- Implementation of digital technologies such as Big Data, Machine Learning, Artificial Intelligence, etc., for various services (like finance, transport and retail) will transform the manufacturing and agricultural production landscapes.
- This will assist the MSMEs to overcome entry barriers to data access and public data ownership.
India faces challenging policy choices for its initiative to promote widespread usage of digital technologies. While digital start-ups like Ola, Flipkart, Zomato and Paytm have added a huge value service sector industry, they are only a small part of the entire digital transformation story.
There are a number of issues that need to be addressed soon. However, it cannot be denied that the role of data and the hardware infrastructure of the digital economy call for prioritised attention.
The Data aspect
Data is the driver for most in the digital economy. This helps several digital platform businesses such as Swiggy/Zomato, Ola/Uber, and Facebook/LinkedIn to generate their revenues by selling the data generated from the user interactions on their platforms to third parties.
To understand this, let’s take the following example. When Uber increases the number of cars under their charge and lower the prices of its rentals, that incentivises more users to register on that platform, which in turn draws more car owners (and advertisers) to it. The benefits of this network effect multiplies the revenue profit for the platform-owning company through the greater amount of data that gets generated for analytics and predictive modelling.
In the leading manufacturing countries, process innovation, maintenance operations, production quality, and inventory operations, among others, are algorithmically monitored and improved using the extracted data and accessed through various channels. .
Thus the manner in which access to data is managed by public policy will have huge impact on the ‘digital development trajectory’ and ensure that the new technologies can be used widely for solving the many development problems facing the country.
Digital infrastructure
India’s development trajectory will also be impacted by the policy choices related to the electronics industry — on whether the country will give prioritised focus on developing and strengthening the indigenous electronics hardware sector while simultaneously building up alliances between the software and hardware segments of the Information and Communication Technologies (ICT) sector domestically.
The required action
A systematic policy formulation across different domains to support digital capabilities ans team effort of hardware-software technologies is called for. This is crucial to counter the increasing imports of digitalised products (and services) in sectors varying from industrial automation, automobiles, healthcare and education, to renewable energy, public safety, smart cities, finance, defence and agriculture.
In the absence of government support for the former, the Indian manufacturing base will decline further as domestic firms won’t be able to bridge the digital gap. So creating a unity between manufacturing and software capabilities may also be one way to improve the overall employment caused by improved manufacturing.
Sensors and robotics combined with Big Data and the advances in Machine Learning with software capabilities give significant gains in productivity to the firms making use of these technologies in the production of goods and services. This will be also be vital to build up a certain international competitiveness.
To help small entrepreneurs overcome the entry barriers associated with data access and storage, public infrastructural support to the digital economy in terms of public digital platforms, public cloud and public data ownership must also be considered. This will be critical in sectors such as finance, energy, water supply, health, and education for securing strategic national interests and for enabling equitable development trajectories.
Budgetary allocation to industry-oriented R&D projects for the design and development of innovative products and solutions must also be increased.
