Call of the hour

The telecommunication explosion in India can make or break this country. It can make the country and set it to a double-digit growth path, which looks difficult though not impossible, if it can still build a strong globally competitive equipment manufacturing base within three to four years to support the demand explosion. It can break the national economy if the country fails to live up to the challenge and continues to depend on imports, a dangerous practice that the country has been following ever since the sector was liberalised in the mid-1990s and Modi-Telstra (now Vodafone after several changes of hands) chose Kolkata to launch the country’s first mobile telephone service on 31 July 1994, with West Bengal’s late Marxist chief minister Jyoti Basu having the privilege of making the first call. India’s import requirement, as outlined by Union Telecommunications and Law Minister Ravi Shankar Prasad, could reach a frighteningly staggering $400 billion in just six years time, by 2020.
 
Compare this with the 2013-2014 oil import bill of $168 billion, which accounted for 37 per cent of India’s total imports worth $415 billion, gold import of $55 billion and defence import of $7 billion.
Thus, by 2020 end, India’s electronic and telecom import at the current consumption and import pattern could overtake the crude oil import bill by 100 per cent. And, that could raise the trade gap from $140 billion, last year, to a whopping $300-billion mark. Unless the foreign direct investment (FDI), which reached $28 billion last year, jumps up to over $200 billion by 2020, the economy would most certainly face the prospect of a collapse under the burden of electronics and telecom imports and the repatriation of licence and royalty fees payable to foreign companies in addition to their profits. It is a high stake gamble which can be won if only the country goes in for massive domestic manufacturing and import substitution and, ideally, become a significant exporter of electronic and telecom wares – from micro-chips to finished products and services. A success in this gigantic effort will also lead to the creation of lakhs of new jobs, bringing about a miraculous revolution in the employment front as it happened in other Asian countries such as China, Japan, Taiwan and South Korea.

Prime Minister Narendra Modi and his Telecom Minister Ravi Shankar Prasad seem to be willing to take the risk and convert the current telecom explosion to the country’s advantage by applying a policy somersault – from the import-led expansion during the UPA regime to domestic manufacturing-led growth. However, much will depend on how foreign technology owners respond to India’s new policy to transfer a good part of their manufacturing activities to India. Reports suggest that all the top five global telecom equipment manufacturers in terms of sales – from No. 1 ranking Huawei of China to Ericsson of Sweden, Alcatel-Lucent of France, Finnish-German Nokia-Siemens Network (NSN) and China’s ZTE – are willing to invest in manufacturing in India, simply because of the current size of its market and the record-setting uptrend. The number of mobile telephone subscribers in India is poised to overtake even China’s, the current global leader, maybe by this year end itself.

Even Cisco Systems of the USA, the world’s No. 1 router and switch vendor, has recently said it would consider India for its next phase of manufacturing expansion. Juniper Network, also US-based, handset makers Samsung and LG of South Korea, Nokia of Finland (now Microsoft Mobile), Lenovo, TCL and Yulong – all from China – and Sony Corp of Japan are also said to be seriously considering large manufacturing investments in India. They are waiting for the Modi government’s first budget announcement, which is scheduled for 10 July, to take concrete decision in this regard.

Thanks to a kind of policy blindness on the part of the UPA-I and II governments, which left the telecom sector, the country’s highest growing industry, mostly under the charge of its southern coalition partner DMK, India became a paradise of foreign vendors. No one questioned the wisdom of the UPA chairperson and prime minister for the successive appointment of Dayanidhi Maran and Andimuthu Raja as the union telecom minister with independent charge despite their personal involvement, directly or indirectly, as cable and television service operators in a clear conflict of interest.

Kapil Sibal of Congress, who was given the charge of the ministry following Raja’s resignation and arrest in the 2G scam case, had neither any clue about the gravity of the situation arising out of the totally import-led growth of the industry for years, nor did he have time to assess it and act as he was busy in defending his government’s indefensible act in the 2G spectrum allocation case. For unknown reasons, Congress satraps such as – the UPA chairperson-cum-party president, former prime minister, finance minister, commerce minister and the party vice-president – chose to ignore the lopsided growth of the telecom sector at a huge cost and risk to the country’s economy and also to its security. Globally, telecommunications are treated as strategic sector and strongly controlled by government, especially in view of growing cyber spying and espionage at the behest of governments, militaries, militant groups, banks, corporates, high-profile research organisations in the fields of space, nuclear, missile production, genetics and drug molecules. Countries have been strongly protective and supportive of national companies in the telecom sector, if for nothing else, at least for security reasons. The UPA government had, on the contrary, chose to weaken the public sector BSNL and MTNL to promote the interest of private service producers which are mostly foreign controlled, directly or indirectly.

 The privatisation of telecom per se was not a wrong policy. However, its high growth in services sphere did not commensurate with the growth in domestic manufacturing of gears exposing the sector almost entirely to foreign suppliers and foreign control. Instead of encouraging corporate governance and management freedom to state enterprises, they were being systematically killed to widen the field for foreign firms to grab. It is difficult to believe that a country, which builds satellites and launchers, missiles, nuclear power stations; boasts some of the world’s sharpest brains in information technology and software production and has the world’s second largest mobile telephone subscribers, is incapable of manufacturing mobile handsets, routers and switches.

Fortunately, the present telecom minister has been quick to grasp the situation and put a strong domestic telecom gears manufacturing programme in place. Much will depend on his ability to make the programme actionable. Ten years have already been lost. Time is certainly not on Telecom Minister Ravi Shankar Prasad’s side. The programme will need a strong policy and on-field support from other concerned ministries, including finance, commerce, home and defence and, of course, state governments as the ambitious national optic fibre network (NOFN) project, already
facing time and cost overrun, gets fully rolled out to cover the country’s 2,50,000 village panchayats.