India to take the next digital leap with 5G, 6G, SatCom, and Semiconductors – KPMG in India report

KPMG in India, in association with India Mobile Congress (IMC) 2023, has launched a report titled “Expanding tech horizons: Unlocking India’s digital potential“. This report serves as a guidepost for India’s digital transformation journey, offering insights that will shape our collective digital destiny.

KEY HIGHLIGHTS FROM THE REPORT: 

• India is today at the threshold of an extraordinary decade of technological advancement and innovation, well positioned to become a global leader in ICT sector. The sector is gaining recognition for not only its services but is also being recognised for its manufacturing prowess.  The ICT manufacturing sector stands at INR 3 trillion in FY22. Overall the sector employs 4 million people.
• India is readying itself for an epochal shift to make it a global digital powerhouse.  It is focussing on development and adoption of  cutting-edge technologies across 5G/6G, Satellite Communication (SatCom) and Semi-conductors.  KPMG estimates these three technologies to collectively add approximately USD 240 billion to the nation’s economy in the next five years and estimates it to contribute additional ~1.6 per cent to the national GDP by FY2028.
• India followed the world in 4G, marched with the world in 5G and now aims to lead the world in 6G
• Having demonstrated its prowess in mobile manufacturing, India needs to move up the value chain to enhance the domestic value addition in ICT manufacturing.  The country needs to transition from an assembly-only approach in electronics to a holistic, integrated, end-to-end manufacturing-led approach
• Through backward integration, Indian companies need to develop niches that will help the country move beyond assembly operations. Until such capabilities are built, the government should focus on getting lowest-cost component manufacturers to set up operations in India.
• Recognising the potential in the semiconductor space, the government is working aggressively to enable India to be at the centre stage of global semiconductor supply chain and is offering some of the most attractive incentives globally. In total, India is offering USD 30 billion in support for semiconductors and related industries.
• As the ICT sector, including smartphone manufacturing and electronics manufacturing, continues to grow, embracing circular economy principles becomes both an ecological necessity and a strategic decision.
• Implementation of the recently passed Digital Personal Data Protection Act (DPDPA) will boost consumer trust, cross-border trade, and lawful processing, and will thus enhance India’s economy and digital innovation.
• To create an inclusive, secure, and technologically advanced future for Digital India, it is imperative that governments, businesses, and academia continue to engage in conversations and explore collaborations.
• Important to invest in skill development for the workforce, with special focus on skill sets relating to 5G/ 6G, semiconductors and satellite communication. 

KEY RECOMMENDATIONS 

For India’s telecom future with 5G

• An effective partner ecosystem can help Communication Service Providers (CSPs) to better support their customers’ growing needs with more comprehensive solutions, utilising 5G and other advanced technologies.
• There is a need to formulate regulations and administrative processes in the context of digital connectivity infrastructure development (DCIP).
• The role of infrastructure providers must adapt to meet the evolving needs of 5G, encompassing elements like fiber capacity, optical transport, tower count, 5G repeaters, edge sites, small cells, and DAS for indoor and outdoor solutions.
• The deployment of 5G technology will require a highly skilled workforce capable of managing and maintaining the complex network infrastructure. 

For accelerating the 6G revolution

• India should continue investing in research and development activities to contribute to the advancement of 6G technology – to strengthen the global knowledge base and help shape the future of this technology.
• India should continue playing an active role in establishing global standards for 6G technology by leveraging its manufacturing capabilities to produce and export 6G equipment to other countries.
• 6G will require 100 per cent fiberisation of towers, however, given that the current state of fiberisation of towers stands at 38 per cent, the country will have to develop an expedited plan to meet the above targets.  

For SatCom

• Regulatory interventions, such as the Indian Space Policy, are encouraging private sector involvement in satellite technologies – specifically satellite broadband – that will redefine global space economics.
• The government must allocate additional funding to the space sector, encourage academic R&D initiatives, make it easier for people to access financing through grants, sovereign funds, and other sources in order to increase the private sector participation
• Space FDI norms should be liberalised
• There is a need to develop a skilled workforce through government initiatives or providing incentives to private players on education.
• There is a pressing need for a National Strategy for Space Technologies and Manufacturing to address the challenges of unpredictable timelines, high costs, and excessive spending on non-mission engineering.
• India must encourage space start-ups through space clusters.

For the semiconductor industry

• India’s strength in design engineering presents a unique advantage. The country should aim to create a synergy between its design prowess and manufacturing aspirations.  By maintaining a stronghold in design engineering, while venturing into manufacturing, India can establish a competitive edge that sets it apart in the global semiconductor landscape.
• While government has provided various fiscal incentives, there is a lot more that can be done to lure investments in India, one such thing can be incentivising cost technology transfer. In addition, the government could offer tax breaks and other incentives to international investors. Supportive and stable national taxation policies coupled with competitive state policies can also aid the long-term nurturing of the sector.
• World class, sustainable infrastructure, as required by a modern semiconductor fabrication plant be provided, with swift transportation, large quantity of pure water, uninterrupted electricity, communication, pollutant free environment etc.
• It takes a conglomerate of 150 companies for end-to-end manufacturing of a semiconductor, therefore there is a need to build an ecosystem like technology parks so that there is an easy access to raw materials and logistics

India’s population dividend and technological momentum give it a tremendous advantage and can help the country achieve its goal of becoming a dependable global digital leader.

Commenting on the report, Yezdi Nagporewalla, CEO, KPMG in India said, “The digital economy in India is on an exponential growth trajectory, powered by the continuous evolution of the information and communications technology (ICT) manufacturing sector. India’s forward-looking 6G vision document has positioned its digital prowess on the global technology forefront. Furthermore, India’s population dividend and technological progress give it a tremendous advantage and can help the country achieve its goal of becoming a dependable global digital leader with cooperative action on digital literacy, cybersecurity, new technologies, and export promotion.”

Akhilesh Tuteja, National Leader Clients and Markets and Technology, Media & Telecommunications (TMT) and Global Head – Cyber Security, KPMG in India said “Our study reveals that 5G technology is driving a transformative shift in both enterprise and consumer markets, as enterprises harness its lightning-fast, low-latency potential to optimize operations and introduce groundbreaking applications. In tandem, developments in 6G, India’s satellite communication sector as well as the semiconductor market in India, underscore India’s evolving and increasingly influential role in the global technology landscape. Strategic initiatives in attracting FDI and bolstering India’s domestic capabilities will further pave the way for a self-reliant digital future and become a technology-driven knowledge-based economy.”

P Ramakrishna, CEO, India Mobile Congress said, “The Information and Communication Technology (ICT) sector’s robust growth trajectory indicates, major industry players looking to address the needs of this customer base have also found the opportunity to be global suppliers, supported by the government’s thrust on conducive policy and enabling infrastructure. This report seeks to highlight and interpret the favourable headwinds capable of propelling India into the global limelight of technological development. I am confident that the narrative that this report has defined will pave the sector’s way forward.”