broadband ranking, countries like South Korea, UAE and Canada have download speeds between 75-94 Mbps; India is the last amongst BRICS nations with 11Mbps. It is interesting that countries like Sri Lanka, Pakistan and Nepal are ranked higher. In fixed line broadband, downlink speeds in India are about 39 Mbps compared to 203 Mbps in Singapore and 103 Mbps in China.

The current situation should serve as a warning for the government and telecom sector. India could have been better prepared had a rapid fibre optic network been deployed as envisioned in the National Digital Communications Policy 2018. Lack of a strong optical fibre network also puts the superfast 5G network plans in jeopardy. The telecom sector’s financial stress due to mounting debts only adds to the woes of telcos and their inability to upgrade their infrastructure. Governments have not been able to reduce the tax and levies on telcos, among the highest in the world.

The internet has become a lifeline for people to be productive during the lockdown. It is certain that remote working and learning will gain more acceptance going forward. While there is no denial that India’s internet access speeds have improved significantly over the past decade, there is huge scope for improvement. The government and telcos should accelerate actions towards ensuring world-class internet speeds so that people can be highly productive working or learning remotely.

G Krishna Kumar
ICT professional and columnist based in Bengaluru. Views are personal
Email: krishnak1@outlook.com

Creating world class talent in India

A holistic approach in higher education based on knowledge, skill and value is required for our nation to become a global talent leader
Published: 22nd February 2020 04:00 AM  |   Last Updated: 22nd February 2020 02:32 AM

By G Krishna Kumar And PVKrishna Bhat

A recent report states that India jumped five ranks to 35th position in the Worldwide Educating for the Future Index 2019. The jump has been attributed to India’s efforts with the draft National Education Policy (NEP). This should serve as a motivation for the Narendra Modi government to get the much-awaited final NEP out soon. The final NEP will be based on the draft NEP, but far fewer pages compared to the 450+ page draft. It is understandable that the NEP committee spent over three years with over one lakh meetings to frame the policy. One of the members of the committee, Prof M K Sridhar, mentioned that the NEP committee had to consider a hundred-year history of Macaulayan education system in the country, followed by 70 years of the post-independence system to provide an exhaustive policy framework for the next generation education system. The draft NEP received several critical inputs over the past 6 months or so. It is still unclear as to what extent tweaks would be made in the final version. But no policy is perfect, and it would make sense for the Centre to move ahead to finalise the policy and allow for periodic changes. 

This article focuses on the NEP recommendations, specifically around Higher Education Institutions (HEI) and suggests some improvements. India’s struggle to get into the top 100 ranking amongst global universities is well known. Will India become one of the best over the next two decades? It is certainly possible if the policy is implemented in the right spirit irrespective of government in power.Teaching the Teachers: The draft policy talks about categorising HEIs into three types of institutions, type 1 being research universities, type 2 teaching universities and type 3 colleges. The concept of creating teaching universities is a welcome move. These will encourage teachers to constantly upgrade their knowledge. The report envisions 1000-2000 such universities to come up over the next two decades, reskilling thousands of teachers. In the overall scheme, it would be useful for corporate employees to be given a chance for lateral entry into HEIs as teaching staff with an appropriate bridge training programme in type 2 universities.  Multi-disciplinary approach in HEI: The other highlight of the draft policy is the aspect on fostering innovation through emphasis on liberal education. Over the past decades, Indians have been blocked by the “stream” approach in higher education, where students are segregated into science, arts, etc. Instead, the approach here is to encourage students to take up specialisation in certain subjects while also supporting them on liberal education like philosophy, music, etc.

