India @2047: Need to focus on AI systems that boost productivity, says IT secy

India needs to focus on artificial intelligence (AI) systems that enhance productivity, said S. Krishnan, secretary, ministry of electronics and information technology.

Speaking at Mint’s India @2047 event in the national capital on Friday, Krishnan said while AI often automates tasks, India needs to see if generative AI (Gen AI) is doing enough to enhance productivity and focus on those elements of emerging technology in different sectors.

AI systems could enhance productivity if supported by internet of things (IoT) devices and the data they generate. IoT devices refer to physical devices that can be connected with the internet and exchange data with other devices and systems.

Generative AI became the focus of public discourse after the launch of ChatGPT, which reduced content generation to a matter of seconds, in November 2022.

“That is what we need to be looking at. We need to be looking at mechanisms by which drug discovery is done faster. In the pharma sector, in the manufacturing sector and various other sectors, where this can be put to better use, to better outcomes. And, we train enough human resources in India that we actually become the AI, or emerging technology back office of the world,” said Krishnan, who took charge as secretary in September last year.

Krishnan said the Information Technology Agreement (ITA) by the World Trade Organization (WTO) has led to easy availability of cheap hardware, boosting the country’s IT sector.

The ITA led to the elimination of import duties on IT products, including computers, telecommunication equipment, semiconductors, semiconductor manufacturing and testing equipment to increase competition and trade in IT products. India joined the ITA in March 1997.

“It’s also possible that the availability of IT hardware and infrastructure of various kinds in the economy, the cheap availability of this, the more ubiquitous availability of a lot of that is what enabled the IT and ITeS sector to grow substantially,” said Krishnan.

“Today, that is about $255 billion in the country, about $200 billion worth of exports. And all of that grew from virtually nothing in the early 90s. And that was enabled simply because the hardware required to use, the hardware that people needed to use in order to generate, or in order to deliver the IT services, could be made available much more cheaply,” added Krishnan.

IT industry body Nasscom estimated the Indian outsourcing industry to grow at its slowest clip of 3.3% to $254 billion last year due to macroeconomic uncertainties and a pullback in client spending on technology.

Also Read: India @2047: Navigating roadblocks on the path to a $30 trillion economy

Resilient supply chains

“One part of the story is that India is one of the largest markets in the IT segment, and as the most populous country in the world, we need resilient supply chains. “We cannot be dependent entirely on supply chains which emanate outside this country, or which we have very little control in this very critical space,” said Krishnan.

He added that the volume of consumption of IT products was growing at a rapid pace such that electronics could become the largest export of the country.

“So clearly, we need to look at it from all of those perspectives and make sure that a significant portion of the electronics manufacturing value chain has got into this country, and we’ve seen measures which have been taken in the last decade or so to actually enable this,” said Krishnan, adding that product-linked incentive (PLI) measures on mobile phones were some of the measures take by the government to enable local manufacturing.

The PLI scheme on large-scale electronics manufacturing enables financial incentives in the range of 4-6% to manufacturers on incremental sales. At least 32 companies manufacturing mobile phones are approved under this scheme. Those companies can raise demands for incentives a year after they have met their production targets.

Despite exporting mobile phones, Krishnan said the overall value addition was low because companies would still import the parts that go into making the entire phone. Companies must look at increasing value if they were to remain competitive in the market, he added.

“If you want to preserve that competitive advantage of retaining the industry in the country, then it means that you need to have more value addition that takes place here, particularly in components, to continue to stay competitive. So for that reason, we need to sort of look at mechanisms by which this needs to be increased, and this element really needs to grow,” said Krishnan.

Krishnan also spoke about the importance of designing the product in India to generate economic value.

“The economic value really gets generated when you start designing things in India, when the product is Indian, and the intellectual property relating to the product is owned in India, and that’s when the real benefits and profits and economic value accumulates to the country. And that’s very important, because as that economic value accumulates, then the money gets reinvested in a variety of activities so that we can move forward,” said Krishnan.

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