Of course I had to come up with a clever alliterative tongue twister for the title, it was the Super Bowl of tech industry!

Last night’s congressional hearing on antitrust investigations against big tech had everything that would make an episode on Silicon Valley (remember, Season 6 premiere?)

The five-and-a-half-hour long hearing held by the House’s Antitrust Subcommittee examined antitrust concerns by the ‘Big Tech’. The CEOs of tech industry’s four most powerful players: Google, Facebook, Amazon, and Apple testified in front of the Subcommittee on the year long investigations around their anti-competitive, monopolistic and oligarchic behavior. It was the first time the four CEOs have appeared together before Congress.

The Committee had prepared evidentiary record over the course of its investigation in the last 13 months, a glimpse of which we saw during the questioning.

The testimony along with the records of evidence shed light on tech companies’ role as “gatekeepers” of the digital ecosystem — whether their dominance in search, advertising, commerce or digital marketplace are deeply rooted in anti-competitive practices of either acquiring or crushing competitors.

The CEOs faced wrath from both Republicans and Democrats. The Democrat lawmakers on the committee delved into the issue of competition, primarily focusing on the documents obtained they claimed were evidence enough on their anti-competitive conduct. Republicans instead focused on content moderation, China and claims that the companies suppress conservative voices, “Big Tech is out to get conservatives.”

Antitrust regulators and lawmakers have always found it hard to keep up with technology, globalization and the ever-increasing blurring of horizontal applications in the digital ecosystem.

Five previous hearings were also part of the subcommittee’s year-long antitrust investigation into digital markets, touching on issues like data privacy, innovation, the free press and competition.

Wednesday’s big tech antitrust hearing came after Bill Gates’ and Microsoft’s landmark court battle 22 years ago in 1998. Microsoft was one of the world’s most successful software companies in the 1980s. On May 18, 1998, the DoJ and the attorneys general of 20 different states filed antitrust charges against Microsoft to determine whether the company’s bundling of additional programs into its operating system constituted monopolistic actions. It led to the erosion of market share of Microsoft after the case was settled and Microsoft agreed to share computing interfaces with other companies

Leading up to the hearing, Members of the subcommittee have for more than a year been looking into whether the four tech giants stifle competition and harm consumers. In that time, the subcommittee has gathered more than 1.3 million documents from the companies, competitors and antitrust enforcement agencies.

The preparatory remarks of all the CEOs were put out before the hearing began. The statement by Jeff Bezos to the U.S. House Committee stood out as he spoke in lengths about his childhood struggles and how Amazon came to be from being a small online bookstore. Mark Zuckerberg’s remarks were geared towards how the Facebook Platform is an American success story, its history of innovation and benefits of scale. Alphabet CEO Sundar Pichai shared his personal experience growing up in India and how Google has helped small businesses. Tim Cook had the most animated expressions as he spoke about the Apple ecosystem and how the App Store facilitates developers and promotes innovation.

It's Wednesday morning and you sit on the House antitrust subcommittee. You get to ask one question of Mark Zuckerberg, Jeff Bezos, Tim Cook, and / or Sundar Pichai. What is it?

Amazon was questioned on its relationship with third-party sellers. Bezos responded by saying that Amazon has policies against accessing third-party seller data to create competing products, but he “couldn’t guarantee” that they had never been broken.

Internal emails and documents from Facebook were brought forth in the questioning of CEO Mark Zuckerberg. He was directly questioned about his companies’ strategy of copying competitors, and even using that as a threat to negotiate a possible buyout. Zuckerberg admitted that Facebook had indeed adapted certain features from the competitors and that Instagram was only able to succeed after partnering with Facebook. Zuckerberg was also questioned on the bias against conservatives, misinformation, its role in election and content moderation on which Zuckerberg rebutted that Facebook has adopted flexible community standards and it does not claim to be the “arbitrators of truth”.

Sundar Pichai found himself facing the most questions. The questions were focused on its advertisement business and its control over all entities relating to ad-exchanges. On its search business, it was alleged that Google only shows results that are most profitable for Google, via Google ads or Google’s own websites. Pichai responded by saying that most of the query results are determined algorithmically (with a few exceptions) and that Google has been a supporter of small businesses. Pichai was also questioned on its ties with Chinese military and the abandonment of ‘Project Maven’, a U.S. defence project to integrate AI and defence operation.

Apple CEO Tim Cook was questioned on the 30% commission it charges developers on the App Store for payments. Cook argued that the 30% commission is much lesser than what developers would pay before the App Store came into being. Cook also had to answer for the playing field not being level for all developers. Some examples such as how Amazon and Uber were able to negotiate deals with Apple, while relatively newer and independent app developers found themselves at Apple’s behest.

There has always been a complicated relationship between antitrust laws and letting the free markets innovate, especially when it comes to technology’s innovation culture. The two sides argue why one’s better than the other, but eventually, there needs to be innovation incentives in the antitrust interface and for companies to see it as “constrained maximization” problem rather than a hindrance. Ranking Member Jim Sensenbrenner recognized that companies such as Amazon play a vital role in modern society. “Being big is not inherently bad, quite the opposite. In America you should be rewarded for success,” he said, but added that there are concerns about their power and use of data.

While the Congress might not have a strong antitrust cases to prosecute the Big Tech firms, Wednesday’s hearing was a step in the right direction to enhance the accountability of the tech industry’s action and to bring forward the stories of businesses that felt unfairly treated.

If you’re happy and you know it, clap your hands (clap, clap). If you enjoyed reading this article, or think someone else might, please show some support by clapping and sharing. Please feel free to drop a comment voicing your opinion on this topic. You can reach me on my personal email — madhav_sharma28@hotmail.com or find me on Linkedin and Twitter

By the year 2022 — coinciding with the nation’s 75th Year of Independence — it is estimated that India will have nearly 850 million Internet users, of which 150 million are expected to start transacting online.

India is rapidly marching towards becoming a digitally empowered society. The push for e-governance, the proliferation of smartphones, increasing Internet access and booming digital payments are fueling the country’s journey towards a trillion-dollar digital economy by 2025.

With Internet penetration expected to almost double to 60% by 2022, the country is arguably the world’s most promising Internet economy, with a rapidly increasing ‘netizen’ population. With improving data affordability, consumption growth and newer financial products, the e-commerce market is set to grow, be it across e-tail, travel, consumer services or online financial services. From the next set of online shoppers, three out of every four customers are expected to come from Tier II cities or beyond, and a vast majority of them would be less tech-savvy, seek greater transparency from brands and prefer consuming content in local languages.

The Indian e-commerce market will exceed 100 billion USD by 2022, with online financial services set to grow the fastest. Growth is expected from the next 100 million users with starkly different demographic backgrounds and preferences vis-à-vis existing users.

The Growing Indian Middle Class and their Consumption Trends

India represents a highly aspirational consumer market, with a wealth of opportunities to offer the world. With an ‘emerging middle class’ population of more than 500 million and approximately 65% of the population aged 35 or below, India could potentially overtake the US and become the world’s second largest economy (in PPP terms) by 2050.

Several factors will boost the e-commerce industry. By 2022, the Indian middle class will be the largest segment of the population. Indian consumers have already experienced a shift in purchasing behaviour as their focus has moved from ‘buying necessities’ to ‘improving their quality of life’, and this trend is only expected to continue further as customers spend more on discretionary products and services.

Additionally, owing to a young population, India is expected to reap a rich demographic dividend, with the labour force growing at a compounded annual growth rate (CAGR) of around 2 percent (2017–2022E), against a population growth of approximately 1 percent over the same period. These spenders constitute a large internet and smartphone user base: with increased accessibility to mobile internet, Indian consumers have already experienced a shift in purchasing behaviour as their focus has moved from ‘buying necessities’ to ‘improving their quality of life’, and this trend is only expected to continue further as customers spend more on discretionary products and services.

By 2025, India’s contribution to the global middle class consumption would be approximately on par with China’s (~15%) and by 2027, India’s middle class is expected to overtake that of the US and China, post which India is expected to dominate.

As more people join the Internet economy (Internet penetration is expected to almost double to 60% by 2022) and continue to get accustomed to their new online lives, the e-commerce industry is expected to grow into a 100 billion USD market by 2022.

A ‘Make-for-India’ solution approach along with conducive policy environment can potentially make e-commerce a $150 billion market by 2022 with a globally leading compounded annualized growth rate of 35%. Much growth of the industry has been triggered by increasing internet and smartphone penetration. The ongoing digital transformation in the country is expected to increase India’s total internet user base to 829 million by 2021 from 560.01 million as of September 2018.

REQUIREMENTS

The idea of this research is to create a framework around conducive e-commerce business in India while creating a discourse for e-commerce players to participate in key policy decision making.

Shortcoming of E-commerce In India

• To cater to the needs of a diverse demographic, e-commerce players need to innovate across the value chain through initiatives such as custom assortments, targeted marketing, local language content and online-over-offline (OOO) infrastructure.
• E-commerce companies have to focus on building loyalty which will translate into repeat sales. To experience exponential growth in the next phase, the existing barriers pertaining to language and tech usability, logistics and regulatory compliances will have to be removed.
• Such innovations can target how customers order (e.g. voice-enabled orders in local languages), pay (e.g. UPI on delivery), interact (through online over offline interfaces) and receive (e.g. two-hour delivery) in order to catapult the number of users beyond 200 million and achieve a higher spend per customer in each category

Policy Landscape Around E-commerce In India And Its Shortcomings

E-commerce is governed by multiple regulatory bodies and several horizontal regulations. RBI has issued various guidelines regarding the payment aspect of the e-commerce sector. The Ministry of Electronics, Information and Technology (MeitY) has acknowledged e-commerce under the IT Act, introducing intermediary guidelines in 2011.

Multiple sectoral regulators have also started amending the respective laws to bring e-commerce under their purview. Some of these are FSSA, IRDA, Motor Vehicles Act, Waste Management Rules, consumer protection, GST provisions and most recently, the data protection bill. Some laws are administered centrally, while there are several which are implemented at the state level.

Recent Policy Decisions — Press Note 2 on E-Commerce

The Department of Industrial Policy and Promotion (DIPP) under the Ministry of Commerce, Government of India, on December 26, 2018, introduced certain changes termed as clarifications to the 2017 policy governing foreign direct investment in ecommerce sector. The policy is likely to impact overall internet business space including digital payments space, logistics etc.

The draft e-commerce policy under consideration and other changes with regard to FDI relating to Ecommerce is aiming to create a level-playing field for offline and online players in the Indian market. Through these regulations, the government aims to curtail non-competitive practices, see increased participation of MSMEs and thus aiding in the survival and growth of small retailers in India.

Way Forward

A harmonised policy framework for e-commerce should be able to, at the same time, adapt to the fast-changing technology and consumer preferences. The envisaged approach will help in the development of an ecosystem that will support the industry, boost investments as well as protect consumer interest. The framework should also provide for an e-commerce facilitation unit in all relevant government ministries and sectoral departments which serve as a point of interface for handling issues unique to the e-commerce sector.

While developing regulations, the ultimate objective should be to balance a thriving e-commerce economy with public interest. The approach should be to avoid overwhelming the sector with additional regulations and, rather, focus on building an enabling mechanism that encourages innovation and allows new-age disruptive business models to enter and thrive in the existing regulatory framework.

Issues Identified

The early research on e-commerce sector in India has identified some issues that create a hindrance to the internet innovation ecosystem in India

MEIS and MEIS benefits

There is a need for clarity on e-commerce exports as a whole not limiting for purpose of the MEIS only. This must follow the approach taken in case of normal exports, where a separate policy guides movement and the MEIS procedures are restricted to a limited set of product group identified under the MEIS.

Given the extent of documentation to be handled being the same for large B2B offline orders and B2C retail sales, the limit of INR 25,000 does not offer much incentive to exporters.

Presently for claiming MEIS benefits, exporters have to approach their bank for Foreign Inward Remittance Certificate (FIRC) who in turn approach OPGSP for the same, which increases the transaction time. Moreover, exporters have to pay in advance amount of Rs.150–200 for each FIRC increasing the transaction cost for low-value consignments. This in turn reduces international competitiveness of Indian exporters

CSB-V

Courier Imports and Exports (Clearance) Regulation 1998 to cover export of goods notified in Appendix 3-C of FTP 2015–20 under MEIS. There lacks a clarity whether CSB-V is applicable only for such e-commerce shipments which are notified under Appendix 3-C or it is applicable to all exports using e-commerce. There is an urgent need to look at policies and procedures for exports through the e-commerce lens in general and not limiting it to benefits under the MEIS

OPGSPs and e-BRC

In case of exports using e-commerce, and payments are received via OPGSPs, banks do not issue e-BRCs to the exporters when they receive payments from the buyers. There is a need to link the transaction ID of OPGSPs as proof of payment for exports made using e-commerce options.

Customs

The Courier Imports and Exports (Clearance) Regulation 1998 regulations does not apply to value of good where the value of consignment is above Rs.25, 000 and transaction in foreign exchange is involved.

The Reserve Bank of India (RBI) has realised the importance of e-commerce and to facilitate such transactions, allowed repatriation of export remittances, facilitated by Online Payment Gateway Service Providers (OPGSPs) for values of goods of USD 500

Return of goods back to India

The RBI permits debit charges back to the overseas importer where the Indian exporter has failed in discharging his obligations under the sale contract. The procedures followed in Customs in the case of return of goods or re-export needs clarity.

Logistics

The ability to develop an end-to-end logistics system will define the future direction of the cross-border e-commerce growth in India. As trade cross-border trade volumes grow, there is a need to look for innovative ways to reduce costs and improve the delivery process.

Issues Identified Under National Draft E-Commerce Policy

The Government of India in its bid to protect the rights of small players and other MSMEs, has proposed to introduce an E-Commerce Policy. This policy was in consideration since long, but has been revived only recently.

The Department of Commerce had constituted an economic think tank which was chaired by Hon’ble minister of Commerce and Industry Suresh Prabhu. The body, which had officials from Ministries of finance, home affairs, corporate affairs, and electronics and information technology, inter alia, submitted its report in December, 2018.

Indian Control Over Data

The government, in a bid to secure the user’s data, has mandated all e-commerce platforms to keep the user’s data in the country. And that every time the data is shared, the company must inform the user as well as the government about the same. The draft is aimed towards making Data Protection rules stricter and protecting people’s data by focussing on data localisation and limited circulation of the same. Another provision prohibits the companies to share any data whatsoever, to any third party.

JAM enforcement

The government has made RuPay, Indian indigenous mode of payment as a mandatory on all e-commerce websites. This will also ensure that the governmental scheme of JAM — Jan Dhan + Aadhaar + Mobile would be enforced to ensure the reach of mobile, bank account and aadhaar card to every citizen.

Data Localization

The government plans to make data localisation i.e. keeping a copy of the user’s data in India compulsory. This would plug in all holes towards data protection and all backdoors of data theft would be closed. Since this requires heavy investment on part of the companies, the government will offer them incentives like waiver on import duties and related taxes to facilitate data storage centers.

