India needs to scale up its IT startups, create a robust ecosystem and an addressable market to form convergence relationships with foreign manufacturing giants to cash in on the game changing emerging technologies like the Internet of Things.
So goes the story. A hotel wner comes across a few maintenance guys in his hotel’s premises, who have come to repair the lift. The owner says that the lift is working fine. The maintenance guys say, “Yes, we know that. But it will break down in 10 days’ time. So we are here for preventive maintenance.”
This, in short, sums up the power of emerging technologies like the Internet of Things (IoT) and Augmented Intelligence (also called Artificial Intelligence—AI) that have taken the world by storm. What is IoT? Simply put, it is a giant network connecting things and people—all of which collect and share data about the way they are used and their environment. That includes everything—from a smart slow cooker, which not only cooks your food automatically for the right length of time and consistency, but also recommends you a meal plan depending on your dietary habits, to a wearable fitness device that measures your health condition and activity, then use that information to recommend a customised exercise routine for you. Built in censors from different gadgets are connected to an IoT platform, which integrates data to produce valuable information through advance analytics. The system identifies patterns and also problems before they occur much, like in the story above regarding the maintenance of the hotel lift. It is all about smart decisions based on real time information.
IoT is a game changer and is expected to herald a mega transformation in conventional industry and structure of society. It is already changing the way different sectors are functioning. Today, an auto manufacturer spends at least 30% of its cost on software and not on hardware. Five years down the line this will shoot up to almost 60%. For Tesla, the American automotive and energy company, it is almost 70%. Hyundai is no longer an auto company. It brands itself as a mobility service provider—an ad campaign that aims to consolidate the future of mobility with shared, connected and clean technologies. And the auto sector is just one area. Look at aviation for instance. Singapore is building T4, a “no human intervention” terminal at its Changi International Airport. You do everything yourself.
Advance nations are merging creativity, human imagination and technology to form super smart societies that are secure, sustainable, and adept at problem solving and creating value. India has no choice but to join the bandwagon if it wants to realise its dream of becoming a superpower. To reap the benefit, it has to forge the right kind of partnerships with other tech savvy nations. While we are great at software development, we have never excelled in manufacturing hardware or developing smart products. In fact, four of the five best selling smartphone brands—Xiaomi, Vivo, Oppo and Transsion—in India today are Chinese. Xiaomi, the top player, accounts for 29.7% of all smartphone shipments (IDC data). Homegrown smartphone brands such as Micromax, Lava and Intex that once cornered nearly 54% of the market share, have a less than 10% market share today. It is only due to government push that India is into manufacturing phones now.
Innovation has never flourished in India for want of a suitable ecosystem. We have to find ways and means to marry our software ingenuity with the world’s best hardware manufacturing to come up with an original offering that consumers may want to grab. This has to happen here and now. If not, Indian IT businesses will face music in less than five years’ time. Large companies may innovate and stay put. TCS has already formed a partnership with Rolls Royce and Volvo on Internet of Thing. The smaller ones may just perish for want of a market.
India is a signatory to the Information Technology Agreement (ITA-1) since 1997. It is among 82 nations, representing about 97% of world trade in IT products and hence is committed to completely eliminating tariffs on IT products covered by the Agreement. While ITA-1 enabled China to raise its global market share of IT products from 2% to 14% during the last decade, it almost wiped out the Indian IT industry. Now everything—printers, scanners—comes from outside. It is high time that our companies play a role in making smart devices. That can happen in a co-creation mode with our software developers working closely with the big manufacturers on their shop floors.
Some encouraging developments have happened of late, especially with Japan. Prime Minister Narendra Modi’s Japan strategy since 2014 gave a new impetus to the Indo-Japan partnership on emerging technologies. The joint vision statement—“Japan and India Vision 2025”—by the two Prime Ministers, Narendra Modi of India and Shinzo Abe of Japan in October 2018, marked the beginning of a new era in Japan-India relations. The two countries pledging to jointly explore the possibility of collaborating in R&D in emerging technologies, was one of the highlights of the historical event. Attracting investments from established Japanese companies and talent from both the sides was at its core.
Japan’s Ministry of Economy, Trade and Industry and India’s IT Ministry signed a memorandum of cooperation. Simultaneously, NASSCOM, a trade association of Indian information technology, signed an MoU with Japan’s IoT Acceleration Consortium (ITAC) with a view to create and develop an IoT ecosystem in India. Addressing digital technology shifts and accelerating IoT adoption at a global level across the industry was its priority. In another instance, Japan’s Nippon Signal Co. Ltd partnered with IIT Hyderabad in manufacturing some smart designs of traffic related equipment for Indian Railways. TCS and L&T started working with the auto company Mazda in Hiroshima.
Since 2018, Japan has been sponsoring 10 Indian startups every year to attend CEATECH (Combined Exhibition of Advance Technologies), the world’s biggest IoT conference in Tokyo. Some companies have benefited from this and their projects are at different stages of development. Quite recently, NASSCOM had a live pitch event for Indian startups in Tokyo, the first of its kind outside India in which 140 Japanese investors and 26 startups from India participated. NASSCOM has also formed a Japan council of companies that have invested in IT in India. Twenty-one companies including Hitachi, Rakutan, Sony, and Panasonic are its members.
There are other success stories too. North America’s IBM is the number two player in India’s domestic IT market today and has even won Airtel’s $2 bn IT annual contract, beating Indian players like TCS, WIPRO etc., on their home turf. Companies like BMW, Bosch have 30,000 engineers working in India in designing components for cars, MERC has 8,000 people for their global products, LG has 10,000 doing R&D in IT, Samsung has 12,000 to 15,000 people.
There is much potential in such partnerships but much more needs to happen. India is not only a market or a factory. It has a vast pool of resources and surplus of skills for driving innovation. For more nations to follow suit, India should provide better stability and ease of doing business. It needs to scale up its startups to become the next INFOSYS, TCS and WIPRO. It needs to create a robust ecosystem and an addressable market to form convergence relationship with foreign manufacturing giants.