India’s digital economy is projected to reach US$ 1 trillion by 2022, but factors like slow movement on 5G infrastructure, poor financial condition of telcos and policy ambiguities could stall the country’s march to the next league.
Internet of Things is regarded as a critical component of the Government of India’s vision for Digital India. The government has earmarked a budget of Rs 7,000 crore for development of 100 smart cities where IoT will help improve factors like healthcare, transportation and security and also conserve water and power. IoT is expected to increase investment and infrastructure and create jobs.
A report by Assocham and Ernst & Young (EY) projects that the internet of things (IoT) market has the potential to reach 2 billion connections and a revenue of US$ 11.1 billion of revenue by 2022. Also, India’s digital economy could reach a size of US$ 1 trillion by that year with the right combination of accelerators including regulatory framework, government incentives and industry collaboration according to Mr P Balaji, Chairman, Assocham’s National Council on Telecommunications & Convergence.
The Assocham-EY report has also recommended early rationalisation of licence fees, taxes and levies for promotion of investments. Moreover, the debt-ridden telecom sector needs to be revived to be able to “to harness the emerging technologies”.
Another issue flagged by the report is India’s laggard status in 5G adoption behind countries like US, South Korea and Japan. The report cautions that the optical fiberisation of telecom towers has to be done quickly to support 5G. As on date, the share of telecom towers with optical fibre is 25% in India compared to 65-80% for US, South Korea and China. A minimum of 60% fiberisation is necessary for 5G ecosystem support.
In fact, India is not well equipped to even address the current trend in data usage. To cater to the growing data demand in India, at least 1 lakh more telecom towers are needed, especially with new technologies coming up that will increase data consumption.
A major portion of fixed broadband connections by 2022 will be high-speed fibre-to-home services. But telcos will still counter right of way (RoW) challenges due to policy ambiguities that will be a speed bump in plans to create nextgen digital infrastructure.
Finally, the report has proposed that telecom be given the status of essential infrastructure that will help in improving ease of doing business in the sector.