Foreign Companies to undergo more tax scrutiny

Foreign companies like Amazon are likely to face more tax scrutiny as the ‘significant economic presence’ doctrine would be used to determine what counts as a taxable ‘permanent establishment’.

The significant economic presence doctrine comes into force April 1, 2019. In simple terms, it means that if the revenue of any entity/person/company not based in India exceeds a threshold as prescribed by the government, such a transaction comes under direct tax liability irrespective of physical location of the taxpayer.

METHODOLOGY

Studies conducted are based on extensive and reliable methodologies that ensures the quality expected in the final work. There are 3 aspects to the research. Firstly, collecting primary inputs from experts in the concerned area. These inputs are based on a structured questionnaire that enhances and informs the understanding of the field. The experts tend to come from 4 broad backgrounds, academia, industry, government, and civil society. Secondly, reliance on secondary research to develop background and specific knowledge of the topics in question. This includes collecting information and data from industry and government reports, as well as a thorough analysis of media outlets. The third phase in the research includes a thorough content and thematic analysis on the inputs collected. This helps track where the debate is coming from and where it is likely to go. In addition, it also helps identify where each stakeholder in the sector stands in their arguments, making for a holistic picture that reflects a multi stakeholder approach. Successful completion of these three aspects of research enables to present comprehensive accounts on issues that are presented in a consumable format to the audience and/or any governmental agencies that wish to read them.

The e-commerce Research Study will identify key issues as highlighted below and will help develop regulatory/policy suggestions towards its deployment in India:

1. E-commerce and Government
2. Market-driven regulatory approach
3. E-commerce’s impact on MSMEs and job growth
4. Policy Recommendations

Impact On Indian MSMEs

There are currently over 51 mn MSMEs, employing 117 mn people, in India. These enterprises produce over 6,000 products and account for 45% of the total manufacturing output and 40% of total exports of the country. MSMEs in India are clearly the backbone of the country.

Over the past decade, e-commerce has rapidly grown within the country, which has had a significant impact on the MSMEs, it has opened up the entire country for the smaller retailers and manufacturers.

Along with access to a national market with higher margins, MSMEs using e-commerce have reported up to 60% reduction in marketing and distribution costs along with a 27% higher revenue growth. Such development of enterprises through digital channels have encouraged more companies to be brought into the organised sector and boost the formal economy. Online shopping in India alone is projected to reach $ 100 bn by 2020, up from $ 40 bn today.

There exist huge potential for e-commerce expansion, as the current capacity to gain larger portion of global consumers remains unharnessed. These include inter-alia availability of a global market, increase in employment opportunities, direct access to the end customers, diversification and mitigation of risks and improvement in their survival rates.

Moreover, the growth in MSMEs will influence national economic development trends and in addition, expand the e-commerce footprint of the Indian MSMEs. This will further assist MSMEs tap into new markets, new suppliers and promote additional sales channel for existing exporters

The key challenges for the Indian MSMEs so as to increase their CBT footprint include — low supply of products that have high international demand and inadequate buyer and market-related information of the global market. The almost non-existent direct market link(s) between MSMEs at the cluster-level and international consumers results in a weaker integration of the Indian MSMEs at the lower tier levels in regional and global value chains. Traditional commerce, especially exports, is dominated by a small number of very large firms. For citation, in most countries up to 90 per cent of exports are conducted by 5 percent of the largest exporters.

The e-commerce industry been directly impacting the micro, small & medium enterprises (MSME) in India by providing means of financing, technology and training and has a favourable cascading effect on other industries as well. The Indian e-commerce industry has been on an upward growth trajectory and is expected to surpass the US to become the second largest e-commerce market in the world by 2034. Technology enabled innovations like digital payments, hyper-local logistics, analytics driven customer engagement and digital advertisements will likely support the growth in the sector. The growth in e-commerce sector will also boost employment, increase revenues from export, increase tax collection by ex-chequers, and provide better products and services to customers in the long-term.

Aligning with Government Programs and Schemes

Since 2014, the Government of India has announced various initiatives namely, Digital India, Make in India, Start-up India, Skill India and Innovation Fund. The timely and effective implementation of such programs also supports the e-commerce growth in the country. Some of the major initiatives taken by the government to promote the e-commerce sector in India are as follows:

• In order to increase the participation of foreign players in the e-commerce field, the Indian Government hiked the limit of foreign direct investment (FDI) in the E-commerce marketplace model for up to 100 per cent (in B2B models).
• In the Union Budget of 2018–19, government has allocated Rs 8,000 crore (US$ 1.24 billion) to BharatNet Project, to provide broadband services to 150,000 gram panchayats
• As of August 2018, the government is working on the second draft of e-commerce policy, incorporating inputs from various industry stakeholders.

Job Creation In E-commerce Sector

E-commerce in India is expected to create over one million jobs by 2022, both directly and in allied industries or the e-commerce ecosystem. Among the 0.65 million core jobs, retail-oriented jobs (such as category management, merchandising) will be key. Around 0.1 million core jobs will focus on e-commerce technology such as algorithms and the development of interfaces. These technology-oriented core jobs will also include the need for digital skills including social, mobile, analytics and cloud (SMAC). The share of these skills is expected to increase further by 2022.

Within ancillary jobs, e-logistics is expected to be the largest segment, creating more than 0.3 million jobs. Delivery/last-mile delivery will contribute to approximately two-thirds of the jobs, as e-commerce grows beyond Indian metros.

Market Diversification

One of the reasons for poor presence of the Indian MSMEs in the global market is the high concentration of India’s exports to only limited number of international markets. Nearly 43 per cent of India’s exports are limited to Asia, followed by Europe and America. The major export destinations for India are United Arab Emirates (UAE), United States of America (USA), Hong Kong and China. This is possibly due to its limited reach to foreign buyers attributed to concentration on offline sales.

Policy Changes

While there is clearly an opportunity to capture, there is a lot that is needed to be done to develop cross-border e-commerce within the country:

Increase limits on Courier Shipments

As per current regulations, there is a limit of $ 375.3 on shipments that can be transported through couriers which also involve foreign exchange. Increase in this limit would enable higher value products which are sought internationally such as lehengas etc. to be exported as well.

Infrastructure

Most of the customs procedures still takes place through a manual process. By switching over to the customs electronic data interchange (EDI) platform, it would enable the procedure to take place in a smoother and faster manner.

Developing Awareness

There is a need to educate the MSMEs in the country as to the opportunities that lie by expanding the scope of their operations abroad. Current issues include:

1. An absence of a known mechanism to reach out to foreign buyers
2. Need for improvement in quality of products that have high international demand
3. Inadequate buyer and market-related information of countries around the globe

Paperless

One of the main factors in e-commerce is delivery time. By reducing the amount of paperwork that is involved and by enabling a risk-based inspection, shipments will be able to reach their destination in a timely manner

Return of Goods

In e-commerce, there are always instances of unhappy customers and return of products. A seamless procedure needs to be developed that would enable the return of the products, without the exporter having to incur import duties on the returned shipment.

Digital Single Window Clearance

There is a need for a single window clearance for shipments of goods through a transparent and paperless process. To enable continued growth of a digital economy — standardization, simplification and digitization of the customs processes should be the central goal of the government. Cross-border e-commerce can typically involve shipment of thousands of products on a daily basis; a single window clearance for bulk export of products to different locations would ease in the compliance requirements for the exporters.

Through the introduction of Digital Single Window System, goods can move faster through the customs, thereby, cutting down the delivery time. Actions, such as lessening and rationalizing paperwork, overcoming the physical in-queue waits to get through to customs and so on can be made less time-consuming and more user-friendly by making the entire process electronic.

MSMEs: From Local To Global — Leveraging MEIS Policies

Cross-border e-commerce has the potential to stimulate MSME growth by bridging the gap between the buyers and sellers digitally. Thus, minimizing the actual geographical distance and intensifying the number of prospective buyers. Use of internationally reliable and accepted systems of operating can further help Indian MSMEs improve cross-border trade.

The Government has introduced the MEIS Policy to support this. The primary objective of MEIS Policy is to increase exports to USD 900 billion by year 2019–20. The MEIS lays down terms for e-commerce only for cases where the exporter is intending to claim benefits under the MEIS. Under FTP e-commerce, exports under courier are allowed manually through airports at Delhi, Mumbai and Chennai only for a limited number of products.

If you’re happy and you know it, clap your hands (clap, clap). If you enjoyed reading this article, or think someone else might, please show some support by clapping and sharing. Please feel free to drop a comment voicing your opinion on this topic. You can reach me on my personal email — madhav_sharma28@hotmail.com or find me on Linkedin and Twitter

Economic development essentially involves a process of structural transformation of which technological development is an integral part. Without it, the productive base of a country cannot be expanded or diversified, opportunities to benefit from international trade and investment are missed and potential growth in employment is lost. Innovation can stem from science-based technological progress, or from the acquisition, adaptation and diffusion of existing technological knowledge. It can also result from entrepreneurial activity leading to new, more efficient combinations of productive resources.

As the crucial role of technology is increasingly recognized, there is a growing need for India in establishing the institutional processes that can lead to a better definition of technology policy’s role in the overall strategic development policies and priorities. Currently, technology policies are on the periphery of many countries’ development strategies. The problem is compounded by typically weak and fragmented national systems of innovation, whereby linkages among stakeholders are few and nodes of collaboration and coordination may be nearly non-existent. It is therefore necessary to establish the centrality of technology as a development issue and connect it to other development policies. Effective technology policymaking cannot be designed, implemented, monitored and adjusted without a sound understanding of the capabilities of the country’s technology entities, their interactions and the set of incentives and disincentives that they face. Technology policies also need to reflect the fact that the mechanisms of technological change and the concept of innovation itself will also be very different in developing countries from those of developed economies.

Absence of a strong technology policy in India is particularly worrying because technology is a cross-cutting issue: it undergirds major threats to India’s security and stability, from foreign policy to the integrity of government’s data, and it provides some of the most promising pathways to employment, education, health, and economic opportunity.

As it prepares to embark on a massive digital transformation, India’s ability to fully capitalize on the emerging technologies of the Fourth Industrial Revolution will be one of the leading drivers of global prosperity and peace in coming decades.

I propose a comprehensive first-of-its-kind technology policy framework titled “The Indian Technology Policy Framework: National Strategies for Innovation”, which aims to promote technology along with principle guidelines that would guide the technological development in India.

Defining Technology

The definition of technology is imperative for tech policy and growth. Dan Wang in its blog titled “How Technology Grows (a restatement of definite optimism)” defines technology as:

Technology should be understood in three distinct forms: as processes embedded into tools (like pots, pans, and stoves); explicit instructions (like recipes); and as process knowledge, or what we can also refer to as tacit knowledge, know-how, and technical experience. Process knowledge is the kind of knowledge that’s hard to write down as an instruction. You can give someone a well-equipped kitchen and an extraordinarily detailed recipe, but unless he already has some cooking experience, we shouldn’t expect him to prepare a great dish.

Market-stimulating technology policies (MSTPs)

Market-stimulating technology policies (MSTPs) comprises of a broad array of policies to promote industrial and technological development, some market and others government determined. These policies may be functional, horizontal or vertical, and can be analyzed at three levels: national, strategic and specific.

The World Bank published a research paper outlining an analytical framework for technology development, based upon evolutionary approaches and drawing upon Asian development strategies. The analysis rests on the concept of “market stimulating technology policies”, comprising a broad array of policies to promote industrial and technological development, some market and others government determined.

POLICY FRAMEWORK FOR TECHNOLOGY POLICY IN INDIA

The Technology Policy in India should encapsulate guidelines for policies, such as data privacy, liability for algorithm-generated actions and cross-border data flows etc. The Dialogue has identified three key vital areas (among many) that the technology policy must adopt:

• Cross-Border Flow of Data

In the global information economy, personal data have become the fuel driving much of current online activity. Every day, vast amounts of information are transmitted, stored and collected across the globe, enabled by massive improvements in computing and communication power. In developing countries, online social, economic and financial activities have been facilitated through mobile phone uptake and greater Internet connectivity. As more and more economic and social activities moves online, the importance of data protection and privacy is increasingly recognized, not least in the context of international trade. At the same time, the current system for data protection is highly fragmented, with diverging global, regional and national regulatory approaches.

The policy framework containing a multi-stakeholder dialogue on how to enhance international compatibility in the protection of data and privacy, especially in relation to international trade, and to provide policy options for countries that wish to implement new laws or amend existing ones.

• Surveillance

Intermediary liability, government surveillance, digital taxation. data governance and sovereignty are some the conversations happening on the sphere of tech policymaking in India this year. While a minimalistic lawful, warranted, targeted surveillance can potentially be a useful tool in aiding law enforcement agencies in tackling crime and terrorism, a regulatory tech policy that is transparent and democratic in nature as well as one that protects privacy principles must be of priority.

• Privacy by Design

Privacy by Design is a framework encouraging the proactive embedding of privacy into the design specifications of information technologies, network infrastructure and business practices, thereby achieving the strongest privacy protections possible. The GDPR requires organisations to implement appropriate technical and organisational measures to implement data protection principles and safeguard individual rights.

Data protection by design and by default would be a legal requirement under the policy framework and practical guidance must be laid down.

In addition to the aforementioned areas, key developmental goals would also be encapsulated under the tech policy framework that promotes the social-economic development across India:

• Affordable, high-speed internet in all Indian households.
• A commitment to defend the principles of net neutrality
• Investment in computer science and STEM education, like offering more computer science classes and training teachers in related subjects.
• Diversifying the tech workforce and supporting tech and STEM education to reduce gender and caste inequality
• A blue-ribbon commission on digital security and encryption

SETTING UP AN OFFICE OF TECHNOLOGY POLICY (OTP)

There is a need to establish a department which overlooks the proposed technology policy. The Office will ensure in assessing technology’s impact on the economy, environment, and society.

The initiatives launched by OTP should help strengthen STEM education, improve citizens’ access to healthcare, streamline commercialization of R&D, and accelerate the development of robotics and advanced manufacturing. These efforts will help attract billions in additional private sector investment, spurring activity in high-growth sectors, and make the economy more productive. India should lead development in finding every available avenue to strengthen India’s excellence in science and technology, and use it to power an innovation–based economy.

OUTCOME & IMPACT

1. Improve policy formulation and implementation, including through an improved national dialogue in the area of technology policy
2. Develop stronger linkages and more effective interactions among the stakeholders
3. Identify measures that encourage the development of absorptive capacity by the various stakeholders and facilitate the transfer of technology through international trade, investment and other channels of transfer of technology
4. Identify specific short, medium and long-term actions that can lead to stronger technological capabilities across sectors and measures to promote sectors of specific potential for technological development

If you’re happy and you know it, clap your hands (clap, clap). If you enjoyed reading this article, or think someone else might, please show some support by clapping and sharing. Please feel free to drop a comment voicing your opinion on this topic. You can reach me on my personal email — madhav_sharma28@hotmail.com or find me on Linkedin and Twitter

The debilitated financial condition of telecom operators notwithstanding, it is likely India will roll out 5G with a minimum time lag as compared to international leaders by the year 2022. As the coverage radius would shrink at higher frequency band the Telcos are likely to use the sweat the existing spectrum and tower assets for voice and deploy incremental resource for 5G data.

