'Digital India Wave Yet To Create A Major Impact On IT Industry'

BVR Mohan Reddy, Founder and Executive Chairman Cyient Ltd and former Nasscom Chairman, shares his views on how the two years of the Modi government have impacted the IT industry. In an interview with BW Businessworld, Reddy talks about the complex problems of the IT industry and the need for the government with work closely with industry bodies like Nasscom. Edited excerpts 

Has the Modi government in general been able to live up to the slogan of "Achhe Din"?
The slogan “Achhe Din” has a relative context as its impact may be seen in different ways by different sections of the society. Overall, we see a check in corruption, and government departments are becoming more transparent and efficient in their work. There have been some good steps towards rural employment generation through MNREGA, however, the continued droughts for the last two years in many states have posed challenges for economic growth.

We see improvement and commitment from the power, road, and railway ministries, and hope to see more impact in the coming year. The ranking on the ease of doing business has improved to 130 from 142, and our current account deficit has come down to 1.3 per cent of GDP—both very positive signs.

How has Modi's Digital India programme impacted the IT industry in the last 2 years?
The Digital India programme has been taken up across multiple industry verticals and departments. We can see many government departments migrating their systems and services online, which definitely increases the democratisation of technology and promises easy access to various government services across the length and breadth of India.

However, the Digital India wave has yet to create a significant impact on the IT industry, as most of these initiatives are in initial phases. Over the next few years, the digital initiative will emerge into a big opportunity. Creating digital awareness and accessibility will definitely have a positive impact on the future workforce. The IT industry will face a shortage of digital skills in the coming years, and there is a need for a focused approach to create a skilled and digitally empowered talent pool.

What are some of the key IT-related initiatives that have proven to be a boon for the IT sector in India?
While there have been a few good initiatives and policy support for the last two years, we do not see any new policy launch for the IT industry. The IT Industry in India is mature and has more complex problems, where it would need support from the government. Issues like visa fee hikes, transfer pricing, net neutrality, and so on have been more prominent in the recent past. IT industry in India continues to be the largest private sector employer, adding about 200,000 employees to reach a total employee base of 3.7 million in the current fiscal. If the government envisions creating sustainable employment for the youth in the coming years, it needs to work along with IT industry bodies like Nasscom to create the desired impact.

How do you think Modi's Startup India initiative has benefited the startup ecosystem in the country? Do you think the provisions in the Startup Action Plan meet the requirements of the ecosystem?
The startup policy is a good start, however, it has gaps which have yet to be addressed. In 2015, India received more than $5 billion worth of investments. With three to four startups emerging every day in India, the country has become the third largest startup ecosystem in the world just after the US and the U.K. (as per the number of startups, which stands at 4200+, and this translates into a growth of 40 per cent as compared to last year).

To support and nurture this budding ecosystem, the union government will have to work together with state governments, academic institutions, industry, and trade associations.

What more should be done by the Modi government in the next few years?
The next few years will be decisive as the government has announced a host of initiatives already. We would like to see the rigor with which the government translates the initiatives like Smart Cities, Digital India, Make in India, Startup India, and Skill India into action and reality. I think that good work has been done in terms of marketing of these initiatives in Indian and global arenas, creating awareness.

However, the Herculean task is in execution, which is where many of the governments fail as they are not able to steer these initiatives towards completion. At the same time, India’s population by 2030 will be close to 1.5 billion and this definitely poses a question in front of us as to how we are making sure that we have sufficient jobs to employ people.

Currently, India has nearly 10 million people who join the workforce every year, and a jobless rate of more than 8 per cent. To address this, the union government needs to reinforce its support to the existing industries which are creating jobs. IT Industry being on the top in the services industry definitely needs a priority to ensure a faster pace of growth and creation of more jobs in future.