There are several examples from India’s own history where universities like Nalanda and Takshashila provided high quality multi-disciplinary structure for the holistic development of students. It is also well known that several global innovations were achieved due to innovation spurred by interdisciplinary setups in universities and corporate houses. However, this means a great amount of unlearning is needed at all levels, including government set-ups and educational institutions. The policy has suggested that all standalone professional institutions must become multidisciplinary by 2030. A tall ask, but much needed for the transformation to be effective. The suggestion on creating a National Research Foundation as a vehicle for funding and supporting innovation in all academic disciplines is a good move.Skill Development: A recent report from the UN Population Fund (UNFPA) estimates that India’s working age population (15-59 years) will reach 65% by 2030. India will also enjoy the longest demographic dividend compared to any other country till 2055. India still has 35 years to make the best in the global job market. Vocational education in all institutions offering professional education will play a key role in India developing a skilled workforce. The policy talks about multiple entry and exit options for students, with relaxed age and time limits providing the students with the required flexibility.

As the policy provides institutions with autonomy on the course content within a larger framework, it is expected that three types of institutions would emerge. The first one would be innovation and multidisciplinary institutions. The second one will be aimed at research-oriented students. A third, larger set would opt for “learning by doing”. This would mean 70-80% of the course content will be practical and industry relevant. There are several examples of universities and educational institutions across the globe that have successfully implemented the “learning by doing” method. Such institutions would help produce an industry-ready workforce. Values: As India aspires to become a hub for world-class talent, the focus on knowledge, skill development, and strong language skills (Indian and foreign) is paramount. However, our education system should also ensure students are high on values and ethics. 

In general, a lack of values can be attributed to a societal issue as well as a reflection on our education system. Does a highly competitive and stressful educational environment force people to adopt wrong means? Perhaps the flexibility for students as per the new policy could provide some relief.Considering our rich tradition and comprehensive life philosophy, the education system must be based on our social and economic needs and inculcate good values in students. Summing-up, the suggestions in the NEP should be implemented in the right spirit for transforming our education system to spur innovation and create high quality talent for industry and research needs. A holistic approach in higher education based on knowledge, skills and values would be required for India to become a global talent leader over the next two decades.

India’s struggle to get into the top 100 ranking amongst global universities is well known. Will India become one of the best over the next two decades? It is certainly possible ... the suggestions in the NEP should be implemented in the right spirit for transforming our education system to spur innovation and create high quality talent for industry and research needs

G Krishna Kumar
ICT professional & Columnist based in Bengaluru Email: krishnak1@outlook.com

AND

P V Krishna Bhat
Chancellor, Central University of Orissa, Koraput

An electric car on a 900 km journey

Ever since I bought a brand new Korean-made electric car a few months ago, I was keen to go on a long drive with the family. 
Published: 16th December 2019 04:00 AM  |   Last Updated: 16th December 2019 02:20 AM

By G Krishna Kumar

Express News Service

Ever since I bought a brand new Korean-made electric car a few months ago, I was keen to go on a long drive with the family.  

Despite some opposition, I managed to convince my family members to take the electric vehicle (EV) from Bengaluru to Sirsi for attending a wedding. Sirsi is a hill station and a popular tourist spot in Uttara Kannada district. The overall trip of over 900 km seemed like a tall ask as there is no charging infrastructure along highways. This meant some serious planning for charging the car and I had to carry fast-charging equipment along with me.

A distance of about 285 km from Bengaluru to Shivamogga was covered comfortably. After charging the car overnight, it was an easy drive from Shivamogga to Sirsi (a distance of 150 km)  via the famous Jog falls. Nice roads, greenery and pleasant weather made it an enjoyable driving experience. Without any additional charging at Sirsi, we were able to drive back to Shivamogga. One more round of charging there meant a good time to catch up with friends and family and then it was back to Bengaluru, about 310 km (via NH75) with no further charging.  

The range an electric vehicle can provide greatly depends on the difference in altitude between origin and destination, quality of road and driving style. The range anxiety cannot be ignored due to the nonexistent public fast-charging infrastructure. The car had to be driven at lower than optimal speed and it was slightly disheartening to see smaller petrol and diesel cars zipping past the electric car. The journey was adventurous as we were solely dependent on personal charging infrastructure.

It was encouraging to see awareness of electric vehicles amongst people in places like Sagar and Sirsi. People’s curiosity about the range and cost per kilometre is worth mentioning. Many of them are keen to go for such a vehicle as it is known to be non-polluting.