• India is currently the world’s second-largest telecommunications market with a subscriber base of 1.17 billion and has registered strong growth in the past decade and half
• Moreover, in 2017, India surpassed USA to become the second largest market in terms of number of app downloads.
• The industry has attracted FDI worth US$ 31.75 billion during the period April 2000 to June 2018, according to the data released by Department of Industrial Policy and Promotion (DIPP).

What’s to come?

• Telecom industry contribution to GDP is expected to reach 8.2% by 2020 from 6.5% in 2017
• Revenues from the telecom equipment sector are expected to grow to US$ 26.38 billion by 2020
• The number of internet subscribers in the country is expected to double by 2021 to 829 million and overall IP traffic is expected to grow 4-fold at a CAGR of 30 per cent by 2021
• The National Digital Communications Policy 2018 has envisaged attracting investments worth US$ 100 billion in the telecommunications sector by 2022.
• The Indian Mobile Value-Added Services (MVAS) industry is expected to grow at a CAGR of 18.3 per cent during the forecast period 2015–2020 and reach US$ 23.8 billion by 2020. App downloads in India are expected to increase to 18.11 billion in 2018 and 37.21 billion in 2022.

OVERVIEW

In the last 10 years, telecom has transformed from a multi-player sector (10+ Service Providers) to just 4 major service providers including the public sector operator. Incumbent players have been facing a tough competition from Reliance Jio with the disruptive (VoLTE) 4G product and relentless price attack.

Fiberization of the network of the whole country is a must for the success of 5G. India has only 22 percent of mobile towers connected on fibre, while 78 percent are without fibre, on wireless. China on the other hand, has 80 per cent connectivity through fibre and the rest through wireless. The optical fibre cable laid today till date is equal to optical fibre cable laid in China in one single year.

TRAI’s chairman RS Sharma expressed hope that the telecom sector is set to achieve stability soon post consolidation in a keynote. “My sense is that the sector is going to acquire stability and looking at the examples around the world scene 3+1 (3 private players and a PSU) is a good number and I don’t see it going down from that.”

India’s telecom sector also faces the challenge of shrinking mobile user base, signalling the end of the era of runaway growth during which the market grew from 873.36 million to 1.14 billion in number terms over the last five years. It also means operators need to focus on driving more data usage per SIM instead of flooding the market with SIM cards. This all has been happening following the entry of Reliance Jio Infocomm Ltd in September 2016.

With the number of wireless connections falling consistently in four of the last five quarters starting April-June 2017 and telecom density reaching 88%, according to latest data from Trai, the subscriber growth story of the sector seems to be nearing its end. The data shows the number of wireless connections has shrunk to around 1,146 million in April-June 2018 from nearly 1,187 million in the same quarter last year.

THE AFTER EFFECTS FOLLOWING JIO’S ENTRY

• Gross revenue has dropped by 15% to 20% for the year 2017–18 over the preceding year for the incumbents and overall sector revenue has dropped
• Idea’s net loss after tax has ballooned to Rs.4160 Crores (15% on gross revenue) while Airtel’s net profit has declined by 74%
• Interest costs are at 20% to 25% of gross revenue
• Voice revenue per minute has come down from by 50% to 18p per minute (in the last one year. The declining trend has started even ahead). Data revenue per MB has come down by 90% to Rs 1.5 per MB
• Voice Usage per user has gone up by 40% while data usage has gone up by 600%. This sharp inflexion in usage and significantly lower rates has created a dichotomy of demand for the sharp spike in usage against falling revenues
• In their current debilitated state where the operation is not generating cash flows, the operators are forced to expand the network by raising further debt and by the monetising tower and other such assets

POSSIBLE FUTURE SCENARIOS

• The debilitated financial condition of telecom operators notwithstanding, it is likely India will roll out 5G with a minimum time lag as compared to international leaders by the year 2022.
• As the coverage radius would shrink at higher frequency band the Telcos are likely to use the sweat the existing spectrum and tower assets for voice and deploy incremental resource for 5G data.
• 5G is likely to be launched in 3300–3400 MHz & 3400–3600 MHz and with the reduced number of operators
• It is possible the operators will be required to pay the spectrum prices over the entire license period and the upfront payment may be kept low.
• Rolling out Wi-Fi networks may get bypassed and integrated with the 5G rollout.
• It is possible 5G will be launched as a premium service to start with and create the path for revenue and margin recovery.
• 5G will impact education, business and entertainment in far deeper ways than we can envisage at this point in time and will be crucial in the digital development of the economy
• Telecom operators will eventually improve their subscriber profiling and build alliances across other categories to be able to monetise the customer asset for adjunct services such as payments, e-commerce, advertising and entertainment.
• Jio will come to terms with the futility of bundling handset and service for the low-end market and cease aggressive pursuing of volume market share and hopefully focus on value market share
• Jio would scale down the price attack on reaching 35% revenue market share and start focusing on quality of service for high-value customers*
• Airtel and Vodafone-Idea combine is likely to leverage their passive infrastructure alliance and stitch an alliance for the active network for spectrum cost optimisation. They may, however, do it partially if their competitive interplay limits their courage to go the full distance.
• Jio, in turn, is likely to explore a similar active network sharing with the public sector enterprise

AN OVERVIEW OF PREDATORY PRICING IN THE TELECOM SECTOR

Predatory pricing is the practice pricing of goods or services at such a low level that other firms cannot compete and are forced to leave the market. Predatory pricing poses a dilemma that has perplexed and intrigued the antitrust community for many years. On the one hand, history and economic theory teach that predatory pricing can be an instrument of abuse, but on the other side, price reductions are the hallmark of competition, and the tangible benefit that consumers perhaps most desire from the economic system.

The Competition Act, 2002 outlaws predatory pricing, treating it as an abuse of dominant position, prohibited under Section 4. Predatory pricing under the Act means the sale of goods or provision of services, at a price which is below the cost, as may be determined by regulations, of production of the goods or provision of services, with a view to reduce competition or eliminate the competitors.

Section 4(2) (a) of the Competition Act, 2002 states that:

There shall be an abuse of dominant position under Sub-section (1), if an enterprise,-

(a) directly or indirectly, imposes unfair or discriminatory-

(i) condition in purchase or sale of goods or service; or

(ii) price in purchase or sale (including predatory price) of goods or service. Explanation.- For the purposes of this clause, the unfair or discriminatory condition in purchase or sale of goods or service referred to in Sub-clause

and unfair or discriminatory price in purchase or sale of goods (including predatory price) or service referred to in sub- clause

shall not include such discriminatory condition or price which may be adopted to meet the competition;

As per explanation (b) at the end of Section 4 predatory pricing refers to a practice of driving rivals out of business by selling at a price below the cost of production.16 Denial of market access briefly referred to in this section, if read conjunctively, is expressly prohibited under Section 4 (2) © of the Competition Act, 2002.

The Section 4 of the Competition Act, 2002 corresponds to Clause 4 of the Notes in clauses of the Competition Bill, 2001 which reads as follows:

This clause prohibits abuse of dominant position by any enterprise. Such abuse of dominant position, inter alia, includes imposition, either directly or indirectly, or unfair or discriminatory purchase or selling prices or conditions, including predatory prices of goods or services, indulging in practices resulting in denial of market access, making the conclusion of contracts subject to acceptance by other parties or supplementary obligations and using dominant position in one market to enter into or protect other market

CASE STUDY

The Indian Telecom in the past 6 months has witnessed a turmoil, which was caused by a new entrant in the telecom market by the name of “Jio”, a product of the conglomerate of Reliance Group of Industries. The services under the offer which was first launched as an “employee-only” offer (i.e. Unlimited Calling for life and Unlimited Data Benefit) were made open to the general public which this resulted in the torrent and surge of the masses to avail the proposed benefits. From what was already prognosticate not only did the move trigger profusion of clientele, but also instilled the rivals with a sense of fierce competition.

This further resulted in multifold reduction in the prices of the services of all other leading service providers which then painted this insurgence of competition as an act of intentional sabotage. Though the allegations can’t be discarded as foul cry, but the consumer centric market has welcomed the new entrant and the competition with open hands which further makes it difficult for others to form a basis of competition.

Predatory pricing as the name suggests is the pricing of goods or services at such a low level that other firms cannot compete and are forced to leave the market. Thought this practice was mostly used by the government agencies to put a check on the unlawful activities and control monopolies of the agencies, it acted as a redressal mechanism rather than a threat to the equality and freedom as promised under the law.

WHETHER CASE STUDY FITS INTO THE DEFINITION OF PREDATORY PRICING

Concentration of the power has time and again been proven to be the least effective remedy to prevent it from falling into the hands of the undeserving. In a scenario where development and business economy form two different sides of the coin, money always changes the equation and the outcome goes for a toss. Despite repeated denials by the Reliance Group of Industries about the “Predatory Pricing” & being a dominant player in the market, the conglomerate has surely affected the Indian telecom sector and the major players, left right and centre; it would be worth waiting to understand the course of events which follow. However at present given the illustrious reputation and the sky rocketing user base, coupled with throw away prices breaking the market stereotype of telecom sector

LEGAL PRECEDENTS

The most valuable observation relating to predatory pricing and abuse of dominance was made by Lord Denning, M.R. in Registrar of Restrictive Trading Agreements v. W.H Smith & Son Ltd.,18 while construing the English Law in Restrictive Trade Practices Act, 1965 that there was a time when traders used to join hands, and combine, so as to keep the trade all for themselves, so that prices can be decided according to them, because of the monopoly. This also lead to the shutting down of all new entrants who might cut prices or even produce and sell better quality goods. Therefore, the Parliament had to step in, both for the benefit of the new entrants and the consumers, and had to hold these trade practices void unless they were done in the interest of public interests. Therefore, the law made any such agreement void and also asked the traders to get all their trade practices registered. However, Lord Denning observes that the traders who combined did not tell the law about it, and it was done in dark; without the law or the consumers knowing about it. Neither putting such agreement in writing, nor words were required, “a wink or a nod was enough” for them to combine and turn the whole market into a monopoly and control everything in it. Therefore, the Parliament came up with another law to get rid of these practices, and so, it included not only agreements but also arrangements to keep the predatory pricing in control. This observation by Lord Denning was aptly discussed when Parliament of India amended Section 4 of the Competition Act, 2002 by the Competition (Amendment) Act, 2007 and is also reflected in the amendment.

In MCX Stock Exchange Ltd v. National Stock Exchange of India Ltd., DotEx International Ltd. and Omnesys Technologies Pvt. Ltd19, the CCI while laying down the test for predatory pricing said that:

“before a predatory pricing violation is found, it must be demonstrated that there has been a specific incidence of under-pricing and that the scheme of predatory pricing makes economic sense. The size of Defendant’s market share and the trend may be relevant in determining the ease with which he may drive out a competitor through alleged predatory pricing scheme-but it does not, standing alone, allow a presumption that this can occur. To achieve the recoupment requirement of a predatory pricing claim, a claimant must meet a two-prong test: first, a claimant must demonstrate that the scheme could actually drive the competitor out of the market; second, there must be evidence that the surviving monopolist could then raise prices to consumers long enough to recoup his costs without drawing new entrants to the market.”

Market has always been a consumer centric business model which harnesses the potential of the players in a fair and healthy competitive environment. Amongst many other challenges present, the most important is to abolish the system of concentration of power. As essential it is for the consumer to derive the value for money for the goods they want, it is equally important that the companies have a fair playing ground to establish themselves as a reliable and trustworthy entity.

Whilst all the competitors in the market have diverse backgrounds and economic portfolios, it should be understood that principles of fairness apply to each of them individually. Interestingly given the developing affairs of the Indian Economy the market is often vulnerable to new entrants who struggle to establish themselves, however the same doesn’t seem to the case with Jio a part of the conglomerate of the Reliance Group of Industries.

It is too soon to determine if Jio is deploying predatory pricing. What may seem like “predatory pricing” to major players in the relevant market sector can also be perceived as a “positive disruption” by the consumers against the monotony and exploitation by the incumbent telecom service providers.

THE REGULATORY PREJUDICE FOR RELIANCE JIO

TRAI’s order in February 2018 where it changed the definition of ‘significant market power’ (SMP) to identify predatory pricing. The regulatory order gave a new entrant like Jio pricing flexibility till it acquired 30% share of the market’s subscribers or revenue.

However, The Telecom Disputes Settlement & Appellate Tribunal (TDSAT) rejected the regulator’s order also set aside a rule in the Telecom Regulatory Authority of India (Trai) predatory pricing regulation that required top telcos to report all tariffs in the interests of transparency and non-discrimination, offering further relief to older carriers.

TDSAT said the regulatory order that gave a new entrant like Jio pricing flexibility till it acquired 30% share of the market’s subscribers or revenue “appeared an unnecessary abdication of its regulatory powers by the Telecom Regulatory Authority of India” in the context of tariff conditions and their enforcement.

“If a new entrant needs to be protected from the rigours of non-predation, it can be done through provisions like ‘Welcome Offer’ and ‘Promotional Offer’ as availed by Reliance Jio, but to allow freedom from requirements of non-predation till acquisition of 30% of total activity in a given market, prima facie appears an extreme step by Trai,” TDSAT said.

The tribunal said Trai’s consultation process that culminated in the predatory pricing regulation had not been effective and lacked transparency. The yardsticks to determine SMP, non-predation or average variable cost, it said “must be objective and known to all telecom service providers”.

Further, the tribunal said it would be improper to “adopt a definition… that provides artificial protection to a telco, who may have the capacity and intent to destabilise the sector through predatory pricing before it attains the defined status of SMP”.

ANALYSIS OF THE CCI JUDGMENT

The Commission notes that after the opening up of telecommunication market to private players, this market has witnessed entry of a number of players competing with each other, resulting in decrease of tariffs and constant improvements in quality and variety of services.

The allegations against Reliance Jio Infocomm Limited by Bharti Airtel Limited in Case №03 of 2017 are that of predatory pricing which is in contravention of Section 4(2)(a)(ii) of the Competition Act and Reliance Industries Limited use of financial strength in other markets to enter into the telecom market which is in contravention of Section 4(2)(e) of the Competition Act.

Similar allegations were made in Case №98 of 2016, to establish abuse of dominance, namely:

1. Huge investment of Rs 1,50,000/- crore in telecom industry is stated to be an indication of its dominant position in comparison to the other existing telecom players and indicate imminent leadership in the telecom sector.

2. Reliance is providing the same services at a discount of 90% — predatory pricing.

The CCI closed both the cases under Section 26(2) of the Act, saying that it is difficult to construe Reliance Jio Infocomm Limited is in a dominant position and therefore the question of examining the alleged abuse does not arise, due to factors such as:

• The market is characterized by the presence of several players resulting in sufficient choice to consumers who can shift from one service provider to another and that too with ease.
• Dependence of consumers on any single telecom operator is not of any significant extent.
• Reliance Jio Infocomm Limited possesses a market share of 6.4%

Reasoning given by CCI : “providing free services cannot by itself raise competition concerns unless the same is offered by a dominant enterprise and shown to be tainted with an anti-competitive objective of excluding competition / competitors, which does not seem to be the case in the instant matter as the relevant market is characterized by the presence of entrenched players with sustained business presence and financial strength.”

