Union Budget 2018-19: India Sets Hope on AI, 5G, Blockchain and Rural Internet

Feb. 1, 2018

In coordination with the NITI Aayog, the Indian government will launch severalnew schemes to build talentin the areas of robotics, artificial intelligence, big data, quantum computing, Internet of Things (IoT). The FM announced that the government will set up dedicated “centers of excellence” topush research endeavors in modern areas of technology. Further, these centers will also strive totrain individuals in an effort to boost employment, which in turn, can boost India’s revenue from technology outsourcing.

The inclusion of India’s rural demographic is vital for the country’s strive towards attaining the title of a developed nation. Hence, to boost the broadband and mobile connectivity across Indian villages, theFM allocated Rs. 10,000 crores. These funds will be utilized forsetting up five lakh Wi-Fi hotspotsand welcoming five crore (fifty million) rural citizens to the cyberspace. The allocated funds will also be used tobeef up the telecom networkand provide high-speed 4G mobile data andVoLTEservices in rural areas.

This seems to be the government’s formula for increasing rural India’s share in the growth and solidification of the Indian economy.

The fifth generation of mobile network has received a major push from regulators and equipment manufacturers globally and India does not seem to be far behind. To boost the adoption of 5G in India, the government will collaborate with a premier institution for R&D in technology – IIT Madras – andset up dedicated 5G centers. These centers will focus on the indigenous development of 5G equipment and invite Indian smartphone manufacturers to develop compatible components.

To incentivize Indian smartphone companies under the “Make in India” program and reduce dependency on foreign imports, the Finance Minister made a “calibrated departure” from traditional practices andannounced a hike in the customs duty on imported mobile devices. The customs duty onmobile phoneshas been increased from previous15 percent to 20 percent. This, however, shouldn’t stress most consumers as the 84.5 of the smartphones (by value; 81% by volume) are manufactured in India.

The import duty ongaming consoles and wearableslike smartwatches has beendoubled to 20 percent, whereas theaccessoriesand specific components including those used in the manufacture of TVs will now be subject to15 percent customsduty, as opposed to 7.5 to 10 percent earlier.

Prior to the budget, there were speculations aboutGSTon domestically manufacturer mobile phones being lowered from 12 percent to 5 percent to augment the adoption of smartphones. But, the budget announcement doesn’t bring any relief in that sense.

A major announcement from the budget session this year was a curb on transactions using cryptocurrencies. Although the Finance Minister said that the government willexamine the utility of distributed ledger systemsand blockchain technology for effective governance and development of smart cities,cryptocurrencies remain illegal tenders of payment. This is because these digital currencies are being used for illegitimate trade, black market activities, and terrorist funding.

Cryptocurrencies have been aputrid can of wormsfor financial institutions and governments across the world, and have earned major bans on public distribution, free use, and initial coin offerings. While the Indian government discouraged the use of digital currencies, we await a clear announcement on investment and trading in these assets.

The budget’s focus on applications backed by AI and blockchain willencourage the Indian start-up communityto develop not just digital “but further deep tech” services, believes Padmaja Ruparel, the president of Indian Angel Network.

5G is seen as a major enabler of machine-to-machine communications and development of futuristic IoT products and dedicated 5G centers in association with IIT Madras willhelp India become one of the leading forcesin technology, remarks Hemant Joshi of Deloitte. At the same time, more efficient services might helpreduce the financial troubles for telecom companies.

On the matter of customs duty hike, OnePlus India’s GM Vikas Aggarwal said that the company wholeheartedlywelcomes the proposed regulationssince all of the OnePlus smartphones are manufactured in India and the company is “exploring ways” toincrease its share of local manufacturingto prevent these regulations burning a hole in the end user’s pockets.

We will keep you updated on comments from more industry experts and liaisons for global brands in India

With a clear emphasis on rural economy and benefits to the middle-class, the proposals in this year’s Union Budget are likely to give amajor boostto domestic production of not just standard but prodigy technological products. Education sector and especially professional skill development will significantly benefit from these announcements.

While the increase in import duties can be tormenting to the average end-user, this transition period can be seen as the precursor to major tech giants like Apple assembling their products completely in India. This, in turn, will boost employment, of not just blue-collar roles, but also increase India’s participation in technology research, and boost the economy.