While many new electric cars are poised to hit the Indian roads shortly, for them to be a true all-purpose family car, the charging infrastructure on highways and tier 2/3 cities should be established on a war footing. The government has done a great job in improving awareness about electric vehicles, reducing the GST on electric vehicles and providing income tax benefits to the buyer. But without good infrastructure, the job is only half done.

G Krishna Kumar
Email: Krishnak1@outlook.com

Ultra-low mobile tariff versus quality

Telcos must move away from the tariff war. The Centre must take a soft approach on taxes and insist on high-quality user experience

Published: 04th November 2019 04:00 AM  |   Last Updated: 04th November 2019 02:03 AM

By G Krishna Kumar

The Supreme Court’s recent judgment upholding the definition of AGR (adjusted gross revenue) and asking telecom firms to pay around `92,000 crore to the government has placed the sector in further financial crisis. The AGR definition has been controversial for about two decades now. As per telcos, AGR should include only the core telecom revenue, while the Department of Telecommunications (DoT) wants all revenues earned by telcos, including interest from bank deposits and foreign exchange gains, asset sale gains, etc. The telcos are appealing to the government to clarify or review the SC judgment.

This SC verdict has come when telcos like Airtel and Vodafone Idea are in a dilemma over Reliance Jio’s move asking its subscribers to pay 6 paise per minute as Interconnect Usage Charges (IUC) for calls made to other network providers. Will all telcos follow suit and is it time to bid goodbye to the ultra-low mobile tariff regime?

The IUC is a charge payable by network provider A, whose subscriber originates the call, to network provider B where the call terminates. An IUC of 6 paise per minute has to be paid by A to B. The telecom regulator TRAI had reduced IUC from 20 paise to 14 paise in March 2015 and further to 6 paise in September 2017. In 2017 TRAI had announced that the IUC would be made zero from January 2020. But it is likely that the IUC may continue for a longer time. In fact, a recent report indicates the government is not able to fix a floor price for mobile tariff and by retaining the IUC at 6 paisa for the next couple of years, the Centre may be indirectly influencing the floor price. It is a clear indication that other telcos would increase their tariff very soon.

Most advanced countries follow zero IUC or Bill and Keep (BAK) mode that allows for calls to be terminated at zero charge. The telcos recover the costs from their own customers instead of charging other operators. Where the voice call traffic amongst telcos is roughly similar, BAK would be appropriate. In India, asymmetricity of voice traffic was prominent five years ago as there were 8-10 telcos per circle and the top 2-3 enjoyed maximum market share. As it stands now, the top three have anywhere between 30-35 crore subscribers, but the asymmetricity continues. TRAI has issued a recent consultation to assess the need to continue the IUC or scrap the same due to the asymmetric voice traffic. Sample this: Jio has 64% outgoing calls to other networks and 35% incoming calls. Airtel has 45% outgoing calls and 54% incoming calls, while Vodafone Idea has 40% outgoing calls and 59% incoming calls.

The challenge in India is the ultra-low tariff that has resulted in an average revenue per user (ARPU) of `74 per month. That is 10 times lower than in most advanced countries. Indian mobile subscribers’ data consumption has gone up significantly over the past two years. The average data consumption is over 9.7 GB now, while it was about 2 GB in 2017. This is among the highest in the world. The average cost to subscriber per GB wireless data has gone down from `17.43 in 2017 to `7.7 in 2019.

The telcos have to constantly update their infrastructure. But in an industry with around `7 lakh crore debt, they are struggling to improve the infrastructure. This has led to extremely poor call quality, constant call drops and inconsistent data connectivity. The overall user experience is pathetic. Most of us have witnessed a drop in the quality of mobile experience in the past few years; this can be directly correlated with the reduced mobile tariff. This artificial low tariff is killing the industry. Many telcos have closed their operations.

