INDIA : An Emerging Powerhouse in Digital Economy & the Land denoting unbounded Business
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INDIA :
An Emerging Powerhouse in Digital Economy &
the Land denoting unbounded Business
Opportunities for the 21st Century
Pankaj Mohindroo
National President
Indian Cellular Association (ICA)
Indian Cellular Association: An Introduction
Indian Cellular Association (ICA) is the apex body of the mobile industry comprising manufacturers,
brand owners, technology providers, VAS application and solution providers, distributors, retail
chains and eminent consumers of mobile handsets.
We represent –
Mobile Phone Manufacturers
Mobile Phone Brands
Parts, components and accessories Industries’
Design, ODM & EMS Industries
ICA’s objectives:
• Fuel the growth of the industry
• Increase competitiveness
• Help in creating a legal and ethical market and regulatory environment
• Take the benefits of mobile connectivity to the masses of the country
• Manufacturing Advisory Committees (Stage – I & Stage - II) set up by ICA in partnership with
DeitY established India as one of the Global manufacturing hubs in mobile handset and component
eco-system
SOME OF ICA’S PROMINENT MEMBERS
2
2
Country Statistics – Key Growth Indicators & Enabling Factors (1 of 2)
• 2nd most Populous nation in the world after China with 1.25 Bn population
• 3rd largest economy based on PPP (Purchasing Power Parity) and 10th largest based on
nominal GDP
• One of the fastest growing economies of the world and has been ranked as the fourth
most favoured Foreign Direct Investment (FDI) destination for 2014-16 (UNCTAD).
• India’s has a large pool of young and working class population. The proportion of
population in the working age-group 15-59 years is expected to rise from 57.7 percent
in 2001 to 64.3 percent in 2026.
• India has a large middle class population which is estimated to grow to 600 mn by 2030
from 250 mn in 2007
• Average household incomes are estimated to triple over the next two decades and India
is projected to become the world’s fifth largest consumer economy by the year 2025
• Approx. 1 Bn mobile phone subscribers in India at present
• Annual demand for 260 mn (approx.) mobile handsets / smart phones and tablets in
2014 and the demand is poised to grow further
• Demand for Electronics and IT hardware products are estimated to grow $400 Bn by
2020 from the current $ 75 – 80 Bn. This is estimated to generate humongous demand
for solid state lighting solutions, Li-Ion technology, consumer electronics, E - Books and
3
other Electronic and IT products.
Country Statistics – Key Growth Indicators & Enabling Factors (2 of 2)
• India has a large talent pool of engineers, scientists and technicians to its credit which
is a great enabler.
• Total number of annual enrolment for various postgraduate courses is as high as 18.6
Million in the nation. India has 1522 degree-granting engineering colleges with an
annual student intake of 582,000
• The National Policy on Electronics (NPE), 2012 considered to be the governing
document to guide and facilitate the growth of this sector has already been unveiled
and the new government is operationalising it very rapidly with various policy
interventions
• Significant fiscal and non-fiscal incentives have already been rolled out by the Federal as
well as various Provincial Governments to promote investments in the ESDM sector
• Various Global Brands have already lined up proposals for investments in this sector
during the last 2 years
• The new Government at the Centre has prioritized to create India as a digital economy
and several policy initiatives e.g. E-books project, smart cities’ project etc. are getting
unveiled to create demand in this sector
• Demand generators due to government schemes – National Knowledge Network (NKN),
National Optical Fiber Network (NOFN), tablets for education sector, digitization policy,
4
schemes for broadband etc.
