India's Technology Sector

2024 MAY 3

Mains > Economic Development > Indian Economy and issues > Innovation and New technologies

SYLLABUS

GS 3 >> Indian Economy >> Tech Sector

REFERENCE NEWS

The world is witnessing an unprecedented race for technological supremacy, with 5.44 billion people around the world using the internet as of April 2024, equivalent to 67.1% of the world's total population. India, with its rich scientific heritage and aspirations for a technology-driven economy, finds itself at a crossroads, facing both challenges and opportunities in this global technological race.

STATUS OF INDIA’S TECHNOLOGY SECTOR

Current Scenario

The Indian Technology Industry is expected to touch the USD 300-USD 350 billion revenue mark over the next 5 years (currently surpassed the USD 250 billion mark).

The Telecom industry in India is the second largest in the world with a subscriber base of 1.1 Billion as of February 2024.

India has also emerged as the second-largest manufacturer of mobile handsets in the world.

India has emerged as the world's third-largest startup ecosystem with over 1.25 lakh startups and 110 unicorns.

Sub Sectors Driving India’s Tech Growth:

IT and Business Process Outsourcing (BPO) Services: India’s services exports have been driving the overall export growth. IT and BPO services are the largest component and comprise over 60% of India’s service exports.

E-Commerce: India's e-commerce market, encompassing various sectors like online travel, food delivery, health-tech, and more, is rapidly growing. It is expected to reach USD 1 trillion by 2030, driven by factors such as a large consumer base, diverse demographics, cost-effective digital infrastructure, and a robust supply chain ecosystem.

FinTech and Digital Finance: India has one of the world’s fastest-growing financial technologies markets. Digital payments especially throughout Unified Payment Interface (UPI) are the primary driver of growth in this sector. According to Invest India, the Indian FinTech market is expected to grow to USD 150 billion by 2025. According to the Reserve Bank of India (RBI), total digital payments were recorded as USD 2.4 trillion in value in June 2023.

Edtech: The ed-tech sector has gained significant traction, especially during the Covid-19 pandemic, with companies offering online learning platforms, virtual classrooms, and innovative educational solutions. India is the second largest market for e-learning after the US with a market size of USD 6 billion, and is expected to grow to USD 10 billion by 2025.

Cleantech and Renewable Energy: India's focus on renewable energy sources like solar and wind has spurred growth in the cleantech subsector. Companies are developing innovative solutions in areas such as energy storage, smart grids, and energy efficiency technologies, contributing to the country's sustainability goals. India ranks 4th globally for total renewable power capacity additions. India has already achieved its target of 40% installed electric capacity from non-fossil fuels in November 2021 itself.

Space Sector: Indian Space Sector contributes 2%-3% of the global space economy. By 2030 India further aims to capture a larger share of close to 10% of the global economy. With the recent successful missions like Chandrayaan-3 and Aditya L1, India is leading the beacon of Space technology aiming for its own Space Station by 2025.

CHALLENGES FACED BY INDIA’S TECH SECTOR

Digital Inequality : India has a large and growing internet user base, but there's a significant gap between urban and rural areas. About 70% of India lacks proper Information and Communication Technology (ICT) access, with only 2.7% of the poorest households having computers and 8.9% internet access despite efforts like BharatNet.
Skill Deficit: While the Indian IT sector is known for IT services, there's a growing demand for specialized skills in areas like AI, cybersecurity, and data science. The education system currently lacks these specialized skills, leading to a shortage of skilled professionals.
R&D Deficit: India invests relatively little in research and development (0.64% of GDP) compared to developed nations, hindering innovation and domestic production of cutting-edge technologies.
Data threats: With the integration of more technology, cybersecurity threats are on the rise. Cyber frauds, online financial frauds, and deep fakes pose significant challenges, impacting decision-making processes. In 2022, CERT-In handled over 1.3 million security incidents reported across India. Events like AIIMS Delhi Ransomware Attack in 2023 highlights the sensitivity of the issue.
Lack of Comprehensive Regulation on AI: India currently does not have a single, comprehensive law for regulating AI. Various initiatives and guidelines exist, but they are not legally binding, creating uncertainty for businesses and raising concerns about potential risks.

GOVT.STEPS TAKEN UP

WAY FORWARD

Quantum Leap Alliances: India could forge strategic partnerships with leading nations and research institutions for joint research projects and collaborative efforts in emerging technologies like quantum computing.
AI-powered Rural Entrepreneurship Hubs: Setting up AI-powered kiosks in rural areas can provide training, resources, and mentorship to aspiring rural entrepreneurs, connecting them with online marketplaces and financing options.
Moonshot Innovation Labs: Establishing "Moonshot Labs" focusing on high-risk, high-reward research in areas like next-generation materials and brain-computer interfaces, modeled after DARPA in the US.
Techno-Skilling for Future: Fostering "TechnoSkills Alliances" between industry, academia, and government to design and implement curricula aligned with emerging technology trends. Introducing "Immersive Learning Environments" combining virtual and augmented reality for hands-on practical training.
Enhancing Cybersecurity: Implementing a more stringent Cyber Resilience Framework integrating proactive threat intelligence and advanced security measures across critical infrastructure. Promoting "Secure-by-Design" principles to integrate cybersecurity from the early stages of technology development.

PRACTICE QUESTION

Q: Assess the impact of India's technological advancements on economic growth, societal transformation, and global competitiveness. Also, propose strategic measures for sustainable tech-led development in India.(15M, 250W)

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