The CCI defined the relevant market as provision of wireless telecommunication services to end users even though it noted that that 4G technology is superior to 3G technology in certain aspects and will be operative only in 4G compatible mobile instruments and consumers may have to incur additional cost towards buying new mobile instrument to avail 4G telecommunication services. It would be interesting to see the actual market research data to see the effects of Jio’s pricing

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According to a recent study conducted by Accenture, AI, through intelligent automation, increased labor capabilities and innovation, can add up to USD 957 billion, or 15 percent of current gross value added to India’s economy by 2035. The report also states that while India stands third among G20 countries measured by the number of start-ups, the size of funding they receive is substantially smaller than US or China.

The Indian AI Industry stands at an estimated USD 180 million in annual revenues. More than 800 companies are reported to be working with AI in some form or the other, which however accounts for just 6% of global AI companies.

The government has recognized the potential of artificial intelligence for the world’s fastest growing economy. Artificial intelligence and emerging digital technologies found a mention in the Finance Minister, Mr. Arun Jaitley’s Budget speech:

“Technologies like machine learning, artificial intelligence, Internet of Things, 3D Printing, and initiatives like Digital India, Startup India and Make in India would help in establishing itself as a digital economy,’’ he said.

Role of NITI Aayog in pushing AI in India

The 2018 Budget presented by Union Minister, Mr. Arun Jaitley allocated USD 480 million to the Digital India mission in the 2018 Union Budget, doubled from last year. The Budget increased allocation for NITI Aayog by more than 20%, defining a critical role for NITI Aayog in advancing AI and blockchain technologies.

The Budget states:

“NITI Aayog will initiate a national program to direct our efforts in the area of artificial intelligence, including research and development of its applications.”

NITI Aayog has since recently released its Discussion Paper, “The National Strategy for AI in India” in June, 2018. The paper is an exposition of India’s desire to join the AI race and its challenges owing to its late entry, as compared to the US and China. It identifies key focus areas of healthcare, agriculture, education, smart cities and infrastructure, smart mobility and transportation and how AI can transform these sectors through innovation in the delivery of services.

Challenges to AI across these sectors have been identified as lack of data, inadequate research, lack of AI expertise and manpower, high costs, low levels of awareness, unclear regulatory framework and a discouraging IP regime. The report identifies India’s key advantages in a massive workforce, a growing start-up scene and opportunities for data mining as an increasing population shifts to smartphones.

Key Recommendations to NITI Aayog:

• Setting up of Centres of Research Excellence for Artificial Intelligence (CORE) to focus on core research in AI i.e. creating new technologies and fundamental basis. International Centre for Transformational AI (ICTAI) for applied research in AI.
• Setting up of an umbrella body Centre for Studies on Technological Sustainability to oversee, assess and management developments in AI.
• Incentivize job creation and skilling through tax holidays and CSR activities
• Recognizing and standardizing informal skilling networks and informal IT training networks according to the National Skill Qualification Framework.
• Open learning platforms through MOOCs and certifications.
• Financial incentives like tax breaks and subsidies to promote reskilling of employees.
• Creating an accessible marketplace called National AI Marketplace (NAIM) consisting of all stakeholders to create a competitive and innovation driven AI market. NAIM to include data marketplace, data annotation marketplace and a solutions marketplace.
• Establishing a central data protection framework with legal backing and sectoral laws, in tune with international regulations.

Key Use Cases

In August 2017, The Ministry of Commerce constituted the V Kamakoti Task Force on Artificial Intelligence for Economic Transformation. Its members include academicians, industry leaders and representatives from Ministry of Electronics & IT, DRDO, Ministry of Finance; participation invited from NITI Aayog, UIDAI, Dept of Science and Technology, DRDO. The Task Force recently released its Report. It views AI as a socio-economic tool and has identified 10 key areas pertinent to India where deployment of AI may be beneficial. Key domains include:

Manufacturing

Scope: AI can modernize and hence expedite processes and decision making. It can also lead to improvements in logistics, supply chain management and maintenance of equipment. A “hybrid” team of human workers and robotics can enhance labour output.

Recommendations: Common Data Exchange Standards for Machine to Machine Communication, assessment of existing manufacturing standards through AI, developing cooperative industrial robots, AI networks for intelligent automation, using AI to achieve shorter production cycles, expedited approvals for testing new technologies, new curricula for vocational training, setting up of more Centres for Excellence, and subsidies and tax breaks for firms engaged in AI innovation.

FinTech

Scope: AI could revolutionize financial transactions by making them presence-less, cash-less and consent-based. This may reduce possibilities of fraud and multiply opportunities for transactions. AI could also help in accurate risk assessment of borrowers in the lending market, thus increasing credit while also protecting banks from non-payment of loans and can also be deployed to manage investment risks in the Indian context.

Recommendations: Aggregating data from financial institutions, Open Application Programming Interfacing to access data from banks, AI driven decision making and analytics.

Health

Scope: AI technologies can help in collection of health data for R&D purposes, supporting management of routine clinical problems and advanced diagnostics and detection.

Recommendations: Development of auto-diagnostic tools, electronic health records, training health personnel in data science, think tanks to define ethical usage of health data.

Agriculture

Scope: Agriculture, a major contributor to India’s GDP and employment, could benefit from AI in areas of real time weather support, crop prediction, irritation and intelligent mechanization of farms. This can enhance the yield per hectare significantly.

Recommendations: Farmer-consumer connect to decide on quantity, variety and pricing, data analytics for climate, harvest, disease, information system for crop advice and management, training development officers in data science.

Technology for the Differently-abled

AI can be deployed significantly for visual and hearing aids, Brain Machine technologies, prostheses, mental health screenings, and robotic assistance.

Recommendations: Supportive Vision, Speech & Natural Language Processing, commercialization of AI based assistive technology, working with NGOs to improve accessibility, developing Brain Machine Interface technologies.

National Security

Scope: AI could be used in warfare, defence communication systems, cyber security and decision making systems.

Recommendations: MSMEs to be incorporated in development of autonomous systems and subsystems, providing grants, data and cyber security tools, augmenting AI based technologies for military applications.

Environment

Scope: Pollution control at source, identifying harmful pollutants, prediction of depletion of natural resources and prediction of meteorological phenomena could all be made possible through deployment of AI technologies.

Recommendations: Classification and quantification of pollution levels, setting up regulatory standards, infrastructure building for data collection, data analytics for nonrenewable resources.

Public Utility Service

Scope: AI, now with the implementation of Aadhar, can be used to ensure more efficient deliverance of public utility. It can have implications in curbing corruption and monitoring provision of services.

Recommendations: Geo-tagging of data, aggregating space data, safety benefits for railways, nuclear power plants and aviation.

Retail and Customer Relations

Scope: AI can help in data protection and transparency with respect to consumer data. It can safeguard against breaching of standards. Further, it can aid the government in leveling the playing field for smaller retailers.

Recommendations: Regulations in consumer data protection, machine interfaces for consumer engagement, AI applications for global connect of traditional Indian crafts, intelligent transportation systems.

Education

Scope: AI could help in measurement of teacher and student outcomes leading to better resource management. It could also create dynamic course syllabus, useful in individual learning. It could also support teaching and learning methodologies.

Recommendations: Development of MOOCs, individualizing learning mechanism through flexible syllabi, course hours, credit systems, AI for skilling, fundamental AI courses at UG and PG level, rethinking engineering and management courses to incorporate AI developments.

The reports has identified data availability and security, digitization of systems, and employment concerns as major challenges for AI deployment in India. It recognizes that trust, data literacy and lack of awareness are a hindrance to widespread deployment of AI in India. The report also elaborates on ethical usage of AI and stresses on establishing legal provisions for regulation of AI activity. While a short term job disruption is expected due to AI technologies, it is also expected to create new employment opportunities in the long run and hopefully offset the balance in the coming years.

Setting up of data sharing platforms, data marketplaces with due consideration to security and privacy will drive the data hungry AI networks.

Specific recommendations made to the Government of India include setting up a regulatory Inter-Ministerial body called National Artificial Intelligence Mission (N-AIM), establishing a network for cooperation between academia, services industry, goods industries, start ups and ministries.
It also suggests funding studies to identify new projects in each domain, national survey to identify clean data clusters, promoting interdisciplinary research through Centres of Excellence, functionalizing data banks and ombudsman, AI education strategies and reskilling, international policy discussions and bilateral cooperation.

The Ministry of Electronics and IT set up 4 committees in February 2018- for Citizen Centric Services; Data Platforms; Skilling, Reskilling and R&D; Legal Regulatory and Cybersecurity- to facilitate availability of data sets for AI development.

The committees are headed by Professor Rajeev Sangal of IIT-BHU, Professor PP Chakraborty of IIT Kharagpur, Debjani Ghosh of President of Nasscom, and Rajat Moona, IIT Kanpur, respectively and their report is slated to be a rather comprehensive set of recommendations regarding AI.

Present State of AI in Manufacturing and Services Sector

According to a report by The Centre for Internet and Society, industries such as electronics, heavy electricals, automobiles and agriculture; and the services sector in the IT industry have significantly transformed their manufacturing capabilities by adopting and integrating artificial intelligence into their processes.

In the electronics sector, AI is used in manufacturing and automated testing processes. It is also being deployed in end processes as robotic appliances, user interface and virtual assistants. The report gives the example of Panasonic that has opened a ‘Technopark’ in Jhajjar, Haryana and uses artificial intelligence to produce and test its washing machines and air conditioners.

In the heavy electricals sector, Smart Factories are being set up that are fully automated with the help of AI and the Internet of Things (IoT). The Indian Institute of Science’s Centre for Product Design and Manufacturing, in collaboration with Boeing, is setting up India’s first smart factory in Bengaluru. General Electric’s Brilliant Factory in Pune relies on IoT, AI, Big Data analytics, 3D Printing and cloud computing to facilitate decision making based on real time communication and quality controls. The plant will manufacture a diverse range of goods from jet engine parts to locomotives for four different GE businesses.

In the automobiles sector, AI is being used in the manufacturing process and for developing autonomous and intelligent transport. Netradyne and Microsoft are working to improve road safety through sensing devices. Bengaluru Smart City is using a prototype of a AI powered traffic management system in collaboration with Electronics City Township Authority (ELCITA). The system will use video streams from multiple cameras to perform traffic management tasks of vehicle detection, controlling traffic lights and estimating traffic density.

In the IT Sector, start-ups such as Mad Street Den, Marax, Morph, Zylotech and Fluid AI are using AI and deep learning to provide personalized customer experiences by analysing customer data and preferences. Start-ups such as Abzooba, Genpact, vPhrase and Ayasdi provide businesses with data analytics solutions rooted in AI.

Companies such as Zee Media and e-commerce platforms such as Flipkart, Lenskart, Jabong and Quickr are using robots and AI powered decision making tools. Digital platform companies like Ola, Myntra and PayTM already use AI in their systems to streamline processes.

The study also identified four domestic and one multinational company working to develop “sector-neutral” AI technologies for wide-ranging applications across sectors. These include robotic systems for automation in manufacturing and warehousing, machine-learning based diagnostic systems and AI based surveillance systems.

NITI Aayog and ABB India, a Swiss-Swedish multinational company operating in robotics, power and heavy electrical equipments, signed a Statement of Intent in May 2018, to further ‘Make in India’ through advancements in manufacturing driven by robotics and AI.

Present State in Agriculture

“Digital agriculture” is the use of IoT, AI and data analytics in agricultural processes. It allows for a real time understanding of crop behaviour, weather predictions and supporting a higher yield per hectare through improved tracking and monitoring systems.

The International Crop Research Institute for the Semi-Arid Tropics (ICRISAT) has developed an AI Sowing app in collaboration with Microsoft to send sowing advice to farmers through a feature phone. Microsoft has also collaborated with United Phosphorus (UPL), India’s largest producer of agrochemicals, to create the Pest Risk Prediction App that leverages AI and machine learning to predict the risk of pest attack. Aibono, an agritech start-up is helping farmers overcome inefficiencies through AI enabled solutions.

Similarly, CropIn, a Bengaluru based start-up, is deploying a “smartfarm” solution that helps in weather predictions, farm monitoring, farmer education, pest advisories and harvest estimations through AI. It’s “SmartRisk” solution helps in risk forecasting for credit assessments and loan recoveries in the agro-business.

Bengaluru based Intello Labs is using deep learning algorithms for agriculturing product grading and infestation alerts. Gobasco, is an Uttar Pradesh based company working to revolutionize the agricultural supply chain through real time data analytics powered by AI. Jivabhumi’s ‘Foodprint’ is a ‘smart agricultural marketplace’ that aggregates farm produce using blockchain technologies.

Banking and FinTech

A working paper by The Centre of Internet and Society identified the deployment of AI by banking institutions in areas of business management through chatbots and concierge applications. AI algorithms are also used to provide personalised customer experiences by modeling preferences and customer behavior and data analysis.

ICICI Bank uses their Software Robotics to support formatting, email sorting, text and data entry. ICICI Bank is also in the process of integrating its chatbot, iPal with voice assistants like Siri, Cortana, etc.

In 2018, SBI hosted a national hackathon, “Code for Bank” that urged student, engineers and developers to come up with innovative banking solutions using AI, IoT, machine learning and blockchain. The bank is using an AI based solution developed by Chapdex that uses data from surveillance cameras to assess customer satisfaction. SIA is SBI’s AI powered chatbot that handles customer queries.

Axis Bank has launched an innovation lab “Thought Factory”, located in Bengaluru, to develop AI powered banking solutions through engagement with start-ups. Its AI and Natural Language Processing powered app ‘Conversational Banking’, helps consumers in interacting with the bank for financial and non financial services. The bank has implemented AI across 125+ processes to increase time and cost savings.

A Coimbatore lab has developed a robot response service called Laxmi that can converse in English and Tamil. It is in use in select branches of the City Union Bank in Chennai and can provide bank related information on over 125 topics.

Defence

Even before the advent of artificial intelligence, the key to controlling the battlefield was information and its derived comparative advantage. Hence, the glorious legacy of espionage and moles. Indeed, C4ISR- Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance, is the most important guiding principle of military among the array of military acronyms and jargon.

Artificial intelligence is fueled by data. A natural application of AI is then military, which is also data-driven and data-hungry. AI can help derive the knowledge from the data and then spin that knowledge into action. This is invaluable in the defence of nations which hinges on the first mover advantage.

The Indian Armed Forces is the second largest military in the world and the world’s largest volunteer army. Harnessing the potential in artificial intelligence can revolutionize India’s military capabilities and compound our numerical advantage through information dominance, battlespace awareness and decision advantage.