INDIA’S INWARD INVESTMENT SCENARIO
FDI INFLOWS 35.8
(US$ bn) 32
26.7 27
24.2
22 22.8
16.4
6
2.4 4 2.6 2.1 3.7
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Rich demographic dividend Huge domestic market Emerging knowledge hub
• India 2nd largest populated India to be fifth largest India has third largest
country consumer market by 2025 technical and scientific
• India has a very young manpower pool in the
population - Over 62% of 2025 world
India’s population is in the 41%
2005 population Prowess in Information
age-group of 15-59 years 5% middle class
population - technology is well
middle class acknowledged 5
India Vs. Global Handset Market
2014
Mn. Units 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
(P)
Indian Handset
7 16 20 37 63 90 110 130 150 180 200 245 260
Market
Global Handset
438 532 681 838 997 1,150 1,197 1,171 1,350 1,550 1,650 1,775 1900
Market
India’s Share in
1.6% 2.9% 2.9% 4.5% 6.3% 7.82% 9.18% 11.1% 11.1% 11.6% 12.1% 13.8% 13.6%
the World
2000
1500
Units in Millions
1000
500
0
2002 2003 2004 2005 2006 2007 2008 2009 2010
2011
2012
2013
2014 (P)
6
Indian Handset Market (In Million Units) Global Handset Market (In Million Units)
6
India witnessing a giant Mobile Revolution
The growth of Mobile Subscribers in India (In Mn)
1200
1000
800
600 1050
950
850
400
620
200
430
205 300
45 55 75 100 140
30 35
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
In Mn
300
250
Demand for Mobile Handsets in India (Volume in Mn)
200
150
245 260
100 200
180
150
130
110
50 90
65
40
5 7 16 20
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 (P)
7
In Mn
Smart Phone Market for India
New Trend – While the Smart Phone market is estimated to account for 14% of the total
mobile handset market in India by volume at the end of 2014, in value terms this segment is
200
estimated to account for 75% of the total handset industry
150
100 200
175
155
135
115
50 95
70
32
12 20
2 6
0
2009 2010 2011 2012 2013 2014 (P) 2015 (P) 2016 (P) 2017 (P) 2018 (P) 2019 (P) 2020 (P)
Volume in Mn
16.0
14.0
12.0
10.0
8.0 15.4
13.9
12.9
6.0 10.3
11.3
9.2
4.0 7.2
2.0 3.8
1.8 2.6
0.4 1.0
0.0
2009 2010 2011 2012 2013 2014 (P) 2015 (P) 2016 (P) 2017 (P) 2018 (P) 2019 (P) 2020 (P)
8
Value in Euro Bn
INDIA – THE EPICENTRE OF MOBILE PHONE MANUFACTURING ACTIVITY
Starting from scratch in the year 2004, India ushered in significant manufacturing activity in the
mobile handsets and component eco-system. By the end of 2012 Indian produced mobile
handsets clocked 180 mn units figure with Indian produced handsets getting exported to more
than 80 countries around the world
180
160
140
120
100
180
165
80
135 140
60 120
40
45
20 31
0
2006 2007 2008 2009 2010 2011 2012
9
Volume In Millions
Example of Opportunities in Solid State Lighting in India – A key Growth Sector
• The Government of India has targeted to establish 100 smart cities over the next
couple of years. Further with the intent to promote and introduce greener and
cutting edge technologies in a time bound manner, India is poised to generate a
massive demand for solid state lighting solutions among other products over the
next couple of years. Some of the other compelling factors which are expected to
promote the growth of this sector –
Currently there are about 3 Million street lights in India
The total no. of households in India currently stands at 330 Mn & 67% households use
electricity
Massive growth in commercial, industrial and residential constructions & corresponding
requirement for lighting
Market Estimates for Solid state Lighting in India
4
2 2.9
0.6
0
2014 (P) 2016 (P)
10
Value in Euro BnEase of doing Business in India (1 of 9) • Liberal Fiscal Incentives in ESDM Modified Special Incentive Package Scheme (M-SIPS) provides subsidy going up to 25 percent on capital investment in the ESDM sector. Benefits would be made available for 10 years from the date of submission of the proposal - (USD 13.4 Bn investment proposals have already been recived till March 2014) Reimbursement of CVD/excise for capital equipment in non-SEZ units Reimbursement of central taxes and duties for 10 years The incentive is available for entire value chain of identified electronics products like Consumer electronics, strategic electronics, Medical electronics, Telecom equipment etc. Investment allowance (additional depreciation) at the rate of 15% to manufacturing companies that invest more than 13 Million Euros in plant and machinery acquired and installed up to 31.03.2015 provided that the aggregate amount of investment in new plant and machinery during the said period exceeds 13 Million Euros Subsidy of 50-75% is available for development of Electronics Manufacturing clusters (EMCs) – This subsidy is up to USD 10 million per 100 acres of land which would be applicable both for Greenfield and Brown field projects 100 % VAT refund is available by various Provincial Governments for a period of 5-10 years for goods produced and sold in the state. States have also come up with schemes for concessional land, reduced power tariff etc. Special income tax exemptions or deductions for specified sectors and business like in Section 80 IA, Section 35 AD and 10 AA. 11
Ease of doing Business in India (2 of 9)
• Availability of world class Infrastructure
India’s road network spans 3.34 mn km which is the second largest in the world. This
consists of 65,500 KM of highways.
