Modi’s Govt To Create US$26b Opportunity For Tech Firms, Reports Zinnov

Zinnov has released a report post the completion of 100 days by the Modi government. The 5 “Growth Levers” identified in the report present a massive potential opportunity for the technology MNCs. The investment in technology for the year 2014-15 is an estimated US$26 billion comprising of investment in digitization, infrastructural improvements, push for manufacturing and technology in healthcare & agriculture.

There is a sizable opportunity for technology MNCs to target considering the scope of investment in digitization across government functions. The new Government plans to take digitalization to the next level by implementing the digitalization of agriculture & PDS data, enabling e-governance & m-governance, facilitating the National Rural Internet and Technology Mission, using IT for real time information gathering, and the digitization of all government files. In the past, The Government has engaged multiple MNCs such as IBM, HP and Cisco for digitization projects

The 5 Growth Levers - Digital India, India as the Innovation Hub, Next Gen Infrastructure, Enhance Ease of Doing Business, and Revive Manufacturing - will be executed by a focus on 3S – skill, scale and speed propelled by technology. With 70% of the population below the age of 35, India has an enormous Talent Pool that needs to be empowered . E-education for widespread skill development and setting up vocational training centers in field of IT and manufacturing are required to enhance the skill set. It is also important to eliminate tardiness in decision making & policy implementation and to leverage technology for real time analytics across industries such as PDS, agriculture & transport etc

Talent Availability (85,000 Graduates from Top tier Engineering institutes, 1.2 million engineers graduated in 2014) Entrepreneurial Indian mindset (4000+ active technology startups 150 Startup incubators 49 Million SMEs/SMBs operating in India), Strong Democratic Fiber (Well defined electoral processes) and Communication Infrastructure (200 million internet users, 2nd largest number of telecom users) are considered India’s 4 Growth Pillars.  

The first 100 days of the government has already demonstrated positive impact:

*  5.7% GDP Growth Apr-Jun - highest in nine quarters

*  Aim to lower fiscal deficit to 4.1% of GDP by Mar 2015

*  13% Rise in NCAER’s1 quarterly Business Confidence Index in June 2014

*  Rs 7,060 crores allocated to build Smart Cities

*  1.5 crore bank accounts opened in 1 day2

*  49% FDI limit in Defense and Insurance

* 14 # of IITs, IIMs and AIIMs to be setup

 Modi’s governance model has a proven track record of being decisive, reform-oriented and business-friendly. The unprecedented mandate and the positive track record have instilled hope for an economic turnaround in citizens and investors. 

Government has defined a 3-pronged strategy to make India an innovation hub. Firstly through enabling skills by the establishment of more premier institutes such as IITs and IIMs and the development of  innovation accelerators supported by  innovation infrastructure. An innovative ecosystem fosters high quality research. Secondly, giving proximity to customers will accelerate and improve India centric product development. And finally, innovative ecosystem will also allow joint R&D efforts across industries for accentuated product development. MNCs have been leveraging the Indian innovation ecosystem to develop products for the Indian customers. 

So far, Technology MNCs have played a crucial role in the establishment of next generation infrastructure. The Indian government plans to invest USD 11 billion in the key focus areas to drive the next wave of technology-backed infrastructure growth. The key focus is to create national optical-fibre networks and to build 100 smart cities with high-speed digital highways along with national solar missions and national gas grids. 

Government has planned for simpler and well defined tax policies to aid businesses. Expected introduction of Goods & Services Tax (GST) and Direct Tax Code (DTC) by BJP government will not only simplify and lower taxes, broaden collection and spark spending but will also remove complexities and bring stability to the economy by increasing investments, creating jobs and boosting exports. 

India is already home to the most prestigious manufacturing companies globally like-Bajaj, Hindalco, Reliance, Suzlon, Hero and Grasim. Modi’s government also aims to crank up the share of manufacturing in India’s Gross Domestic Product and to help India transform into a global hub for manufacturing. The Indian Manufacturing Industry presents a US$8 billion opportunity for the ICT sector by 2017. This is only possible when the Government’s push for manufacturing is backed by increasing adoption of IT and increasing relevance of IoT in manufacturing. 

“The stage is all set to create long term sustainable growth and reposition India on the global map with strategies like minimum government, maximum governance; empowering the poor; digital India and relationship building with Asian nations.” said Praveen Bhadada, Senior Director, Zinnov.