Digital Modi 3.0: Solving Issues Pending from Modi 2.0

The drum beats for a “Viksit Bharat” progresses uninterrupted with the continuity in governance that has occurred with the ushering in of what is popularly being referred to as Modi 3.0. Continuity of policies will help in accelerating the digital vision of Prime Minister Modi, thereby leading to a more connected and digital India, and thereby a more efficient economy.

A key aspect of “Viksit Bharat”, i.e. a developed India, is to have a technologically advanced economy and society. One of the drivers for a technologically advanced economy and society is an acceleration of digitalisation of Bharat.

The fundamental driving force for this digital transformation will be the need for further strengthening the domestic telecom sector. Modi 3.0 will surely accelerate the work on BharatNetIII, which is one of the largest telecom projects in the world. In addition, the telecom service providers (TSPs) who continue to expand their network services to the remotest areas in India, as well as the telecom equipment manufacturers who have steadfastly ramped up production in the last decade, would require further policy support to accelerate their rolling out of digital infrastructure.

TSPs have been under considerable pressure as India rapidly digitalises, as the data going through their networks has jumped exponentially, necessitating the need for continuous significant capital expenditure while the average revenue per user (ARPU) increase is not keeping pace with the increase in data. In the past ten years, the broadband data consumption per subscriber has surged over 288 times while the ARPU has only increased by 1.25 times. This data increase has primarily come from entities that are referred to as large traffic generators (LTGs), who have in a way substituted cable TV, thereby shifting the equivalent of cable TV data from cable TV networks to the broadband, both fixed and wireless.

While the equivalent of such LTGs used to share their revenue with the cable TV network providers, they are not doing so with the wireless or wired broadband providers. This sharing of revenue by LTGs such as OTTs (over-the-top content providers who ride on top of existing networks to provide content and earn revenue) with the telecom service provider, is referred to as the policy of Fair Share of revenue. We are at a stage where there is an urgent need to usher in the Fair Share of revenue policy.

Another aspect of this growth in telecom network is the origin of the equipment for the network, i.e. the issue of AtmanirbharTelecom. Telecom and broadband network use equipment such as optical fibre/optical fibre cables, routers, data cables and so on. Unfortunately, we continue to import much of this equipment. The telecom equipment sector in India has scaled up significantly in many areas such as manufacturing optical fibre, routers etc. and the industry has sufficient to supply not only for domestic demand but has also begun exporting. It is therefore expected that the networks being rolled out using taxpayer money, have a substantially large amount of domestic procurement, similar to the transformation that is happening in Indian defence, and that we do not import equipment from China or elsewhere, and prevent compromising our networks. 

Tighten Regulations 

This would require the government to tighten rules and regulations on local value addition related to PPP-MII (Public Procurement Policy – Make In India), which is a policy for having greater domestic content in procurements done by government, such as procurement for BharatNet III. The PPP-MII in its current form, mandates that 50 per cent of the project value needs to be local. Unfortunately, products within a project, form a very small portion, and most of the cost thereby is taken up by dumb and by passive infrastructure such as the telecom tower, cement, labour etc. This implies that contractors use this as a loophole and use up the 50 per cent limit under PPP-MII to procure the dumb and the passive infrastructure domestically, while the high end equipment still gets imported. Therefore, the equipment being deployed continues to be imported from economies such as China, Europe and USA, limiting the development of the Indian telecom ecosystem.

To make the situation worse, many countries worldwide have begun enacting protectionist policies such as the BABA (Build America, Buy America) Act. The BABA Act in some cases, such as telecom, has been amended to mandate that optical fibre cables need to be 100 per cent manufactured in the US, with no components being imported.

This amendment to the BABA Act by the US has blocked Indian digital manufacturers from accessing the US market. This implies that Indian manufacturers who had invested in the US for manufacturing optical fibres based on fibre optics exported from India, are now shut out from the US market and their investments have become unproductive. Modi 3.0 is expected to take up reciprocal steps to ensure that the Indian market is available to only Indian manufacturers and hence, also strengthen the PPP-MII.

Just as Modi 2.0 unbottled the electronics manufacturing and made India the second-largest manufacturer of mobile phones, it is expected that Modi 3.0 will do the same with telecom service providers and telecom manufacturers. And surely, Modi 3.0 will continue on pushing for a greater digital India leading to a “Viksit Bharat”.