India has a total of 125 airports which include 11 international airports
There are 13 major ports and 187 minor/intermediate ports along the coast line of the
country. Total capacity of Indian ports in the year 2010-11 was 616.73 million tons. Ports
handle over 90% of India’s international trade
Indian rail route is 63,028 KM long which is largest in Asia and second largest in the
world under one management. Indian Railways have 222,147 freight wagons for use in
movement of freight to any corner of the country.
The Special Economic Zones (SEZs) Policy announced in April 2000 by the Indian
Government provides an enabling environment for manufacturing / assembling activity
to thrive. There are 133 special economic zones operating presently all over India.
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12INDUSTRIAL CORRIDORS
13Ease of doing Business in India (3 of 9)
• Availability of uninterrupted & high quality Power
India has doubled its power generation capability during the last one decade. The
current power generation capacity stands at 2,34,000 MW compared to 1,12,000
MW in 2004.
Various Indian Provinces like Gujarat, Chhattisgarh, Madhya Pradesh etc. are power
surplus
Distribution, transmission and generation of power have been made debundled pan
India
Various Provincial Governments have entered MOUs with Industry clusters / SEZs to
ensure availability of uninterrupted high quality power supply without fail e. g.
Nokia SEZ of Sriperumbudur
14Ease of doing Business in India (4 of 9)
• Single Window Clearance systems ensure hassle free business start
ups in India
In order to remove hassles related in obtaining environmental clearances, land
procurement, construction related permits and NOCs, several provincial
Governments have initiated important measures to address these issues. Some of
the important initiatives taken in this direction include
The Single Window Clearance Act, Government of Andhra Pradesh - which
provides all clearances required to start and operate an Industry are processed
through a single point within a set time period
Single Window Clearance Act, Government of Rajasthan – which establishes a
single window clearance mechanism in order to fast track all permissions,
concessions, exemptions and relaxations for establishing operations of an
enterprise in the Province
Single Window Clearance Mechanism, Odisha – effected through Odisha
Industries Facilitation Act (OIFA) 2004 which was initiated to facilitate single
window industrial clearance
15Ease of doing Business in India (5 of 9)
• Favorable Regulatory Policy
India allows 100% FDI through automatic route in the ESDM sector
India is on the verge of adopting GST (Goods and Services Tax) in place of VAT to
streamline the taxation policy
Availability of differential duty benefit of 5% in favour of domestic production of
mobile handsets compared to the applicable duty on imports
Indian produced electronics products have huge export potential considering the
strategic location of India and a huge consumption market in Middle East; emerging
growth markets of North Africa and Latin America.
The National Policy on Electronics (NPE), 2012 has recommended various landmark
initiatives to boost growth in this sector e.g. export benefits to be made available for
the manufacturing sector, to adopt a rational taxation structure for the ESDM sector
etc.
Preferential Market Access (PMA) Scheme – Provides for preference to be given for
domestically manufactured electronic goods in government procurement. Extent of
government procurement from domestic manufacturers will not be less than 30 % of
the total procurement.