In February 2018, the Ministry of Defence constituted a 17 member Task Force headed by N Chandrasekaran, the Chairman of Tata Sons, to finalize the specifics of a plan to infuse artificial intelligence in military and security operations of the country,. The multi-stakeholder task force will study the strategic and security implications of using artificial intelligence in the Indian Armed Forces. Their report is much awaited for it is slated to lay out a comprehensive action plan for using artificial intelligence for military purposes.

The members of the task force include leading stakeholders from government, defence, and space research institutions. The task-force will also includes academicians from the Indian Institute of Science-Bengaluru, and Indian Institutes of Technology at Mumbai and Chennai.

Additionally, various research projects for deployment of AI in Defence have been undertaken like: AI for Net Centric Operations (AINCO), Image and Video Processing Technologies for Network Centric Operations (IVPTNCO), Verify Organize Maintain Analyze (VYOMA) systems and Multi Agent Robotic System (MARS). Unmanned autonomous vehicles are already used for reconsonnaince and military surveillance, capable of surviving diverse terrains. DRDO’s Daksh, an electrically powered Remotely Operated Vehicle (ROV), used in Bomb Disposal Units in military and paramilitary forces.

A Centre for Artificial Intelligence (CAIR) was set up under DRDO in 1986. Since then, its campus has been expanded. CAIR is engaged in developing tactical communication powered by AI, robotics and control systems for the Indian Army. CAIR has made significant advancements in Multi Agent Robotic System (MARS) which will literally create an “army of robots”, capable of team play and cohesive action. This will improve the coordination and collaborative advantage of Indian Army’s existing robots- Wheeled Robot with Passive Suspension, Snake Robot, Legged Robot, Wall-Climbing Robot, and Robot Sentry. CAIR has also undertaken a project to develop mobile robots that will equip the Indian Army with accurate systems and also improve autonomous functioning of robots.

Healthcare

In a country without a universal healthcare plan and a majority rural population that do not have access to doctors and pharmacies, AI could help bring good health to many by enabling access, reducing the workload of doctors and specialists and instant diagnosis.
Bengaluru-based Telerad Tech and Israel based Zebra Medicine Limited have decided to collaborate to use AI based solutions in radiology and cancer, stroke, fracture detection to revolutionize healthcare in India, Asia and Africa.

Google has collaborated with Aravind Eyecare Systems to develop an AI powered retinal screening system. A report by The Centre for Internet and Society finds that AI is deployed in hospitals for diagnosis, treatment and patient care, drug discovery and supply chain management in pharmaceuticals, mental health services such as Wysa and Woebot, manufacturing of medical equipment, medicines and insurance.

Research and Innovation at the Entrepreneurial and Educational Level

India is fast realising the importance of research and development of AI at multiple levels of education and skilling. AICTE Model Curriculum for UG and PG Engineering courses adopted in December 2017 has made AI, robotics and IoT mandatory and has given upto 20 credits for subjects like AI, IoT, robotics and machine learning

AICTE’s Start Up Policy aims to identify and support young entrepreneurs with the vision to create 100,000 tech-based, student-owned start ups and a million employment opportunities by 2025.

Smart India Hackathon 2018 held in April at Chennai is a digital innovation competition under AICTE under HRDM involving all technological institutions. It witnessed large scale participation from students who came up with innovative digital solutions for public utility and governance.

A Cyber Physical Systems programme was initiated in 2016. CPS deals with deployment of computer systems to perform tasks in the physical world (eg: self driving cars).

DST Grants/ Fellowships (innovators in general- hence covers AI and Robotics)-
NIDHI PRAYAS: grant upto Rs.10 lakh to convert a commercially viable idea into a prototype
NIDHI Entrepreneur in Residence: fellowship upto Rs.30,000/- per month is provided to the selected entrepreneurs for a period of 1 year.

NITI Aayog and Google have signed a Statement of Intent in May 2018 boost research in AI through training and mentorship programmes, online training courses, Phd scholarships, supporting start ups and organising a Hackathon focused on solutions in health, education, agriculture, financial inclusion.

On PM’s visit to UK in April, 2018, the countries proposed a UK-India Technology Partnership. Some of the primary aims are collaboration on Future Tech- which includes AI, establishment of a UK-India Tech Hub to encourage innovation, research & development and attract investments and export opportunities. There is focus on harnessing AI for health, public safety and manufacturing.

In 2017, the government of Karnataka invested Rs. 40 crores in the Centre of Excellence for Data Science and Artificial Intelligence (CoE-DS&AI) in Bengaluru, in collaboration with NASSCOM. The CoE aims to give impetus to start ups rooted in AI and data science solutions. The CoE will provide state of the art equipment, data, expertise and leadership to drive industry-oriented innovations and talent building. The CoE has garnered support from IBM, Intel, Digital Ocean, and NVIDIA.

Wadhwani Institute of Artificial Intelligence was set up in Mumbai earlier this year for AI education. PM Modi’s address at the inauguration stressed on using AI for enhancing human capabilities, guided by good human intent. He echoed “Make Artificial Intelligence in India and Make Artificial Intelligence work for India” to use AI to facilitate communication across diverse Indian languages and dialects, empower disabled persons, support classrooms to attain universal education, support healthcare for universal healthcare and improved diagnostics, predictions in agriculture and of natural calamities. Combined with Digital India, BharatNet, Atal Innovation Mission, Skill Development Mission, AI can establish India as a knowledge economy and attain economic growth by harnessing futuristic technologies .

Railways

Centre for Railway Information System (CRIS) Conference on theme of AI for Customer Experience and Service Delivery in March 2018 “noted that use of AI can help in route optimization; real time train movement monitoring; crew fostering; improving the price advantage of rail freight; improving logistics chain integration…predictive maintenance to improve asset management, Crowd management; chatbots for consumer interaction in different regional languages; IoT of sensors to detect concerns on tracks and locomotives”

In May 2018, the Ministry of Railways announced that an artificial intelligence module will be used by IRCTC to detect anomalies of head gear, uniforms, rodents and mopping in catering kitchens to improve operations in Railway Catering. The AI module will detect anomalies through CCTV footage and issue a ticket. Alerts will be sent to the authorities accordingly via email and the web portal. This module has been developed by IRCTC in collaboration with WOBOT, a New-Delhi based company.

Miscellaneous

NASSCOM launched a collaborative platform with the Municipal People’s Government of Dalian, a port city in China’s Liaoning Province, to jointly boost Sino-Indian IoT and AI capabilities in 2017. The Sino-Indian Digital Collaboration Plaza (SIDCOP) is powered by AI and IoT and will work in both offline and online modes. The idea is to draw advantage from complementary technological capabilities.

Call to Action

If India is to fully exploit the opportunity that AI presents, vast infrastructural refinements are necessary. In order to make quick intelligence decisions, it is important for the AI technology to be cognizant of the real time situation, updated to the last millisecond. This requires an information infrastructure capable of high speed, real time data communication. This entails sensors, computers and communication systems that collect intelligence across land, air, sea, space and the cyberspace and fast processing, analysis and delivery. Public-private partnerships can be beneficial in laying down the infrastructural underlay and AI supportive technologies.

There is also a need to establish a comprehensive set of legislations to regulate unmanned armies and autonomous weaponry so as to adhere to ethical and moral reasoning. They must be governed by strict configurations and safeguards. A Group of Governmental Experts (GGE) met in 2017 to deliberate upon Lethal Autonomous Weapon Systems (LAWS)- weapons that once activated can select and engage targets without further human intervention. They agreed on certain accountability and review principles.

The N Chandrasekaran Task Force hence comes at a particularly important time where there is need to clearly define Military-AI objectives and the means to achieve them with regards to due regulatory measures.

Comparison of China and India’s AI Capabilities

The Chinese government spends 2% of its GDP on research while the Indian government spends only 0.6% of its GDP on research.

According to a Scopus analysis by Neel Shah which analyses AI research trends in India from 2001 to 2016, only 14.42% of AI research is conducted by industries, compared to 85.58% conducted in universities. Within industrial research, almost 70% of research is conducted by non-Indian MNCs with Microsoft and IBM publishing 62% of all industry research publications. Only one Indian company is in the top 10 — TCS with 13% of all publications.

As far as university research is concerned, the top 15 universities contribute 42% of all research publications.

All of Indian academia publishes less papers on “machine learning” than a single university in China. India’s total research papers on machine learning have been 745, China is 3956 and USA is 19,000+. India ranks 15th by the number of documents produced. Industrial research on machine learning is even more dismal.

The researchers could only find 12 new papers, all from 5 companies, in the last 15 years. China has 22 from Baidu, 4 from Alibaba, 3 from Tencent and 2 from Renren, followed by a long list of publications from other companies.

According to the Global AI Talent Report 2018 which analysed the LinkedIn database, India accounts for 386 of the 22000 PhD educated AI researchers worldwide, compared to 413 in China and 9010 in the US. While the results may be skewed due to consideration of only the English language and LinkedIn’s relatively lower popularity in the Asian market, the skew should affect China more than India for India is LinkedIn’s second largest market and fastest growing by listings.

According to Scopus data, India is ranked 19th on the H index-a metric quantifying a country’s scientific impact and productivity. Its H index is 100 with 17886 published documents. China is ranked third with an H index of 195 and 101408 citable documents . The data however indicates a jump in number of AI papers published in India- 3301 in 2016 from 2025 in 2015.

At the 2017 Association for Advancement of AI Conference, China stood second at 23% of all papers presented at the conference. India stood 8th with 2% of all papers published.

According to a UBS research, India spends USD 50.3 billion on absolute R&D, while China spends USD 409.2 billion.

Start Up & Entrepreneurial Culture

According to data from analytics firm Tracxn, Indian start-ups have collected less than USD 100 million from 2014 to 2017. The data also shows that nearly 186 AI startups were founded in 2015 and 2016, but only 42 in 2014. Despite that, VC funding in the Indian AI space rose from US$15 million in 2015 to US$67 million in 2017. The average deal size rose from US$0.8 million in 2015 to around US$1.5 million in 2017. According to Excube360 data, US has USD 15 billion invested in the sector, followed by China with USD 1.9 billion.

Reports suggest that the lag in AI innovation could be due to inaccessibility of data sets. While data in India is in plenty, it is poor in quality and not accessible. There is lack of the expertise required to analyse and integrate the data. Moreover, while innovation in the US and China is backed by the government (The Chinese government has invested USD 2.1 billion in an AI Tech Park in Beijing), there has been a lack of initiative from the Indian government.
Public records show that China’s Ministry of Science and Technology has funded at least eight AI-related research projects since the beginning of 2018 to the tune of USD 430 million from the central government budget. The Chinese government has also allocated large budget cuts to AI innovation and has invested heavily in AI supportive infrastructure. China’s Ministry of Science and Technology in November 2017 appointed Baidu, Alibaba Group, Tencent Holdings and iFlyTek — to lead the development of AI innovation for self-driving cars, smart cities, computer optics for medical diagnosis and voice intelligence, respectively. According to an Oxford report, the Chinese government has invested more than USD 1 billion in domestic startups over the past two years with focus on healthcare and AI.
sumHR identifies the top 22 Indian AI companies that are working to develop intelligent solutions in the fields of banking, healthcare, customer engagement, speech and language recognition, data analysis, business and marketing solutions. It is important to note that innovation is targeted at the applications of artificial intelligence, rather than advancements of artificial intelligence itself or “deep innovation”.

The Chinese government unveiled a plan (New Generational AI Development Plan) last year to become the world leader in AI by 2030. Artificial Intelligence is a priority for China in its national agenda and the government is working closely with the private sector to harness AI for civilian and military purposes. Last year China successfully tested swarms- autonomous distributed robots that are capable of cooperative behaviour. China has also put together a team of 120 specialists in the Chinese Academy of Military Sciences to work on the research and development of AI for military purposes. Robots are also deployed in the manufacturing of weaponry, leading to speed and safety improvements. Anbot is patrol police robot developed by the Chinese National Defence University and has a maximum speed of 11 mph. Chinese Type 59 Tanks that are due for retirement are to be converted into unmanned vehicles equipped with AI. China has also made pioneering advancements in quantum technology that can be used for encryption and military communication.

China factor

China’s Artificial Intelligence policy and gives a sneak peek into how it is building an innovation ecosystem surrounding such new technologies and provides context for Indian policy makers to respond to the development of this paradigm technology in its neighborhood. While in India, most of the discussion surrounding China is categorically placed under the labels of foreign policy, trade deficits, economic development or one of their close corollaries, the report enables an understanding of China’s socio-technical regime that is enabling it to become a technological superpower.

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From the mass production model of the 19th century to specialisation model of the current times, the landscape of higher education has evolved over period of time. Technology will be a key driver going forward, while disruptive models that meet the necessary skill requirement of the 21st century will play a significant role to shape the nature of higher education.

Technology Vs Traditional Learning

EdTech is a form of education that is increasingly being used in higher education. However, the take-up and use of such education system in developing countries is at a preliminary stage. This article series will deal with how technology can enhance the learning experience. This aspect also deals with describing and understanding teachers’ perspective about incorporating technology in higher education in India. Probing further, answers to the following questions can give a better perspective on this aspect:

1. How can schools, especially schools in rural India, implement online learning in higher education in India?
2. How successful has e-learning been in higher education?
3. Is there a changing faculty attitudes about involving technology in higher education?
4. MOOCs and remote learning as an alternative to the conventional education system?
5. Does technology in education enhance the classroom experience through delivering courses over the internet?

Effective and Interactive Pedagogical Approaches

Blended approach to learning managed to cause better student engagement which is more difficult to achieve in a traditional classroom. Fast development of Learning Management System platforms and features results in various means to encourage students to take a more active role and employ individual approach in the process of knowledge acquisition, thus creating opportunities for better student collaboration. With data-driven learning and assessment practices accessible via learning analytics, both instructors and students are able to track students’ progress and interaction with material, which provides opportunity for instructors to gain insight and provide timely help to students performing poorly. The series could look into the following:

1. What are the factors that should be kept in mind carefully plan and implement appropriate pe­dagogy?
2. How can we move from a Teacher-Centered Pedagogy to a Learner-Centered Pedagogy or Learning-Centered Pedagogy?
3. With education being qualitative in nature, do we think such data-driven quantifiable metrics to track students’ journey would fit in?
4. Does effective and appropriate pedagogical approaches lead to social and emotional development of a student?

Design Thinking in Higher Education

To meet the challenges of a new era, universities and schools are redesigning their core functions while also creating capacities to reach emerging and underserved areas. Changing student demographics, rapidly evolving stakeholder (industry) demands, and new technologies are requiring universities and schools to reconsider abiding assumptions about geography, time, and quality. Design thinking offers important pathways for shaping these important new models. Organizational change can embody deliberate choice that purposefully shapes the object and direction of the change itself.

The technological and sociological trends suggest that in maintaining their value to society, many colleges and universities will need to teach new material to new types of students at new, large scales.

1. Does design thinking in higher education offers an important pathway for transforming universities into adaptive institutions that can carry out the important work of effectively responding to legacy and emerging markets?
2. Does design thinking offer a comprehensive framework that can help students tackle problems that our community (global, national or local) face?
3. How can schools and teachers implement design thinking in their environment?

