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Why Digital India may pip Make in India

columns Updated: Sep 27, 2015 10:52 IST
N Madhavan
N Madhavan
Hindustan Times
Make in India

Prime Minister Narendra Modi with Apple CEO Tim Cook .(Twitter: @PMOIndia)

Last week marked the completion of a year since Prime Minister Narendra Modi launched his ambitious “Make in India” initiative to boost manufacturing in India -- and by most accounts, its success so far is at best mixed.

Everything from land acquisition to infrastructure and global economic conditions seem to suggest that it won’t be easy to sustain the momentum. China recently devalued its yuan -- which makes it more competitive -- and is sitting on huge capacities in manufacturing.

On the other hand, as Modi flew into the Silicon Valley at the weekend after meeting Fortune 500 CEOs on the East Coast of the US, it was clear that the rockstar reception he got in California-- and the speech he made -- showed that his other big gambits, “Digital India” and its accompaniment, “Startup India,” are on stronger ground.

Read: What top tech CEOs said about India as they met PM Modi

Here’s why.

In manufacturing, China jumped ahead with all the right moves in the 1980s, and India is a late starter. On the other hand, India’s IT revolution started by software service companies and government establishments such as the Centre for Development of Advanced Computing and Centre for the Development of Telematics in the same period gave a special digital advantage for India.

It is a happy coincidence that high-tech CEOs such as Microsoft’s Satya Nadella and Google’s Sundar Pichai are Indians. But more important, fields such as cloud computing, e-governance, the Internet of Things (in which even machines will have Internet addresses and talk to each other) are emerging areas for innovation. The smartphone boom in India is giving natural traction to social media and knowledge-driven services.

Modi also announced “Design in India” as part of his speech.

The significance of all this is that it is easier for India to push ahead and create millions of jobs in emerging areas where it can lead the competition than play catch-up in old-world manufacturing based mostly on wages -- and involving higher costs.

The strange blessing is that Digital India can create jobs that in turn force manufacturers to look to India -- as a market where it will manufacture for local consumption more than an export hub. This is already happening with mobile phones, and this is where the action is more likely to be.

One only has to look at the mushrooming venture funds and startups in India that stand in stark contrast to smokestack industries beseeching the Reserve Bank for interest rate cuts to get the drift: Digital India will pip Make In India.

In Modi’s favoured Facebook idiom, the Digital India initiative is one fit for a “Like” while “Make in India” is more of a “Poke”.