A digital India Inc

The Change

The Budget has come up with a lot of initiatives to push the Digital India program but none of those in the wish list of the domestic smartphone makers, including incentives in the form of tax holidays and deductions, came through. Makers of POS machines, scanners, fingerprint readers, iris scanners and micro ATMs have benefited, with complete exemption from all forms of customs duty under Modi’s ‘Make in India’ scheme. TVS Electronics from the listed space, which sells POS products and scanners, is a beneficiary here. To promote digital payments and usage of the BHIM app, two new promotional schemes will be launched, the Finance Minister said. He further said steps would be taken to put in place facilities for digital payments at government institutions, petrol pumps, colleges and hospitals. The government will soon review recommendations of the committee on Digital Payments, including the proposal to create a Payments Regulatory Board. The digital push will benefit RS Software, which built the UPI platform and is also a partner in the Bharat Bill Payment System. Unlisted companies in the enterprise mobility solutions space and also large IT players including Infosys and TCS are set to have it good.

The Background

The Ministry of Communications & IT says the Digital India programme is a $1-trillion business opportunity. This program was introduced in August 2014 by Prime Minister Narendra Modi. Since launch, the Centre has been giving it support. To start with, it saw to it that the laying of the optical fibre cable for broadband connectivity was fast-tracked. Internet penetration in India stands at about 28.7 per cent now (rural penetration at 13.65 per cent), up from 20 per cent two years back.

This saw telecom players BSNL, RailTel and Power Grid and also the optic fibre cable companies Sterlite Technologies, Himachal Futuristic Communications and Vindhya Telelinks benefit from increased business.

A lot of transactions at government departments (tax, revenue, passport) also moved online in this period. These projects were done by the big IT companies such as Infosys, TCS and Tech Mahindra. The Centre’s demonetisation move in November gave the biggest push to the digital economy. Post this, the number of transactions happening through prepaid instruments jumped 33 per cent to 169 million transactions (in November, month-on-month); and debit card usage at PoS terminals increased over 65 per cent.

The Verdict

The Digital India programme presents a huge business opportunity. At a time when global IT spending sees a slowdown, it makes sense for Indian IT companies to turn their attention to the domestic market.

Published on February 01, 2017

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