Gamifying Education and Project-Based Learning

Gamification has become an increasingly pervasive part of education over the last decade. Educators in K-12 schools have found creative ways to engage students by gamifying coursework. But why are these teaching strategies not more common in higher education?

Gamification, the process of introducing elements and mechanics from games into the classroom and curriculum, aims to improve student motivation and engagement — and when applied correctly, there is evidence that games can improve student performance.

1. What Are The Elements Of A Well-Designed Learning Game?
2. Project-Based learning or Problem-Based learning?
3. Which theoretical framework is best suited for analysing qualitative data about international students’ experiences with project-based learning?
4. Should project-based learning be made compulsory in schools and universities?

Imparting life-skills

‘Traditional’ subjects such as math and science are essential building blocks of the Indian education system. They prepare students with academic and skill foundations that make them more employable in their fields.

Similarly, it would also work in the favour of the students if they were to learn essential life skills in schools. For instance, managing phone addiction, managing time. These could vary on the basis of location. More backward communities can have modules that teach kids how to respond to domestic violence, or managing their finances

1. What is the importance of a life skills-based education
2. What are the diverse attributes students need to develop while at university?.
3. How can the current Indian education system incorporate teaching life skills in its curriculum?

Outcome/Result Based Learning in Higher Education

The pressure to perform in India leads to children experiencing higher stress from universities and parents. It’s arguable whether the perfect scores produce adults who are critical thinkers or merely rote learners, and there are concerns about a lack of development in behavioural and social skills.

We need a rethink towards ways to reduce the pressure to perform and view education as a learning experience rather than a life maker/breaker.

1. Can the current education system in India sustain without emphasis on results?
2. Can discussions, homework and quizzes replace marks and grades as the preferred method of collecting information on the performance of a student?
3. Will doing away with marks and rankings foster social development among students to raise self awareness and build decision-making skills?

If you’re happy and you know it, clap your hands (clap, clap). If you enjoyed reading this article, or think someone else might, please show some support by clapping and sharing. Please feel free to drop a comment voicing your opinion on this topic. You can reach me on my personal email — madhav_sharma28@hotmail.com or tweet at me

In the past three decades, India has seen staggering technological changes. The early history of Internet in India, in fact, dates back to 1986 when it was launched in the form of Educational Research Network (ERNET) meant only for the use of educational and research communities. It was a joint undertaking of the Department of Electronics (DOE) of the Government of India, and the United Nations Development Program (UNDP). In 2018, India now has an internet penetration of 34 percent of households. In just 30 years, technology has embedded itself in everything we do, both professional and personal. It has become more affordable as well. Health, Communication, Education, Information, and Entertainment — there is no aspect of life in which its impact is not evident. Over the years, technology has revolutionized our perspective of the world. Technology has created amazing tools and resources, putting each person’s most useful information at their fingertips.

Technology and innovation are the core enablers of the process of ART in good governance — Accountability, Responsiveness and Transparency. These processes can be effectively scaled and adapted to infuse efficiency and measurable performance metrics into larger domains of governance.

ASPECTS

Impact of IT enabled services on economic growth

Information technology (IT) is an example of a general purpose technology that has the potential to play an important role in economic growth, as well as other dimensions of economic and social development. The discourse in the conference will be upon the unexpected success of India’s software export sector and the spillovers of this success in various IT enabled services, attempts to make IT and its benefits available to India’s rural masses, e-commerce for the country’s growing middle class, the use and impacts of IT in India’s manufacturing sector, and various forms of e-governance, including internal systems as well as citizen interfaces.

Advances in information technology (IT) and global connectivity, combined with waves of economic liberalization, have given impetus to a new dimension of globalization: cross-border trade in services. The services sector has been growing steadily and already accounts for 70 percent of employment and 73 percent of gross domestic product (GDP)in developed countries and for 35 percent of employment and 51 percent of GDP in developing countries (UNCTAD 2008). Infrastructure and skills improve in developing countries, cross-border trade in services is expected to continue to expand.

How IT is enhancing the output of Healthcare, Agriculture and Education

Healthcare

Today, the importance of health IT results from the combination of evolving technology and changing government policies that influence the quality of patient care. Automated and interoperable healthcare information systems will continue to improve medical care and public health, lower costs, increase efficiency, reduce errors and improve patient satisfaction, while also optimizing reimbursement for ambulatory and inpatient healthcare providers. While diagnostic technology such as MRI and CT scans have been around for some time, small and portable diagnostics are becoming more and more accurate, accessible and cost-effective, while robotics technology offers solutions for everything from senior care to exoskeletal solutions for the paralyzed. 3D printing is taking off as a way to create inexpensive, customized treatment supports ranging from blood vessels to prosthesis.

While our current healthcare has already been impacted by these technological shifts in what is possible for patients, there are much greater changes on the horizon. Systematic shifts are ahead as diagnostic technologies improve, handheld and app-based solutions are developed, brain-machine interfaces and implants become commonplace, and robotics and AI are honed. The nature of insurance and regional or national systems, specializations and care providers, funding and research are all open to disruption, and the impassive nature of progress will need to be tempered with human compassion and understanding to ensure technological development continues to work to the great benefit of humankind.

Agriculture

In the years since independence, India has made immense progress towards achieving food security. Its population has tripled, but food-grain production has more than quadrupled; there has thus been a substantial increase in available food-grain per capita. But more can be done. Crop yields in India are still just 30% to 60% of the best sustainable crop yields achievable in the farms of developed and other developing countries. And poor infrastructure and unorganized retail means India has one of the world’s highest levels of post-harvest food loss.

In the budget 2018, the government has proposed that it will establish specialized agro-processing financial institutions in the food processing sector, and has doubled the allocation of the Ministry of Food Processing from Rs. 715 Crore to Rs. 1400 Crore in 2018–19.

Three areas where technology can impact the agriculture areas are:

• Smarter value chains
• Improving access to credit, technology and markets
• Building farmer resilience to environmental shocks

Education

With the massive impact of smart technology across all disciplines, economies and industries, the whole the Education sector, including Higher Education, is being disrupted and therefore at a crossroads and in need of fundamental transformation. This is especially so in this new era of reduced public funding, lagging personal incomes, increased accountability around outcomes, and educational ecosystems trends such as technology immersion, personalized learning paths, knowledge skills, economic alignment and globalization.

It is important to review the use of IT to improve outcomes, accessibility, and delivery of lower-cost but high-quality education. This would specifically involve the creation of smart data, learning analytics, personalized education using cognitive computing, and blending world-class certified MOOCs with best of traditional education and practical, relevant curricula.

Creating a cyber-secure system and opportunities of skill and employment

As per a report, India saw at least one cybercrime every 10 minutes during the first half of 2017. But Indian companies are struggling to beef up their cybersecurity teams as there’s hardly enough talent around. There are currently around 30,000 cybersecurity vacancies in India, recruitment experts say, including several for C-suite leaders who can overhaul the overall security strategy of a firm. According to McAfee officials, India needs a full-proof cyber security ecosystem.

Revolutionizing Manufacturing through technology and 3D Printing

In a manufacturing environment that is perhaps changing more rapidly now than during the Industrial Revolution, competing successfully will require that Indian manufacturers increasingly provide customers with shorter times between order and delivery and between product conceptualization and realization, greater product customization, and higher product quality and performance, while meeting more stringent environmental constraints. Accomplishing these goals will require major changes in current manufacturing practices; such changes include the use of new and/or more complex manufacturing processes, greater use of information to reduce waste and defects, and more flexible manufacturing styles.

Information technology and 3DP can provide the tools to help enterprises achieve goals widely regarded as critical to the future of manufacturing, including:

• Rapid shifts in production from one product to another;
• Faster implementation of new concepts in products;
• Faster delivery of products to customers;
• More intimate and detailed interactions with customers;
• Fuller utilization of capital and human resources;
• Streamlining of operations to focus on essential business needs; and
• Elimination of unnecessary, redundant, or wasteful activities.

One such technology that is playing an important role to shape Industry 4.0 is 3D Printing. 3D printing industry has proven to have made significant implications for automotive, machinery, aviation and more. Currently, design and rapid prototyping are two of the main processes that benefit from 3D prints. 3D printers are also useful in low-volume production, such as when small amounts of product are needed to test the market or advertise at trade shows. And as time goes on, 3D printers’ production capabilities continue to scale.

As per a market intelligence solution firm, 6Wresearch; Indian 3D Prototyping & Materials market is projected to reach over $62 Million by 2022. To tap in on this, there is a major need to create a unique concept of building dual system of skills education where major focus remains on practical industrial training along with theory. The objective of bringing in the dual system of education is to make youth ‘job ready’ unlike the conventional education system.

Role of Emerging Technologies in India

The application of AI and Blockchain in governance provides an opportunity for India to apply sophisticated information and communications technology (ICT) tools and leapfrog developmental and infrastructural constraints. Through Digital India, the Indian government has undertaken digitization and revamping of systems related to railways, land records, educational resource etc. As the government pursues its digital agenda, artificial intelligence and blockchain can be a tool for efficiency and decision making. The Union Budget of 2018 has also recognised the need for government investment in research, training and skill development in robotics, AI, digital manufacturing, and Big Data intelligence and Blockchain.

Blockchains have the potential to revolutionize the activities of government with potential use cases in government including: Healthcare and Electronic Health Records, Digital Identities, Tax and Internal Revenue Monitoring, Voting, Secure Banking Services, Supply Chain, Energy, Land Titles, Direct Benefit Transfer and Welfare Payments, Engagement with Citizens and Digital Payments.

CONCEPT

We have only touched a small part of what could be a long list of improvements that technology has brought to our lives. But, innovation is constant and the next set of improved technologies will soon be here. The conference seeks to discuss the various issues and challenges surrounding the design, development and role of IT to create New India 2022. We will also seek to define people’s involvement in governance by three approaches:

• Managerial — Vertical flow of information focused on speedy delivery for specific areas or services
• Consultative — Gauging societal interest and opinions on proposed schemes through various portals by citizens
• Participative — Multidimensional flow of information evincing a keen interest from citizens forming a cyber society akin to a social network.

In the past four years, India too has seen staggering technological changes. With the push of Digital India Initiative by the Government of India and giving a digital identity to each of India’s 1.2 billion resident, by means of providing a unique ID, called Aadhaar, the need to address digital security and privacy in this age of emerging technologies has become more critical than ever.

ASPECTS

Cyber World: Is it a threat to Democracy?

Emerging technologies are capable of harnessing enormous amounts of data in real time and seamlessly communicating that data around a complex network of other connected technologies. Such practises are hardly new, but with emerging technologies it is the volume of data and the scale of connectivity that sets them apart from traditional technologies.

The recent cyber threat activity against the democratic process in the United States and Europe has raised concerns about similar threats to India. This comes at a time when Philip N. Howard, a professor of Internet studies at the Oxford Internet institute, alleges that Russia may target countries like India and Brazil to interfere in their elections by spreading misinformation that can negatively affect aspects of citizens lives.

With unprecedented data flows comes new and unmatched security risks, both to the integrity of country’s democracy and to the privacy of its citizens.

Data Protection Bill 2018 — Key Challenges and Opportunities

The committee of experts under the chairmanship of Justice B.N. Srikrishna, has brought its deliberations to a close and handed over the draft protection of personal data bill for India to Ministry of electronics and information technology for circulation.

It includes positive features like broader definitions, horizontal application, extra-territorial jurisdiction and steep penalties for violations, as well as negative features like data localization requirements, many exceptions to state related processing.

Emerging Technologies in India

The application of emerging technologies such as AI, Blockchain and IoT in governance provides an opportunity for India to apply sophisticated information and communications technology (ICT) tools and leapfrog developmental and infrastructural constraints. Through Digital India, the Indian government has undertaken digitization and revamping of systems related to railways, land records, educational resource etc. As the government pursues its digital agenda, these emerging technologies can be a tool for efficiency and decision making. The Union Budget of 2018 has also recognised the need for government investment in research, training and skill development in robotics, AI, digital manufacturing, and Big Data intelligence.

Over the past few years, there has been a widespread proliferation of regulatory restrictions of the internet, in particular for commercial use. While the governments earlier endeavors to increase control over the internet had the implicit aim of keeping information outside state borders, this new breed of regulation aims at keeping data in. With the pretext of increasing online security and privacy, some governments are requiring mandatory storage of critical data on servers physically located inside the country, i.e. data localization. Also, some data protection and security laws create barriers to cross-border data transfers to such an extent that they are effectively data localization requirements.

The belief that forcing personal information, emails and other forms of data from leaving the country would prevent foreign surveillance or protect citizens’ online privacy is flawed in several ways. First, many of the recent legislative proposals pre-date the surveillance revelations, and are not designed for addressing these issues. Second, information security is not a function of where data is physically stored or processed. Threats are often domestic, while storing information in one physical location could increase vulnerability. Thirdly, data localization is not only ineffective against foreign surveillance, it enables governments to surveil on their own citizens. Moreover, users and business do not access data across borders with the purpose of evading domestic laws, while legal obligations do not always depend on where a server is physically placed.

As a result, data localization, or discriminatory privacy and security laws to similar effect, has spawned severe protest from advocates for open internet and the global trading system. Forced localization is often the product of poor or one-sided economic analysis, with the surreptitious objective of keeping foreign competitors out, or creating a handful of new jobs in e-commerce, data centers or consultancies. However, any job gains as a result of data localization are minuscule compared to losses in terms of jobs and output in other parts of the economy.

The internet has delivered worldwide benefits, mostly through US technology companies offering services globally. Light regulation has enabled innovation, facilitated rapid development of internet services, and delivered benefits across the planet.

These technologies are also bringing new challenges. Fake news and social media have been blamed for nothing less than the potential destruction of democracy, and leading technology companies warn of the dangers posed by cyber attacks.

One response has been for governments to clamp down and impose tighter regulations. The inherently borderless nature of the internet has presented regulators and lawmakers with challenges, but in recent times governments have taken two different approaches.

The first is to create laws that apply beyond their own borders. The European Union has imposed tight data-protection rules — known as the General Data Protection Regulation (GDPR)―based on the premise that individuals have the fundamental right to control the use of their own data. The justification for the GDPR’s extraterritorial application is that a citizen’s right to control their own personal data is universal and exists regardless of overlapping jurisdictions. According to the GDPR, personal data should be used in a manner ‘designed to serve mankind’ and should ‘whatever [an individual’s] nationality or residence, respect their fundamental rights and freedoms, in particular their right to the protection of personal data’.

The second approach is to compel data localization and legislate that data — typically personal data — must be stored within a state’s jurisdiction. China and Russia both have laws that impose a data localization requirement. Both states cite protection of personal information as one of the justifications for these laws, but concerns have been raised that they’re using localization to enable intrusive government access to private information. Governments have a range of exceptional access powers that are typically relatively easy to exercise within their borders, but difficult to enforce outside their jurisdiction.

