Sameer Kochhar: What are your plans on localisation of content?
Ajay Kumar: The transliteration tools are available and its been decided to do this for top 100 government websites and NIC has already initiated the exercise. Additionally, we are creating an institutional set up to whet this content and this is being discussed with PIB and the NIC state units. The domain ministries will be equal stakeholders in this.
SK: Is digital literacy critical success factor for India to transform into a knowledge economy?
AK: Absolutely! we have to empower the people at the bottom of the pyramid who otherwise are illiterate in terms of formal education. We need to build capacity of farmers to be able to access information from Internet regarding weather, prices or better techniques. Kisan Call Centre has been playing a good role in this already. Digital literacy is more about providing opportunities to people to access information rather than just operate it.
SK: Singapore and China have specific schemes for technology promotion for MSMEs. Are you doing something on these lines?
AK: This is the Ministry of MSMEs job. We only provide the framework for the domain ministries. In fact, a lot of MSMEs today are able to grow much faster than what they could in the past because of technology adoption. Their balance sheets have improved and so have their profitability.
SK: What do you think of electronics manufacturing in India?
AK: It has to be local demand driven and export oriented. If you were able to compete with imports with zero duty, you would be able to compete globally. Given our good trade relations with the Middle East, Africa and Europe, these markets should be an easy target for exports. The challenge would be to compete with South East Asian economies.
SK: Should you not target products with high domestic demand like PCs or mobiles rather than focusing on specialised items, which may not have a large market either in India or abroad?
AK: The ecosystem of electronics is very unique. There are certain components, which run across products and those components have become verticals. Fabs have become scalable—logic fabs, memory fabs or even PCBs. Components like diodes, resisters, LCDs etc are used widely across vertical product lines. You have large companies like Foxconn or Tetronics who have monopolised the market. It is no more about products; it is about developing various parts of value chain—design, products, service, warranty—which will make the market grow. We may not be able to do all verticals, but certainly will do some. Our effort should be to create the EMS industry, for sure. Examples are Erickson, Nokia, Siemens who are doing end-product assembly and manufacturing here.
SK: In the past, we have done cables, casings and plastic components in the name of electronics manufacturing. What is the kind of manufacturing, we should be looking at?
AK: There are two sides to it—manufacturing for low value-add that has low margins and manufacturing for high value-add with high margins. High value products are IP based which constitutes nearly 50-70 per cent of the product value, so there are huge margins. We don’t have that in India at all.
SK: Whether in India or in the US, it is created by Indians and the industry had made no effort whatsoever in trying to move up that value chain.
AK: On the employment side, all our schemes are trying to address some of the issues being faced by the industry. One is inverted tax, which essentially means if you are manufacturing, you will pay higher tax than compared to if you are importing. We are trying to correct this. Even the Budget made certain announcements to this effect. There are several small inputs that go to make the product. At present, you have to list out all those inputs and get them notified in zero, so that if the end product is zero then inputs become zero. The problem is, it is impossible to list out all inputs and also that technology is changing so fast that the inputs change, which do not find mention in the notification. But it is changing. We have 56 units, which during the last 18-months have made investments in India in electronics manufacturing, the first time in last one decade. Automotive components and consumer electronics are the emerging areas. I must add, in order to be an electronic superpower, we have to generate IPR, which China did 10-year ago. The result is Huawai and Lenovo that compete with the top.
We are doing two things to promote greater IP generation. We are setting up incubators focused on electronics—in Delhi and Patna to start with. We need to get into areas of large area electronics. In IIT-Kanpur, we have set up a National Centre in partnership with industry to work on these areas to produce technologies and products that can be commercialised as and when demand arises. Similarly, we are now going for a Center for Micro and Nano System with NIC.
On the consumer protection, we have introduced international quality and safety standards in electronics despite resistance from the industry. More than 8,000 products have been registered since the time first notification came out in October 2012. We have notified 15 more products, which will come into effect from May 2015. That is six months lead time for industry to conform. What we have seen is a lot of cheap and gray market products have stopped in the first list of 15, especially things like tablets and set top boxes which were happening. This helps consumer get good quality stuff and it gives a better opportunity for the genuine manufacturer to set up manufacturing units and sell in India.
SK: How do you ensure after-sales, particularly for installations in rural areas?
AK: So far, at the end-product level, we have defined safety standards. We are now defining component level standards and this initiative has started under the BIS Act. Much against opposition from BIS, we successfully introduced the scheme for self-registration of standards across the country, which has been a tremendous success. We are now at the second level, wherein, we are looking to see how we can get into the performance standards. Those capabilities have to be created within the system, not in just one department. We have already started multi-stakeholder consultations involving industry, UIDAI, BIS etc.
SK: Why don’t we accept whatever is globally benchmarked and if that is the standard that we want to replicate here, then whatever has been tested is good enough. But if there is an uncertified product, there should be a local facility to do so.
AK: Absolutely. The whole idea is that wherever there is a global standard, which you can adopt, you should do it. More importantly participate in the development of that standard itself at the global level, which so far we have not done! Further, if there is something, which is unique to us and requires some tweaking, we should be able to do the tweaking. There may be a possibility that this prime mover advantage ends up creating global standards.