For India to benefit from the strong mobile connectivity, high-quality network infrastructure is required. The tariff war that telcos are indulging in must end. The focus must be on providing better quality of experience for subscribers. According to a report, if the top three operators start charging 6 paise IUC to their subscribers, the telecom sector revenue is likely to go up by `15,000 crore. This is welcome money for a sector reeling under severe financial constraints.

The government on its part should take a relook at the regulatory fees imposed on the telcos. The regulatory levies and taxes (license fees, GST, etc.) in India are the highest in the world, with telcos having to pay 25-30% of the gross revenue as tax. A recent news report indicates that the government is working towards reducing the universal service obligation from 5% to 3%. The revenue share license fee is likely to be brought down to 6% of the adjusted gross revenue of the telco. The government has recently set up a panel to suggest steps for providing much desired relief to telcos.

The government action on reducing taxes and providing longer timeframe for deferred payment of spectrum fees will provide respite to the telcos. Along with this, the inevitable increased tariff (quality over cheap tariff) will enable the telcos to improve their infrastructure to meet the ever-growing demand from the mobile subscribers. 

But the government should mandate the telcos to provide the right quality of service. There were discussions on the government imposing penalties for poor quality voice and internet connection. The government should certainly bring some tight controls.  

With Digital India ambitions from the present government still intact and with several services planned to go digital in the country, a robust telecom sector is the need of this hour. Telcos must move away from the tariff war. The government must take a soft approach on taxes and yet insist on high-quality experience for the end users. Quality should win over low tariff.

G Krishna Kumar

ICT professional and columnist based in Bengaluru. Views are personal

Email: krishnak1@outlook.com

Getting India ready for the electric mobility revolution

Electric car sales cannot revive the struggling industry in the immediate future. But the benefits of electric vehicles are too good to ignore.
Published: 21st July 2019 04:00 AM  |   Last Updated: 21st July 2019 12:54 PM

By G Krishna Kumar

Over the past few weeks, the interest level around EVs (Electric vehicles) has suddenly increased in the country, thanks to the recent budget announcement by the finance minister about promoting electric mobility, by reducing GST for EVs to 5 per cent and allowing income tax benefits for EV buyers.While these sops must be lauded, there are limited options for electric car buyers, unlike with regular petrol/diesel vehicles or internal combustion engine cars or ICE cars, where the options are aplenty. The automotive industry is reeling under pressure, with ICE car sales at 18-year lows. The industry’s woes are compounded with the need for BS VI emission compliance for ICE cars.

Electric car sales cannot revive the struggling industry in the immediate future. But the benefits of electric vehicles are too good to ignore.  EVs help in curbing pollution in our cities and towns through reduced carbon dioxide emissions. Also, electric mobility can help reduce India’s oil import dependency. Currently India imports 84 per cent of its oil demand. A NITI Aayog report indicates that by 2030 India can save 474 million tonnes of oil if 30 per cent of private cars, 70 per cent of commercial cars, 40 per cent of buses and 80 per cent of two and three-wheelers become electric.

Global EV scenario
Globally, EV prices are at least 50 per cent higher than those of ICE cars, and the price is expected to fall to ICE car levels over the next 3-5 years. The battery is the most important component of EVs. A Bloomberg report states that the cost per kwh (kilowatt hour) was over $1,000 in 2010 and it is expected to go below $100 by 2024. Research reports indicate that EVs will become cheaper compared to ICE cars once the cost per kwh goes below $125.

The European Union is leading the way in electric mobility adoption with new policies and regulations. Norway is widely seen as a pioneer in the EV market, with over 20 per cent of new cars sold being electric. The government offers subsidies, toll fee waiver and special parking to aid EV adoption. The UK’s Road to Zero strategy is aimed at removing ICE vehicles by 2040. The US EV market is expanding rapidly and is expected to add over 4 lakh electric cars this year.A recent report suggests that the world’s EV sector growth is healthy, and by 2025 the global market will be worth $570 billion, with China leading with a market share of 60 per cent. 

