A couple of weeks back I attended the NASSCOM EMERGEOUT Conclave 2011 at Gurgaon, India. While the event featured several interesting sessions and panel discussions, the keynote by R Chandrashekhar interested me specifically. R Chandrashekhar is the Secretary in Ministry of Communications & IT of Government of India. It is always insightful to learn about government’s perception of the industry and the initiatives it is taking for the sector to foster in an organic manner. Since the theme of the conference was around emerging companies, it made all the more sense. Here are my thoughts on the Indian mobile and internet space based on the keynote session.
Indian economy has seen tremendous growth in IT and ITES sector, and much of it can be attributed to the emergence of domestic market. One would want it to mirror the amazing growth of the telecommunications sector in India. Deregulation and liberalization have been key drivers of the telecom market. With over 850 million mobile users, India has a high mobile penetration with near-saturation of the urban market. What ails the Indian ecosystem is the low broadband penetration with only 12.32 million users. Although, recently there has been initiatives for wireless broadband and 3G rollout, there is a long way forward. In a country with approximately 800 million rural population and 550 million people below poverty line, inclusive development is a huge challenge.
For mobile apps, this ecosystem provides both immense opportunities and some awkward challenges. The growing number of users, increasing sales of smartphones, recent 3G rollout, and evolving VAS users are positive signs. However, the steep VAS prices and hazy revenue sharing models present issues in plenty. Another bummer is that the Indian market is dominated by pre-paid subscribers and ultra low handsets.
So what are the development enablers that build the sector and the opportunities around it? While the government has to bring better policies into effect and start initiatives to build the ecosystem, the industry has to serve in product and service creation for existing market as well as work on creation of new markets. The Government of India has already commissioned new Telecom Policy 2011, IT Policy 2011, and National Policy on Electronics 2011 as well as have several initiatives in the works: National Broadband Plan, National e-Governance Plan, UID, Mobile Service Delivery Gateway, National Knowledge Network, e-Education, Skill Development Mission, and e-Health. The National Broadband Plan intends to extend the fibre-optic network to 2.5 lakh panchayats as well as provide last mile wireless broadband to 6 lakh villages. The 3 years plan is a Rs.30,000 crore project.