India is a signatory to WTO and remains committed to provide equal treatment on
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matters related to taxation and other bilateral economic issuesEase of doing Business in India (6 of 9)
• Enactment of Hassle free Land Acquisition processes across states
Timely acquisition of land is very critical from the point of view of successful
establishment of a business venture. In order to make the entire process hassle free
various Provincial Governments have undertaken significant initiatives to address this.
Some of the important initiatives include –
Computer aided Registration of Deeds (CARD), Andhra Pradesh - which has reduced
the time taken to registrar property from 17 days to 1 day
E-Dhara Bhulekh, Gujarat – This has reduced the time to register property from 3
days to 3 hours
SIR Ordinance (Special Investment Region), Gujarat – The ordinance provides for a
single window clearance system
• Global environment -
Seamless end to end duty free environment for electronics industry and trade. India
is a signatory to WTO IT Agreement. The Zero duty environment is available for 217
IT tariff lines which allow duty free imports. Government has put corresponding
zero duty measures for domestic industry as well.
• Promotion of manufacturing
The customs and Excise VAT policy promotes addition of local value add by creating
niches which incubates investments in growth segments such as mobile industry
17Ease of doing Business in India (7 of 9)
• Government support to generate demand in the ESDM Sector
Investment in broadband infrastructure & creation of digital India,
E -commerce, E-learning, smart cities, E-books are some of the
visionary steps currently been taken forward by the new
Government in centre. It is expected that these initiatives will
generate further demand in the ESDM sector
• Hand holding and support services to new industry
The provincial governments have created clusters and parks for
the electronic industry. These offer subsidized land and ready
made sheds with ready infrastructure to start manufacture.
Concessions and incentives in local taxes and fees. Access to high
speed modern transport by air and road.
18Strength of Indian IPR Regime - Ease of doing Business in India (8 of 9)
• Stable and well established from legal, judicial and administrative point of view
• Fully TRIPS compliant
• Covers Patents, Designs, Trademarks and Geographical Indications, copyright, plant variety
protection, semiconductor Integrated circuits Layout designs etc.
• India is a member of World Intellectual Property Organization (WIPO)
• India is also a member of the following important WIPO administered International Treaties
and Conventions related relating to IPRs:
Budapest Treaty on the International Recognition of the Deposit of Micro-organisms for
the Purposes of Patent Procedure
Paris Convention for the Protection of Industrial Property
Convention Establishing the World Intellectual Property Organization
Berne Convention for the Protection of Literary and Artistic Works
World Trade Organization (WTO)
Agreement on Trade Related Aspects of Intellectual Property (TRIPS)
Patent Cooperation Treaty
Protocol Relating to the Madrid Agreement Concerning the International Registration of
Marks- Madrid Protocol
Washington Treaty on Intellectual Property in respect of Integrated Circuits
Rome Convention for the Protection of Performers, Producers of Phonograms and
Broadcasting Organizations
Nairobi Treaty on the Protection of the Olympic Symbol
Convention for the Protection of Producers of Phonograms Against Unauthorized
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Duplication of Their PhonogramsEase of doing Business in India (9 of 9)
• Environmental Clearance
In order to make the environmental clearance process streamlined and hassle free
several provincial Governments have undertaken measures to expedite these
processes to promote business activities and to ensure faster clearances. Some of
the important initiatives taken in this regard include the following –
States like Rajasthan have introduced fast track processes called “Tatkal
systems” to issue environmental consents / clearances to Industries in a time
bound manner
In Rajasthan investments in Green category below 0.65 Euro Mn are exempted
from the Environmental clearance process
West Bengal Pollution Control Board is in the process of institutionalizing a
centre called “Environment Compliance Assistance Centre” to support
Industries with environment related clearances / regulations
• Labour Law Compliance
Compliance to various Labour Laws have been made simpler. Several Provincial
Governments like Rajasthan, Uttar Pradesh, West Bengal, Haryana etc. have
undertaken measures to streamline their processes for registration / renewal of
licenses required under various Labour laws.
20Thank You
For any further query please feel free to contact –
pankajm@ica-ind.org
bijeshk@ica-ind.org
ica@ica-ind.org
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