CHALLENGES

Increasing data localization — governments requiring certain data to be stored within a jurisdiction — threatens internet innovation and makes the development of digital goods and services more difficult, potentially slowing economic growth.

OPPORTUNITIES

Where do you store all this data? In data centers, of course. And data centers, with its large servers and coolers, are power hungry — in 2014, before the real data boom, US data centers consumed 70 billion kilowatt-hour (kWh) of electricity, that is 2% of the country’s total power consumption. A study says by 2020, 20% of world’s energy consumption.

And all this energy cannot be, realistically, sourced from fossil fuel alone — which at present contribute 80% of the world’s energy. Growing energy need plus fewer fossil fuel mean high cost for data centers. Hence, tech companies are these days buying up wind and solar farms.

All that means, more data centers in India could mean new, power-hungry customers for India’s renewable energy market, which is already seeing better investment growth than China (India’s target is 175 GW of renewable power by 2022 against its current capacity of around 60 GW).

MEASURING THE ECONOMIC AND TRADE IMPACTS OF CROSS-BORDER DATA FLOWS

“In the quest for data protection and privacy, policy-makers must not ignore the pitfalls in restricting cross-border data flows”

The world is experiencing unprecedented increases in connectivity and global data flows. This is underpinning the so-called fourth industrial revolution, which is characterized by end-to-end digitization of all assets and integration into a digital ecosystem. It heralds the fourth major upheaval in modern manufacturing after the lean revolution of the 1970s, outsourcing in the 1990s, and automation in the 2000s.

The Asia Pacific continues to be one of the fastest growing regions in the world, both economically, and in terms of connectivity. By 2017, Asia had the largest number of internet users in the world, with 1.9 billion people online.

Cross-border data access, usage, and exchange are essential to economic growth in the digital age. Every sector — including manufacturing, services, agriculture, and retail — relies on data and on the global flow of that data. Whether directly, or by indirectly taking advantage of global-scale data infrastructure such as cloud computing, global connectivity has enabled cross-border economic activity, allowing individuals, startups, and small businesses to participate in global markets.

Global data flows are also transforming the nature of international trade, creating new opportunities for businesses to participate in the global economy by selling goods and services directly to customers and plugging into global value chains. McKinsey & Company estimates that global data flows raised global GDP by approximately 3.5 percent over what would have occurred without such flows, equivalent to $2.8 trillion dollars in 2014.

Reports suggest that cross-border data flows contributed $2.8 trillion to the global economy in 2014, which is expected to touch $11 trillion by 2025. Data has often been referred to as the new oil, an economic resource, that is fueling the fourth industrial revolution.

However, many governments have been inclined towards restricting cross-border data flow and mandating localization of certain data. It remains to be seen whether curbs on cross-border data flows will lead to the anticipated enhancement of data privacy, sovereignty and security, or are we merely heading towards a Walled Wide Web without meeting these objectives.

Like in many other countries, the political narrative in India also seems to be tilting towards data localization. This may be gauged from recent developments in the regulatory and policy frameworks on data governance, which may compel companies to set up their data centers within Indian shores.

Desk research of reports from international organizations, such as the World Economic Forum, trade associations and research think tanks including the European center for International Political Economy and the Asia-Pacific MSME Trade Coalition, provides some insights on the economic benefits of cross-border data flows. It also highlights the impact of barriers such as data localization — requiring that certain types of data remain in country, or be stored on local servers — on the economy:

• Over the past decade, international data flows have increased global GDP by 10.1 per cent, and data flows now account for US$2.8 trillion of global GDP (2014), a larger share than global trade in goods.
• Between 2005 and 2015, global flows of data grew 45 times, while by the end of 2016, the raw volume of global data flows reached 400 terabits per second. Projections suggest that cross-border data flows will increase another nine-fold by 2020. This growth in data flows contrasts the growth of traditional value flows of physical goods and services, which have barely managed to grow at the pace of worldwide nominal GDP.
• Current trade statistics significantly underestimate the magnitude and growth of cross-border data flows, and as a result, the contributions of cross- border data flows to global growth and to small businesses are significantly underestimated.
• According to UNCTAD, world trade in IT and ICT-enabled services amounted to approximately US$1.6 trillion or 48 per cent of all traded services in 2007.
• Worldwide, the shift to cloud computing could create nearly 14 million new jobs by 2015, with a majority of these new jobs potentially being in large emerging economies.
• Estimates show that removing foreign digital trade barriers would increase U.S. GDP by US$16.7 to US$41.4 billion (0.1 to 0.3 per cent) and wages by 0.7 to 1.4 per cent in the seven digitally intensive sectors.
• The elimination of current data localization measures in the EU can generate GDP gains of up to 1.1 per cent.
• More than US$339 billion can be saved by Export -focused micro, small and medium enterprises (MSMEs) through the utilisation of digital tools.
• Each one per cent increase in usage of electronic payments produces, on average, an annual increase of ~US$104 in the consumption of goods and services, a 0.04 per cent increase in GDP.
• The shift from cash to digital payments could increase GDP across developing economies by six per cent before 2025, adding US$3.7 trillion and around 95 million jobs.

India’s interconnectivity with the world

• 10% increase in total internet traffic and mobile internet traffic increases India’s GDP by 3.3% and 1.3% respectively.
• If in the last decade, India had accelerated its participation in all types of global data flows to match leading countries, its GDP is estimated to have been US$1.2 trillion higher.
• E-commerce is expected to add up to 20 million jobs by 2020. While adjusting for the replacement of offline jobs, it is still expected that e-commerce will create a net addition of 10 million new jobs in India by 2020

Governments and societies face significant challenges when determining the best approach to data governance. The immense economic opportunities arising from the digital economy and data flows are indisputable, as are the potential perils of ignoring data privacy concerns.

A number of studies have been published that highlight the scale and importance of cross-border data flows. These studies point to the growing economic significance of data flows, and are beginning to provide useful benchmarks and indicators of the extent of the impact. Key findings of the studies include:

• In 2014, the free flow of data was estimated to have contributed $2.8 trillion to the global economy, a figure that could reach $11 trillion by 2025.[11] The same study estimates around 12 percent of international trade in goods has been estimated to occur through global e-commerce platforms such as Alibaba and Amazon.
• In the United States, digital trade has raised GDP by 3.4–4.8 percent by increasing productivity and lowering the costs of trade; it has also increased wages and likely contributed to creating as many as 2.4 million new jobs.
• A 2016 World Bank study found that a 10 percent increase in internet penetration in the exporting country leads to a 1.9 percent increase in exports along the extensive margin (the quantity of goods), and a 10 percent increase in internet penetration in the importing country leads to a 0.6 percent increase exports along the intensive margin (the average value of goods)

Because of limitations in the data, each of these pictures are still incomplete and, in almost all cases, provide only rough estimates of the impact of data on growth and jobs.

The capacity to move large quantities of data seamlessly and rapidly across borders can undermine domestic regulatory standards in areas such as privacy, consumer protection, and health care. For example, cross-border data flows to a jurisdiction with lower levels of privacy protection can undermine domestic privacy protection. This creates an incentive for regulators to restrict cross-border transfers of personal information. For instance, the European Union’s General Data Protection Regulation (GDPR) prevents transfers of personal data to another jurisdiction that has not been deemed by the EU to have adequate privacy protection and the European Court of Justice has found that a finding of adequacy requires the other country to provide privacy protection that is “essentially equivalent” to that found in the EU.

Data localization not only fails to achieve this — it also creates economic and trade costs.

WHAT IS THE OPTIMAL REGULATORY AND LEGISLATIVE FRAMEWORK?

Regulatory frameworks for data privacy are critical to facilitate cross-border data flows in Asia and around the world. Over the past decade, international data flows have increased global GDP by 10.1 per cent. Data flows accounted for US$2.8 trillion of global GDP in 2014, a larger share than the global trade in goods.

Goals set in the Draft National Digital Communications Policy 2018, along with various government notifications and guidelines such as Reserve Bank of India’s notification on Payment Data Storage 2018, and the Guidelines for Government Departments for Contractual Terms related to Cloud Storage 2017, show signs of data localization.

The rationale behind such mandates has been attributed to various factors, such as: securing citizen’s data, data privacy, data sovereignty, national security, and economic development of the country. The extensive data collection by technology companies, due to their unfettered access and control of user data, has allowed them to freely process and monetise Indian users’ data outside the country.

This has raised data protection and privacy concerns. Furthermore, the advent of cloud computing raises important questions on accountability of service providers who store Indian users’ data outside of the country’s boundaries, leading to a conflict of jurisdiction in case of any dispute.

Another area of caution for policy-makers is to prepare adequate ground through holistic analysis, before mandating data localization, especially on devising an optimal regulatory and legislative framework for data processors and data centers operating in the country.

In addition to these, India also aspires to become a global hub for, among others, cloud computing, data hosting and international data centers, all of which are prompting the government to enact data localization requirements for accelerating the nation’s economic growth, especially in the sphere of digital technologies.

Though these policy goals are justifiable, a deeper analysis is required to determine the possible adverse spillover effects on relevant stakeholders in case a faulty roadmap is adopted to achieve them.

Adequate attention needs to be given to the interests of India’s Information Technology Enabled Services (ITeS) and Business Process Outsourcing (BPO) industries, which are thriving on cross-border data flow.

The possible rise in prices or unavailability of foreign cloud computing services in case of a data localization mandate, and its impact on medium small and micro enterprises (MSMEs) as well as start-ups relying on these services must also be counted for.

Domestic and foreign businesses engaged in developing data driven new age technologies such as Internet of Things and Artificial Intelligence may also find it hard to comply with data localization requirements.

Adequate infrastructure in terms of energy, real estate, and internet connectivity also needs to be made available for India to become a global hub for data centers. Promoting confidence in users without sacrificing expectations of privacy, security, and safety must also be worked upon.

With the BN Srikrishna Committee ‘Recommendations on the data protection legislation’, and the Telecom Regulatory Authority’s ‘Principles on data ownership, security and privacy’ expected soon, the emerging trend of cross-border data flow restrictions becomes worrisome.

While the government’s policy goals are certainly having the right intention, adoption of the age-old route of protectionism for their realisation may not be appropriate. Formulating policies that create boulders in cross-border data flows should not be promulgated unless backed by adequate and inclusive research on its multifaceted impact on relevant stakeholders.

Also, the possibility of triggering a vicious cycle of data localization requirements by other countries as a response to India’s possible data localization mandate will be detrimental for the global data economy.

MUTUAL LEGAL ASSISTANCE TREATIES

Minimal or deregulated governance on critical data, due to absence of localization requirements, could be detrimental to India’s national security as data would be outside the purview of existing data protection legislation. The ineffectiveness of Mutual Legal Assistance Treaties (MLATs) in this realm aggravates such government fears.

One way forward is being developed by the Asia-Pacific Economic Cooperation (APEC) forum through Cross-Border Privacy Rules (CBPR) system, serving as a mechanism that fosters trust and facilitate data flows amongst participants. A key benefit of the APEC regime is that it enables personal data to flow freely even in the absence of two governments having agreed to formally recognize each other’s privacy laws as equivalent. Instead, APEC relies on businesses to ensure that data collected and then sent to third parties either domestically or overseas continues to protect the data consistent with APEC privacy principles. The APEC CBPR regime also requires independent entities who can monitor and hold businesses accountable for privacy breaches.

The U.S.-EU Privacy Shield is another example of how interoperability between the EU approach to privacy and the U.S. accountability-approach might be achieved. In this regard, Privacy Shield avoids countries (in this case the U.S.) having to adopt a top-down privacy regime akin to the EU’s GDPR. Instead, Privacy Shield allows a subset of businesses in a given country to agree to a particular privacy regime in order to be deemed equivalent by the EU. This enables the free flow of personal data between the EU and the business participating in Privacy Shield.

For those countries party to the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), the commitments on privacy in the e-commerce chapter provide another framework for integrating privacy, trade, and cross-border data flows.

Data localization for law enforcement purposes

The globalization of the internet and the rise in the use of cloud computing mean that a person’s data is often held in a separate jurisdiction. Currently, where data is held in another jurisdiction, officials need to rely on the processes under mutual legal assistance treaties (MLATs) to obtain access.

A MLAT provides a process whereby one country’s law enforcement personnel can request information held by a communication service provider in another country. MLATs were originally designed to facilitate sharing evidence in exceptional circumstances and have proved to be ill-suited when responding to regular requests for access to electronic data.[19]

A key limit with MLATs is the time taken to respond to a request for data. For example, to obtain data from a U.S.-based company takes approximately 10 months. [20] This is too long in cases where law enforcement needs to respond to international terrorism or cybercrime.

Data localization is a second-best option when responding to the challenges facing local law enforcement and in countering the inadequacies of the MLAT process. As outlined above, data localization creates a range of economic and trade costs and can degrade data security.

Instead, two reforms should be considered. The most immediate is reform of the MLAT process to better accommodate requests for electronic data. The second longer term reform is to consider negotiating data sharing agreements — bilaterally or multilaterally.

QUALITATIVE ANALYSIS

Both the approaches to data localization are forms of regulation that impose additional costs. Ideally, a harmonized global approach to data protection would be preferable. The European GDPR already imposes relatively high costs on companies doing business in the European Union, or even just conducting business with EU citizens.

Data localization requirements, however, impose additional new costs above and beyond those of the GDPR.

There are several factors that decide where data should ‘live’ — that is, where it is best stored. Many of these factors are technological, and the best place to store data has changed over time as technology has evolved.

Some of the factors involved today are:

• the proliferation of power- and storage-constrained mobile devices — it is better to have much of the world’s data processing and storage take place at data centers that don’t have limits on storage and battery life
• environmental efficiency — cooling is a significant cost in data center operations, and some climates are better suited for efficient data centers
• the limits of communication technology — some locations can provide a more responsive and therefore higher quality services
• physical and political security — it’s no good having a cheap-to-run location with good connectivity to end users if safety and security are compromised by other physical or political instability
• the human geography — where are end users located, and what are their computing requirements?
• financial considerations — where can cost-effective space, power and communications connectivity be found?

Data localization requirements often mean that some or all of these physical and technical factors are compromised. More broadly applied data localization requirements result in real additional costs, estimated at over 0.5% of GDP. It is only for relatively sensitive data that this cost can be justified.

For some particularly sensitive data, such as financial, health or telecommunications records, and data with national security implications, it’s not unusual for governments to require the information to be physically stored within their jurisdictions. Australia, for example, has mandated that certain health data be stored locally, and national security and other government data has contractually enforced localization requirements.

For most data, the risk of compromise is not related to its physical location. Hackers don’t gain access to data because of a server’s location — they gain access because of poor cybersecurity.

On top of the direct additional cost, data localization makes it much harder for new internet businesses to grow. Protecting personal data involves work to secure and manage where it is being sent, tracking and accounting for these data flows, and being able — in the case of the GDPR — to delete individual records if necessary. localization requires that this work be duplicated — potentially across many jurisdictions — so that a business expanding internationally might need to simultaneously comply with myriad data localization requirements on top of its baseline work to manage personal data. This significantly increases the complexity and cost of expansion without directly addressing the cybersecurity concerns that actually improve data security.