India’s EV journey
Electric cars have been around in India since 2001, but only over the past few years have we seen the government’s active involvement with policy changes. Since 2017, the government has made a strong pitch for electric vehicle deployment in India through initiatives such as FAME (Faster Adoption and Manufacturing of E-vehicles), FAME-2, Green Mobility Fund and Make in India. In a bold move, the government is pushing for sale of EVs only after 2030.

As per The Society of Manufacturers of Electric Vehicles (SMEV), there are more than 4 lakh electric two-wheelers and a few thousand electric cars on Indian roads. With several new electric cars and two-wheelers planned to be launched in the coming months, adoption should improve. However, there are significant challenges.

Challenges and opportunities
A recent report indicates that 2.1 crore two-wheelers were sold last year, and electric scooters’ share was less than one lakh. While over 3 lakh cars were sold in FY19, less than 10,000 electric cars were sold. Despite zero road tax in several states and government subsidy to the manufacturers, the high price is a deterrent. But then it is a great opportunity for companies to innovate and bring the prices down. The battery is the costliest component of EVs and India is dependent on China and other countries for both the technology and the supply of lithium for manufacturing batteries.

It is an opportunity for the government to task the premier technical institutes, such as IISC and the IITs, to come up with innovative battery storage/alternative technologies. Innovation in reducing cost and improving charging speed for the mass market are the need of the hour.The next challenge is about range anxiety, a term used to indicate an electric car driver’s worry that the battery will run out of power before a suitable charging point is reached.Newer cars are expected to hit the Indian market with a 300-400 km range with a fully charged battery. This is much better than the 100-km range cars currently in the market.

Range anxiety is all the more serious as public charging infrastructure is almost non-existent at present. Even with the infrastructure, it would take 45 minutes to several hours to charge a car, depending on the technology used for charging batteries. While people are used to instant refuelling with ICE vehicles, the time taken for charging will be a dampener.There is a possible opportunity for companies to create innovative replaceable/detachable batteries. This will significantly reduce range anxiety and would make it convenient for the car and two-wheeler users. 

Standardisation of the charging infrastructure would play a pivotal role. The government and the industry should strive for indigenous technology using solar power for developing a robust charging infrastructure. India’s electricity infrastructure needs significant improvement to cater to increasing demand. Sustainable electricity generation through mini/micro and nano grids can be the way out.

Disruption in the job market can be another big challenge. Sample this: The number of moving parts in a normal ICE car would be over 2,000, while an EV counterpart would just have 20 odd moving parts. The fewer the moving parts, the lesser the need for maintenance. This could affect the established petrol/diesel-based automobile industry ecosystem, which includes service centres, spare parts manufacturers etc.

The present automobile ecosystem has provided jobs to over 5 lakh people in the organised sector and several lakhs of unorganised jobs. The government would do well to create a 5-10-year road map that would allow for a gradual move towards creating a strong EV ecosystem. Also, the government and industry should embark on reskilling the existing workforce. For India to emerge as a global electric mobility leader, a robust ecosystem involving government, industry and academia must be created, with a  charter to drive road map implementation and  spur innovation.

G Krishna Kumar
ICT professional and  columnist based in Bengaluru
Email: Krishnak1@outlook.com

Getting BSNL off life support

Hyper competitive environment can be blamed for the woes of this sick PSU. The situation also shows how lack of agility can pull a firm down.
Published: 03rd April 2019 04:00 AM  |   Last Updated: 03rd April 2019 07:43 AM

By G Krishna Kumar

Recently, BSNL, the state-owned telecom PSU, was in the news for
failing to pay salaries to its 1.7 lakh employees for February. The 
Centre’s action to ensure that employees are not affected, at least 
for the immediate future, must assuage the employees.

BSNL, which was a Navaratna company just 10-12 years ago now
has over Rs 90,000 crores of accumulated losses. The new
 government should takesome significant steps to get BSNL back 
on track. The wage bill for BSNL and MTNL (the state-owned telco
 providingservices in Delhi and Mumbai) is about 60 per cent of the 
revenue. 

