Context

The current coronavirus pandemic is continuing in extending its reach every country around the world and plunging the economic growth and intensifying the competition for foreign investment.

• The United Nations Conference on Trade and Development just released its latest World Investment Report and projected that FDI to developing Asian economies could drop by as much as 45%. 
• It is now clear that digital services have become critical to every 21st century economy more than ever.

Background

• Digital India was conceived in 2014 as a way to push the country’s digital transformation forward and empower citizens in the process.
• The government emphasized on developing infrastructure to enable affordable internet access for all and for every Indian to possess a digital identity.
• The Digital Identity project (Aadhaar Card) quickly transformed into what is now known as the India Stack, a set of interoperable software layers supporting digital payments, verified paper-less records, business and service transactions.
• The government envisioned that Jan Dhan Accounts would serve as low-cost and hassle-free bank accounts encouraging participation in the formal banking economy.

Importance of Digital Services around the Globe

• The digital services are helpful in filling gaps when national or global emergencies interrupt more traditional modes of commerce.
• The digital services enable access to and delivery of a wide array of products across multiple sectors, from healthcare to retail distribution to financial services.
• The investments in digital services continue to flow at record levels globally, outpacing investment in nearly every other sector.

Features National Digital Communications Policy 2018

• It seeks to unlock the transformative power of digital communications networks in order to achieve the goal of digital empowerment and improved well-being of the people of India.
• It aims to accomplish the following Strategic Objectives by 2022:
  • Provisioning of Broadband for All
  • Creating 4 Million additional jobs in the Digital Communications sector
  • Enhancing the contribution of the Digital Communications sector to 8% of India’s GDP from ~ 6% in 2017
  • Propelling India to the Top 50 Nations in the ICT Development Index of ITU from 134 in 2017
  • Enhancing India’s contribution to Global Value Chains
  • Ensuring Digital Sovereignty

Why India’s Digital Policy require Reformation?

• The bilateral relationship is an important factor in realising the potential for greater trade and investment in digital services.
• One of the biggest challenges faced by the Digital India programme is the slow progress of infrastructure development which needs to be addressed quickly.
• For Digital India to have a large scale impact on citizens across the nation, the digital divide needs to be addressed through last mile connectivity in remote rural areas.
• For digital technology to be accessible to every citizen, significant efforts are needed to customize apps and services to cater to local needs.

Ups and Downs of India’s Digital Transformation

• There is a possibility that it might be difficult to reconcile digital reform approaches with India’s strong interest in promoting data privacy, protecting its democratic institutions and encouraging Foreign Direct Investment (FDI) and India’s position as a global leader in information technology.
• The course of the India-U.S. trade relationship is uncertain, as signs of progress are continually interrupted by setbacks in the form of new restrictions.
• India and the U.S. are yet to conclude negotiation on a bilateral trade agreement that could address some digital services issues, and the U.S. just initiated a “Section 301” review of whether digital services taxes in 10 countries constitute “unfair” trade measures, including India’s equalisation levy.
• The duplicity and anonymity in bank accounts has been alleviated post demonetization and the traceability of funds, whether flowing from personal accounts or businesses, has allowed the Indian government to identify over 225,000 “shell companies”.
• Another key dimension of India digital transformation has been the increase in the adoption of technology and the digital means of payments for businesses of all sizes.

Digital Opportunity for India’s Trillion Dollar Economy

• India is an ideal destination for increased Foreign Direct Investment (FDI) flows in the digital services sector and offers undeniable potential for innovative homegrown start-ups not least because of its huge and increasingly digitised population.
• The Indian government policies will be key determinants in how quickly and at what level the Indian economy attracts new investment, fosters Indian innovation, and expands its exporting prowess.
• India is among the top three global economies in number of digital consumers with India being the second-largest internet subscriptions market in the world.
• India has the second-fastest rate of growth of digital adoption with India’s digital index score has moved from 17 in 2014 to 32 in 2017 (on a scale of 0 to 100), second-fastest rise after Indonesia.
• India’s digital divide is narrowing fast as less-affluent states leapfrog to catch up with more-affluent states.
• India can create up to $1 trillion of economic value from the digital economy in 2025, with half of the opportunity originating in new digital ecosystems that can spring up in diverse sectors of the economy.
• The 30 themes collectively represent some of the largest system-level digital opportunities and transformations possible, in areas where significant productivity gains, efficiencies, and citizen benefits can be achieved, and where initiatives already under way provide some basis for future growth.

Way Forward

• The Personal Data Protection Bill (PDPB), the e-commerce policy, and the Information Technology Act Amendments are three pending reform measures under consideration that are likely to affect India’s growth trajectory in digital services for years to come.
• The approaches in the regulatory reform efforts seem to emphasize a focus on protecting the domestic market for domestic companies and prioritising government access to data.
• As India resumes its efforts to put into place a new architecture for digital services and as it pursues opportunities to attract new investment, the government and stakeholders might consider the full range of implications for the long-term.
• India will be host of the G20 nations in 2022, and it appears clear that post-COVID-19 international cooperation and approaches to good governance in the digital sphere will be top-priority initiatives.

Source: The Hindu