In 2011, the Indian Ministry of Communications and Technology implemented certain provisions of the 2000 Information Technology Act by publishing privacy rules. These Reasonable Security Practices and Procedures and Sensitive Personal Data or Information Rules introduced a strict consent requirement that only allows for sensitive personal data to be transferred abroad when “necessary” or when the individual’s consent has been obtained. These rules also introduced the right to access and review personal information that a company holds. The mercantilist intent of the law is clear, as the government of India issued a clarification to emphasise that the rules do not apply to its expanding outsourcing business. The laws have also been amended with a data retention requirement (with duration at the discretion of the government) for intermediaries that so far has not been implemented.

National media in India have reported that the National Security Council Secretariat (NSCS) is considering proposals that incorporate strong elements of data localization, mandating all email providers to set up local servers, or that “all data generated from within India should be hosted in these India-based servers and this would make them subject to Indian laws.” The strategy also includes creating an Indian email service and ensuring Internet traffic data is routed within India as much as possible, including precedents of forced data localization for selective cases and services, e.g. BlackBerry mail services in 2012.

SECONDARY DATA ANALYSIS

• The following pointers aims to quantify the losses that result from data localization requirements and related data privacy and security laws that discriminate against foreign suppliers of data, and downstream goods and services providers, using GTAP8. The study looks at the effects of recently proposed or enacted legislation in seven jurisdictions, namely Brazil, China, the European Union (EU), India, Indonesia, South Korea and Vietnam.
• Access to foreign markets and globalised supply chains are the major sources of growth, jobs and new investments — in particular for developing economies. Manufacturing and exports are also dependent on having access to a broad range of services at competitive prices, which depend on secure and efficient access to data. Data localization potentially affects any business that uses the internet to produce, deliver, and receive payments for their work, or to pay their salaries and taxes.
• The impact of recently proposed or enacted legislation on GDP is substantial in all seven countries: Brazil (-0.2%), China (-1.1%), EU (-0.4%), India (-0.1%), Indonesia (-0.5%), Korea (-0.4%) and Vietnam (-1.7%). These changes significantly affect post-crisis economic recovery and can undo the productivity increases from major trade agreements, while economic growth is often instrumental to social stability.
• If these countries would also introduce economy-wide data localization requirements that apply across all sectors of the economy, GDP losses would be even higher: Brazil (-0.8%), the EU (-1.1%), India (-0.8%), Indonesia (-0.7%), Korea (-1.1%).
• The impact on overall domestic Investments is also considerable: Brazil (-4.2%), China (-1.8%), the EU (-3.9%), India (-1.4%), Indonesia (-2.3%), Korea (-0.5%) and Vietnam (-3.1). Exports of China and Indonesia also decrease by -1.7% as a consequence of direct loss of competitiveness.
• Welfare Losses (expressed as actual economic losses by the citizens) amount to up to $63 bn for China and $193 bn for the EU. For India, the loss per worker Is equivalent to 11% of the average month salary, and almost 13 percent in China and around 20% in Korea and Brazil.
• The findings show that the negative impact of disrupting cross-border data flows should not be ignored. The globalised economy has made unilateral trade restrictions a counterproductive strategy that puts the country at a relative loss to others, with no possibilities to mitigate the negative impact in the long run. Forced localization is often the product of poor or one-sided economic analysis, with the surreptitious objective of keeping foreign competitors out. Any gains stemming from data localization are too small to outweigh losses in terms of welfare and output in the general economy.

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OVERVIEW

India is home to around 65 million SMEs, which contribute to 11% of GDP, 45% of total manufacturing output and provide employment opportunities for more than 100 million people. SMEs also play a crucial role in supporting large enterprises as ancillary units and even help in promoting industry in rural & backward areas.

SMEs also play a significant role in Nation’s development through its high contribution in domestic production, significant export earnings, low investment requirements, operational flexibility, location wise mobility, low intensive imports, capacities to develop appropriate indigenous technology, import substitution, contribution towards defence production, technology–oriented industries, competitiveness in domestic and export markets thereby generating new entrepreneurs by providing knowledge, training and skill development .

As indicated by HSBC reports in 2015, India is relied upon to be the fifth biggest exporter economy by 2030. It reaffirms the confidence that the trade approaches are the center of India’s financial changes. The Government is sure of maintaining the most elevated amounts of development, straightforwardness, and globalization.

MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT (MSMED) ACT, 2006

Government of India was notified by its Micro, Small and Medium Enterprises Development (MSMED) Act in 2006 to address policy issues affecting SMEs as well as the coverage and investment ceiling of the sector. The Act seeks to facilitate the development of these enterprises as also enhancing their competitiveness. It provides the first-ever legal framework for recognition of the concept of “enterprise” which comprises both manufacturing and service entities. It defines medium enterprises for the first time and seeks to integrate the three tiers of these enterprises, namely, micro, small and medium. The Act also provides for a statutory consultative mechanism at the national level with balanced representation of all sections of stakeholders, particularly the three classes of enterprises; and with a wide range of advisory functions.

CHALLENGES

• Difficulty in procuring finance and credit instruments — Unlike Tier I cities, where most businesses have easy access to various finance and credit instruments, enterprises based in Tier II and Tier III cities find it significantly harder to procure the same. However, the gravity of this issue varies across different regions of the country. According to a study conducted by FICCI — a whopping 83 percent of enterprises in the city of Chandigarh stated difficulty in the procurement of credit instruments as a major challenge, while only 77 percent from Mumbai cited this issue as a growth inhibitor.
• Lack of basic infrastructure — lack of comprehensive infrastructure is perhaps the biggest drawback faced by businesses within the SMB/SME ecosystem. Since there is still a significant percentage of SMEs that operate within the unorganized space, the lack of basic facilities and absence of marketing platforms makes it extremely difficult for such businesses to thrive and/or compete with stronger players in the market.

Ease of doing business

Last year, India moved into the top 100 of the World Bank’s ‘Ease of doing business’ global rankings and was one of the top reformers, improving its score in many criteria. While this is great news, there are more reforms in areas such as business setup, enforcing contracts, resolving insolvency, paying taxes, etc. that can help drive this growth further in 2018.

There are barriers SMEs need to cross

The barrier are many such as lack of reliable data on overseas markets, inability to contact potential overseas customers, unfamiliarity with export rules, procedures & documentation, lack of trained export staff for trade facilitation, difficulty identifying foreign business opportunities, insufficient access to export finance etc.

Some of the barriers are about perception, some related to lack of knowledge & information whilst some about lack of holistic and end-2-end global trade solution for SMEs.

When exporting in a developing nation like India, lack of access to global trade opportunities, trade intelligence and worldwide market demand are significant information barriers faced by SMEs. This lack of information could have potentially high implications. SMEs need to know about procedures, documentation, specifications, rules, regulations, standards etc. in target country or they risk trade execution or worse, product rejection.

Similarly, lack of information on export opportunities in global market could result in high marketing and opportunity cost of targeting the wrong market and of missing the right one. Finally, lack of trade facilitation or access to global trade resources to help execute end to end transactions dissuades SMEs to venture into uncharted territories.

FOREIGN TRADE POLICY FROM PERSPECTIVE OF SME

SMEs are a vital piece of the Indian economy. They have high edges and offer business. Assuming a noteworthy part in the industrialization of rural regions, the SME division contributes around 8 % to GDP other than contributing 45% of the aggregate manufacturing output, and 40% to the exports from the nation.

India has about three million SMEs which add to the Foreign Trade, the last including all imports and exports to and from the nation. With an export development and increased value expansion to the SME segment being the prime concentration, the Government has made updates in its Foreign Trade policy of 2015–2020. Plans like “Make in India” and “Digital India” resound a similar impact.

The main goal of this five-year Foreign Trade design is to position India as one of the best worldwide players, and expanding the abroad deals while teaming up with foreign dealers is surely in a state of harmony with it. Going forward, the SMEs are henceforth distinguished as bunches according to their mastery. To push all novel and existing groups towards improved profitability, Union Commerce Minister clarified the dispatch of another plan Niryat Bhandhu Scheme (NBS). They will get help and direction through the Export Promotion Councils.

Goals of the FTP-Foreign Trade Policy (EXIM) Policy:

The primary targets are:

• To quicken the economy from low level of financial exercises to abnormal state of monetary exercises by making it a universally arranged dynamic economy and to get most extreme advantages from growing worldwide market openings.
• To animate supported financial development by giving access to fundamental crude materials, intermediates, parts,’ consumables and capital merchandise required for increasing generation.
• To upgrade the techno nearby quality and proficiency of Indian agriculture, industry, and services, in this way, enhancing their competitiveness.
• To produce employment opportunities
• To offer quality consumer products at sensible costs.

A few features of the present Foreign Trade Policy 2015–2020

• India to be made a huge member in world trade by 2020
• Commerce Minister reported two new plans in Foreign Trade Policy 2015–2020. Two New Schemes declared in FTP Are MEIS and SEIS. FTP 2015–20 presents two new plans, in particular, “Stock Exports from India Scheme (MEIS)” and “Service Exports from India Scheme (SEIS)”. These plans (MEIS and SEIS) supplant numerous plans prior set up, each with various conditions for qualification and utilization.
• Merchandise exports from India (MEIS) to advance particular administrations for particular Markets Foreign Trade Policy
• For administrations, the sum total of what plans have been supplanted by an ‘Administrations Export from India Scheme’(SEIS), which will profit all Indian Service Exporters
• FTP would diminish export commitments by 25% and offer a lift to domestic manufacturing
• Incentives (MEIS and SEIS) to be accessible for SEZs too. FTP profits by the two MEIS and SEIS will be stretched out to units situated in SEZs. — Both MEIS and SEIS firms and specialist organizations would now be able to get financed office spaces in SEZ (Special Economic Zones), alongside different advantages. With a view to supporting the Special Economic Zones, Government has chosen to broaden both the motivator plans for export of products and enterprises to units in SEZs.
• E-Commerce of crafted works, handlooms, books and so forth, qualified for advantages of MEIS, e-commerce trades up to Rs.25000 per relegation will get SFIS benefits.
• E-Commerce Exports Eligible For Services Exports From India Scheme. — As a feature of Digital India vision, versatile applications would be made to ease filing of taxes and stamp obligation, Automatic Money Transfer(ATM) utilizing Internet Banking have been proposed.
• Agricultural and village goods to be upheld over the globe at rates of 3% and 5% under MEIS. Higher amount of help to be given to processed and bundled food and agricultural things under MEIS.
• Industrial goods to be upheld in real markets at rates extending from 2% to 3%.
• Branding efforts wanted to advance exports in segments where India has customary Strength.
• No need to frequently present physical copies of documents obtainable on Exporter Importer Profile.
• Validity time of SCOMET export authorization completed from current 12 months to 24 months.
• Duty credit scrips to be unreservedly transferable and usable for an installment of excise duty, service tax
• Manufacturers who are additionally status holders will be empowered to self-insure their produced products as starting from India. — Tax and duty on Indian producers have been lessened, to support Make in India vision
• Reduced Export Obligation (EO) (75%) for local purchase under EPCG plot.
• Debits against scripts would be qualified for CENVAT credit or disadvantage moreover.
• Business administrations, lodging, and restaurants to get rewards scrips beneath SEIS at 3% and other determined services at 5%.

OPPORTUNITIES

The customer base in India is going through a big change with an increased access to the Internet and digital channels. There are over 462 mn+ Internet users in India, with over 34% Internet penetration. This is also changing the customer demographics, with 72% of Internet users below the age of 35 years.

The next wave of growth in the Internet users is expected to come from rural areas in India. There are going to be an estimated 280 mn users from rural areas in 2018, up from 163 mn.

The consumption patterns of content are changing as well. 90% of new Internet users coming online in India are non-English users, according to a report by KPMG. However, there is very little content available for local language users on the Internet, and this is a great opportunity for India small businesses.

Customer relationship management has seen innovation in the last year. Artificial intelligence, chatbots and self-service platforms are allowing small businesses to meet customer expectations at scale.

SMBs have more access to powerful business platforms and technology, which is not limited to large enterprises anymore. SaaS companies have empowered SMBs with critical business infrastructure at affordable costs.

Diversifying business in more markets not only allows to mitigate business risks but also enables to achieve economies of scale. It opens up infinite growth potential and makes a business more competitive in dealing with domestic competition, too. It increases credibility and customer faith in the business’ brand, as the customer feels that your products have world class quality since you are a global brand, neutralizing the advantage of multinational corporations and other larger companies.

With all the technology advancements, integrated platforms and access to knowledge and information, SMEs leading the way in going global would emerge as industry leaders whereas as the ones lagging behind might even risk their survival. There is a need to promote SMEs in the fastest way, aiming at enhancing the global supply chain and there is a complementary relationship between big enterprises and MSMEs. With integrated platforms and managed solutions that could manage the end-to-end process for SMEs, today global trading can become second nature for these SMEs as it will assist in producing goods, while the global trade partners could enable them to go global effectively and efficiently.

Global trade now is a necessity that SMEs cannot afford to ignore. It will not only halt their growth, but hamper their domestic existence amid increasing competition.

Growth in Tier II and Tier III

Small business growth is not restricted to Tier-I cities anymore. Tier-II and Tier-III centres are starting to become the new breeding grounds for small businesses and startups. With more awareness, access and support in the form of incubators and accelerators and investments, these cities and towns will drive the growth of the small business sector in India

Technology adoption and moving online

Digital channels and the Internet have enabled entrepreneurs and small businesses to scale up and grow faster. Technology has empowered small businesses to look beyond their existing markets and expand their businesses to new markets.

Small businesses that are online are growing much faster than those that are offline. But only a third of them are online in the country. There is a lot of potential for growth for these businesses

The Government hopes to promote SMEs in the fastest way, aiming at enhancing the global supply chain. There are various trade chambers, trade promotion organizations and export promotion councils that help SMEs for global trade. There are also organizations such as ECGC which helps in export finance and export credit guarantee.

The infrastructure for trade, both physical and digital, has continued to improve over last couple of years. This has resulted in increased digital adoption, digital enablement and digital engagement amongst SMEs though the number still remains low.

Technology is another big enabler. Technology today has the power to enable companies to gain meaningful knowledge about global trade and understand prevailing trends and potential. The right application of technology could open up multiple avenues and opportunities at low cost for SMEs to internationalize and connect to the global markets.

Usage of Internet and Technology could make our SMEs globally aware and globally visible, and could reduce the fixed global trade costs for them. These traits were once only reserved for large enterprises, but these are now allowing small businesses to compete directly with larger companies. Even for geographically remote areas, technology can significantly reduce trade costs and allow connecting with distant customers.

Further, Integrated Trade Platforms and SaaS Enabled Managed Marketplace for Global Trade could provide an end-2-end managed solution for SMEs to trade globally using a partner based approach. These platforms are making global trade safe and easy with technology and are helping SMEs ‘go global’ by partnering with them in every step of their global journey.

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