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IT manufacturing: India’s economic growth engine

Technology has never been more central to every aspect of human existence than it is today. Who could have predicted a year and half ago the monumental challenges companies would face—supporting millions of remote workers through a warp-speed cloudification of infrastructure or creating entirely new digital-first customer experiences that resonate in a virtual world? The digitisation of everything has been markedly accelerated by Covid-19 and has spurred innovation and new models of working, learning, interacting, and care.

While lockdowns over the past year have had an impact, demand for PCs has been stronger than ever. IDC’s Worldwide Quarterly Personal Computing Device Tracker reported 3.1 million PC shipments to India in Q1 2021—the highest ever number of first-quarter shipments to the country. This can be attributed to “PC density” – people needing more than 1 PC per household, and work from home and e-learning continuing to drive demand. Gaming demand also remains strong as consumers continue to be homebound.

Beyond consumer devices, the proliferation of the hybrid cloud is delivering new levels of efficiency and scale for businesses. And the growth of the cloud is leading to the democratization of high-performance computing, opening new frontiers of knowledge. We are seeing Artificial Intelligence (A.I.) and Machine Learning (ML) increasingly infused into every application, from the edge to the network to the cloud, to create dramatically better insights. The rapid adoption of 5G, which is fuelling new use cases that demand lower latencies and higher bandwidth are in turn driving computing at the edge closer to where the data is created and consumed. The confluence of these trends is leading to the biggest and fastest build out of computing in human history.

Building an IT manufacturing ecosystem in India
While the digitisation of everything—accelerated by Covid-19—has resulted in an unprecedented demand for semiconductors, it has also led to stressed supply chains across industries. Global dependence on a few countries for the supply of substrates, components and other essential materials has also made apparent that complete offshoring of manufacturing makes supply chains more fragile, especially in a geopolitically tense environment.

As several industries, from automobiles to electronic devices, depend on semiconductors for their end products, this abrupt chip shortage has constrained their capacities and prompted a scramble to find quick solutions. Governments are taking serious note and want to take measures that reduce these disruptions. But the semiconductor industry is a long-term game with high barriers to entry and real solutions will take time and strategic thinking to implement.

Taiwan, which is a poster child of the great semiconductor and related ecosystem success in the world today, decided to invest in its semiconductor ambitions in the 1970s. Today, it has a comprehensive ICT ecosystem beyond foundries—across ODM, OEM, assembly and testing, and industry 4.0—ensuring an integrated supply chain and local talent pool to accelerate innovation and timely and quality production across the board.

The ecosystem around semiconductors and devices is diverse. While we have phones and personal computers on the consumer side of things, opportunities also lie in the industrial Internet of things (IIoT), edge innovation and human-centric A.I.—all connected to computers. The Indian government’s Production-Linked Incentive (PLI) Scheme that encompasses electronic and technology products along with sectors like battery manufacturing, automobiles and auto components, and telecom and networking products is a step in the right direction.

Supportive policies and legal framework, infrastructure, logistics, communications, connectivity, public-private collaboration, and skilled labour are all key to making India an even more attractive manufacturing destination. There is a need for swifter, predictable and cost-effective import and export mechanisms, strong IP law, and uninterrupted cross border data flows to ease product development, especially in IoT and related spaces. The goal is to turn India into a booming destination to build IT sector products and solutions spanning PCs, servers, cloud, IoT, network infrastructure, and beyond.

Accelerating innovation
The IT manufacturing journey from research to market depends entirely on driving an industry-led focus with strategic alignment across government initiatives that will help boost innovation, productivity, and competitiveness. A digitized self-reliant supply chain and ability to predict any disruptions in production are essential to maintaining quality, time, and cost standards. Investments in infrastructure development and a strong freight assistance mechanism are also essential to this process.

India must also focus on building skilled manpower to be considered a favourable destination for players large and small. As the approach to tech manufacturing changes and becomes more competitive globally, skill gaps will need to be addressed in a dynamic fashion.
The Indian economy is at a crucial juncture right now. The government has rightly set its eyes on creating an ecosystem that enables local companies to meet domestic as well as global demand. Surging consumer demand aligned with a strong IT manufacturing ecosystem will not just boost India’s development but will be instrumental in helping achieve its mission to become a $5 trillion economy. A nuanced approach with suitable investment strategies towards harnessing demand, building talent, and creating the adequate infrastructure is required to build a globally competitive IT manufacturing ecosystem in India.

I believe there are truly exciting times ahead for the industry. We can harness the power of our differences and work together to solve some of the country’s and the world’s biggest challenges, build on an exciting software and hardware technology foundation, grow new partnerships, and accelerate innovation.

Authored by Prakash Mallya, VP & MD – Sales, Marketing & Communications Group, Intel India and published first in Fortune India

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