Budget 2020

Towards a $1-trillion digital economy

Nitin Bansal | Updated on January 24, 2020 Published on January 24, 2020

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Policy roadmap to boost investments, import duty waivers for services exporters will help industry

India aims to become a $1-trillion digital economy by 2025 and digital infrastructure will play a key role in this journey. It will require investments and a stable policy roadmap to encourage investments into the sector. We believe the government could create a financial institution through which loans can be given at zero or very low interest rates to players who are rolling out digital communications infrastructure.

‘Make in India’ is a focus area for the government — it could consider providing incentives to make manufacturing in India more competitive, both for domestic consumption and to encourage exports. Here we believe that the benefit of lower corporate taxes should be extended to all companies without any cap or restrictions. Easing imports and exports will help India increase its contribution to the global ICT supply chain.

Services exports

India is a hub for services exports. Companies that earn foreign exchange through the export of services could be given waivers from custom duties to import components and equipment through the concept of positive net exports. This will help companies by increasing revenues and exports. It will also help create jobs in India and, at the same time, help the country increase its share of the global market for services. Import duty waivers will help such companies make their local manufacturing competitive.

The rollout of 5G will require a lot of Indian companies to experiment with new technologies. All investments made by companies in internet of things (IoT), machine-to-machine (M2M) and artificial intelligence (AI) for the next two years should be seen as R&D, and extended the related incentives. This will help kick-start IoT, M2M and AI in businesses in a big way.

Supporting clusters

The government could identify 20 top manufacturing clusters and 20 top logistic centres (airports, seaports, inland container ports, etc) for digital transformation. Digital infrastructure with networks such as 5G, IoT, M2M, wireless and fibre-based backhaul could then be rolled out to ensure that these clusters undergo digital transformation at the earliest and keep pace with the rest of the world.

The government could give incentives including doubling benefits on depreciation and tax breaks for enterprises that embark on digital transformation in the next 12 months. This will motivate the domestic industry to transform itself. Indian enterprises will develop expertise locally and can take it to the rest of the world, earning both export revenues and creating new-generation jobs in India.

    (The writer is Managing Director, India, and Head of Network Solutions, Market Area South East Asia, Oceania and India, Ericsson)

    Published on January 24, 2020
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