After having a strong foothold in the IT industry, India is taking giant strides in the Artificial Intelligence Sector, where a study by Finnish industrial digitalization developer ZYFRA found that India is among top 15 countries as far as research in this field is concerned.
The ZYFRA study found that India has leading position in the development of AI technologies for the Industrial Internet of Things, although the creation of a digital economy in the country is still a matter of distant future.
In the rankings, the US occupied the first position globally, immediately followed by China. India ranks 13th, just after Canada. The rankings were arrived at after examining the number and quality of scientific publications on the subject. The study, therefore, does not show the scale of application and use of the technology.
“It takes a lot of time from reaching new frontiers in the academic field to the successful practical application of these methods. For example, a very important result on the use of convolutional neural networks for semantic segmentation was published in 2015, and the work on implementing this method in steelmaking began only in 2017,” AI Business Director of ZYFRA Dmitriy Lukovkin explains.
Nevertheless, the country has already a huge scientific capacity. Industrial automation, big data and artificial intelligence can have a significant influence on the development of the world economy.
“We are looking forward to what is going to happen to us after the coming of Industry 4.0, and at the same time we fear it. More than a million jobs (USD 14.6 trillion in salaries) can be automated with the use of modern technologies. It enables us to discover new ways of using human potential and to get rid of the routine work, but at the same time, it can raise the level of social inequality, because many people will lose their jobs. That is especially important for India which has the second largest population in the world,” Lukovkin adds.
The first step
The massive program of digitalization of the Indian economy began in 2016 with the monetary reform (withdrawal of ₹500 and ₹1000 banknotes). During the reform, 86% of cash was withdrawn from the circulation, about half of that money was deposited on bank accounts by force (before the reform, cash payments accounted for 98% of the total). The government reduced the limit on cash transactions and canceled the commission for certain types of electronic payments, including state duties. The previously launched national biometric identification program (Aadhaar), which covered 1.15 billion people, was aimed to increase the efficiency of budget spending for social benefits and tax collection.
The effect of the reforms on the fiscal policy and on the digitalization of the economy was huge, the IMF admitted, noting that they had expected it would have negative impact on the tax basis and economic growth. This is exactly what happened: in 2016 and 2017, the Indian economy experienced hard times. At the end of the last fiscal year (April 1, 2017 – March 31, 2018), the country’s economy grew by 6.7% – the lowest growth rate since 2014. Throughout the year there was a decline in industrial production and a decrease in the volume of bank loans.
Due to the monetary reform, the gray business schemes lost their attraction for entrepreneurs, business began to come out of the shadow, but the total economic activity declined. Therefore, the tax collection rate remained at the same level.
Alongside the reforms, the government of India has launched two national programs to support and develop the economy – National Policy on Electronics and Make in India. The first one is aimed to support firms working in the field of electronics and technology, the second one focuses on increasing the local content of products of foreign companies. At present, their implementation helps the country to deal with the transition to a digital economy.
In 2018 the Indian economy managed to overcome the negative consequences of massive changes. India’s GDP in April-June 2018 grew by 8.2% compared to the same period of the last year. The growth rate turned out to be the highest since January-March 2016, when it reached 9.3%.
The share of manufacturing sector in India’s GDP has been growing significantly. For example, from April to June the industrial output increased by 13.5% compared to the same period of the last year. The most significant progress was achieved in the production of electrical equipment and electronic components.
“Boosting the use of digital methods by force can have many advantages, but the tempo of implementation of these initiatives carries significant risks. The acceleration of digitalization in India is objectively limited by undeveloped infrastructure in the real sector and the significant share of the foreign manufactures,” ZYRFA’s analytics note.
Right now India has become the fastest growing economy in the world, leaving China behind. However, it is worth noting that India’s growth rate had already outrun the People’s Republic earlier, but then it was left behind again. What stands in the way of the reforms carried out by the government of the country? How can India consolidate its leading position in terms of economic growth?
Reforms on paper
A key obstacle to successful reforms in India is the underdeveloped infrastructure, ZYFRA’s study emphasizes. Regulatory barriers are also very significant. Despite the comparative cheapness of digital services, the problem of “digital inequality” is far from being solved. This is reflected in statistics that only 86 out of 100 people use mobile communications and only 261 million people out of more than a billion inhabitants of India have access to a broadband internet connection.
In the global Networked Readiness Index by World economic summit India ranked 91st out of 139, the rate of use of payment terminals at sales points is one of the lowest in the world, and the lack of an effective regulatory framework does not allow to ensure the protection of personal data of digital services users.
Government policies, the regulatory framework and the level of economic development play a significant role in the developing of the country’s digital industry and its salability.
Potential for growth
According to ZYFRA, India still has a long way to go till it achieves its full potential as a digital economy and it would be better to implement reforms in a gradual way.
“The top priority should be stimulating infrastructure investments to reduce “digital inequality”, as well as creating and developing of real production capacities and improving the digital security in general,” said Lukovkin.
The success of the industrial development and the growth of manufacturing output have a direct effect on the growth of the country’s economy. The country can gain a leading position in exports and technology expertise through industrial development. Industrialization is a necessary step if you want to strengthen the country’s economic clout.
Depending on the scale and the complexity of their economies and on the level of technological development, countries set forth different strategic tasks. However, almost all developed countries, willing to preserve and strengthen their positions in the world, envisage their future only in terms of the digital economy of the new technological order.
Ganesh Kumar, Director of Spudweb Technologies, opines: “Although currently IIoT technologies are not widely used in India, they are attracting growing interest. The more Indian industrialists learn about the concept of Industry 4.0, the more they want to digitalize their production, using IIoT technology among other things.”
“In ZYFRA we also believe in India’s promising future in the digitalization of industry. And we have plans to enter the India’s market. In the nearest future we will present our solution for monitoring the connected equipment MDCplus, as well as a solution based on CV and DL Zyfra Eye,” Lukovkin adds.