Budget 2023: Technology ushering the next phase of digital revolution in India

India’s Technology industry has mirrored and propelled India’s growth story over the past 3 decades and continues to set the growth and innovation narrative for the foreseeable future. While the first $100 billion took 30 years to materialize, in the next 10 years the industry has been able to double it. In FY-22, the technology industry grew at 15.5 per cent (Y-o-Y) to reach $ 227 billion in revenue which is 9 per cent of GDP. With exports reaching $178 billion, the sector contributes 51 per cent of services export. More importantly, the industry generates 5 million direct employment with women constituting ~36 per cent of the workforce. 

The remarkable growth of the sector has been made possible through concerted efforts of Government of India for decades. Apart from policies and incentives, Governments at various levels are also active consumers of the sector as they contribute by actively imbibing technology into governance. 

In the last decade, India has created the largest digital public good ecosystem in the world. Through the India stack framework, products and initiatives, India has witnessed digital solutions on identity, payments, credentials, health, education being scaled for a billion people to usher in an era of digitisation to improve governance and quality of life to the last mile.  This has had a domino effect on the industry in terms of driving innovation, product development and accelerating the startup culture. 

With the building blocks of a digital society in place - digital public goods, skilled workforce, policy and regulatory ecosystem to promote entrepreneurship and ease of doing business - Indian technology sector is all set to scale greater heights in line with the ‘AatmaNirbhar Bharat - Vocal for Local and Make for Global’ vision of Government of India and in the process contribute $1 trillion to the economy.  

With the mainstream adoption of several new technologies viz., Web 3.0, Generative AI, Metaverse etc., the next phase of digitisation will be driven by the possibilities through the emerging technologies. From improving traditional focus areas viz., efficiency and effectiveness to evolving focus areas of trust, security, autonomy and privacy, one can see technologies pushing the frontiers of businesses and governments to operationalise hitherto unimagined realities. It is important to continue the narrative of Digital India in the Post Covid era in an active manner through new-technology interventions  to capitalize and ride on the current wave of innovation at scale. 

Given the demographic composition of India and the associated challenges and opportunities, sectors viz., health, education, skilling, sports and entertainment can drive technology adoption at scale. Add to it, Government of India’s renewed commitment to semi-conductor production and hardware, mobile manufacturing through the production linked incentives approach, a whole new technology ecosystem is being created for the future.  

Although the long-term projections, possibilities and plans are in place, there are short: mid-term challenges that need quick mitigation strategies. The pandemic induced digitisation demand is tapering in the revised economic realities of growth set-back and inflationary pressures. As interest rates increase and investor sentiments become dull, the access and cost to capital will change and as we are witnessing the players across the field in the sector re-align and re-strategise to accommodate for that change. To that extent, Government can ease any concerns of the sector through a focused approach centered on demand creation, skilling and investments into the sector.  

On the demand front, as the largest user of technology services, Government of India is already catalysing several initiatives for the sector. MeitY has identified health, education, e-Governance (GeM, land records, document and data exchange, urban governance, DBT, CSCs), energy, financial services, agriculture as critical areas for making India a $ 1 trillion digital economy. A technology focused and clearly articulated budgetary attention towards these initiatives will have an extremely positive downstream effect for the entire sector.  

With workforce re-alignment topping the priority of companies of all sizes, this phase can be used to explore innovative skilling models which can not only improve the overall digital skills of the population but also provide the opportunity to re-skill the already skilled in the focus areas of the future. The Skill India Mission is particularly well positioned to orchestrate such large-scale skill transformation initiatives and also rapidly realign to cater to niche skill needs across the world. 

The Start-Up India mission has had tremendous impact on the overall psyche and the very fabric of the nation. A generation of entrepreneurs have been identified and made battle-ready to take the mantle to the next level. It may be extremely important that the idea behind the mission is now taken to every corner of the country. Investments to set-up incubators and allied institutions in tier-II towns and rural areas will have long term sustainable impact.  

As India cements its position as a leader in skills in technology for the world, it will be equally important to perhaps align additional focus on product development and accelerate scientific temper for innovation and creation at (higher) education institutions. Incentivizing and supporting innovations in products and actively providing for testing grounds for these can help tilt the balance from a Digital Talent Nation to a creator economy driven through product innovation to become a Digital Product Nation.  Such a tilt will accelerate the “make for global” paradigm in the technology sector.   

This combination of a robust long-term vision with short-term challenges in turn presents unique opportunities to the ecosystem to further course-correct and prepare better for the future. 

 

Views are personal. The author is Partner, Deloitte India.