This was about 20-22 per cent 12 years ago. Over the past several 
years the wage bill increased
 while the revenue has been stagnant or reducing. Meanwhile,
private telcos operate at 9-14 per cent wage bill as a percentage of 
their revenue.

While the hyper competitive environment can be blamed for the woes
of this sick PSU, the situation also shows that poor management and 
lack of agility can pull down any profitable organisation rapidly. A 
recent report shows how
the paltry productivity of BSNL/ MTNL compares with their private
peers. On an average, each employee of the PSU manages about
 500 subscribers,
 while the private telcos manage 20,000 to 28,000 subscribers per 
employee.Interestingly, even China’s state-run mobile operator, 
China Mobile is better
 than BSNL in this parameter. China Mobile has a base of a whopping
 90 crore
 subscribers and its employees handle over four times the subscribers
compared to the BSNL staff.
The merger of BSNL and MTNL has been on the cards for some time,
but successive governments have failed in taking action.

Way back in 2009, the government tried to encourage BSNL by
 providing 3G

spectrum before the auction was held for private players. But BSNL
 could not
 make any impact with the head start. There was no such luck for
 BSNL when
 it came to the 4G spectrum. The lack of 4G offering has put BSNL
 on the
backfoot. After Reliance Jio’s entry, private players are competing to
 provide
better rates for the subscribers. And all this while, BSNL’s services
have been
 limited to just 2G and 3G. This has been a huge disadvantage for the
 PSU.
BSNL and MTNL account for less than 10 per cent of the wireless
subscriber
 base. And BSNL has not been able to match the private players
 when it
comes
 to marketing their services.

Bureaucracy and slow decision making during equipment purchase
and
managing contracts, and inadequate management flexibility in pricing
 plans
and challenges around vendor management contribute to BSNL’s woes.
Added
to all this, BSNL staff are indifferent when it comes to customer retention.

In fact BSNL has tried to implement the FTTH (Fiber to the Home)
connectivity
 through vendors, but it has not been a smooth ride. The back-and-forth
between
 BSNL and the vendors puts the subscribers in a spot. Perhaps, BSNL
needs to
 learn from the private telcos on how to handle managed services from
vendors.

Notwithstanding the shortcomings, BSNL still commands the highest
 market
share in wireline broadband with lakhs of kilometers of optical fiber
cable
across
 the country. It has infrastructure/towers and a talented workforce. This
means
 the PSU can rise again. The government’s actions must go beyond the
tactical
 bailout package which is being worked out.

Perhaps the government should learn from Telstra of Australia and
British
Telecom of the UK. They are great examples where the government
control
was drastically reduced. The companies are listed in the stock exchange
and
have improved and agile management structure. They are now
accountable to shareholders. Despite stiff competition, both the 
companies have performed
 exceedingly well. The Centre should consider a stake sale and bring in
management talent and create a professional board. Accountability
must be enforced.

It is estimated that the land assets owned by BSNL is worth over
Rs 70,000
crore. The government must create the right checks and balances to
monetise
 the amount either by selling the assets or leasing them out. It must
conduct an
 audit of the active infrastructure being used by BSNL and suggest
 means of
improving the unutilised/under utilised assets. The company must
soon find
 ways of offering next gen technologies. News reports suggest that
BSNL
could take a lead on 5G. That is heartening. However, keeping in mind
the
company’s track record, implementation could be a cause for worry.

The government must set a 18-24 month goal of right sizing the
workforce and
 bringing in efficiencies using industry benchmark on productivity.
The
government should look beyond voluntary retirement schemes.
It should
actively encourage entrepreneurship amongst employees and
 create a
platform for employees to come up with ideas. It can enable a
support
system
 for localised content and solutions for the Indian market and
also utilise
the
 start-up ecosystem for upskilling.

The new government must play a pivotal role in creating and
implementing
 a strategy to breathe life into the PSU. Genuine efforts are
 needed to get
BSNL off life support.

G Krishna Kumar
ICT professional and  columnist based in Bengaluru
Email: Krishnak1@outlook.com