Smart cards have reduced our dependence on paper based applications, making information available more easily. In every segment, the demand for smart cards is increasing. As per market reports, the annual shipment of smart cards for the year 2009 was more than 250 million units, of which the majority was for subscriber identity module (SIM) cards for GSM mobile phones.
By Richa Chakravarty
The changing global scenario is one of the key drivers behind the rising demand for smart cards. With the Indian government undertaking various programmes like the Rashtriya Swasthya Bima Yojana (RSBY), the National Rural Employment Guarantee Act (NREGA) and the Public Distribution System (PDS), there is sure to be an upsurge in the adoption of smart card technology in India.
“Under the programme for below poverty line (BPL) families, the government has already issued close to 180 million smart cards and there is a potential for over 300 million cards still to be issued/reissued to these families. As part of this programme, BPL families can enjoy cashless medical treatment of up to Rs 30,000 per annum,” says Anil Agarwal, director, ID Smart Cards Creations Pvt Ltd. The company is not only into designing, developing and producing smart cards but also manufactures smart card machines.
The demand within this segment is growing tremendously as smart cards are gaining popularity in many other applications. According to Deepak Agarwal, senior manager, technical marketing, Secure Micros, STMicroelectronics, “telecom market in India is already booming and with the 3G spectrum opening up, there will be yet more expansion as the requirement of SIM cards will increase. Further, the penetration of mobile phones in rural areas will result in growth in the telecom sector. We foresee a higher demand for smart cards in this segment.”
Banking is another sector where the demand for smart cards is rising as smart cards are slowly changing over from being made of magnetic strip cards to being chip based, or a combination of the two. “These chips, which are based on smart card technology, are Europay Mastercard Visa (EMV) certified and offer a high level of security for any banking transaction,” says Deepak Agarwal. This vertical is also expected to witness a growth in smart card adoption in the years to come.
Similarly, ID verification is another field that will experience a growth in the demand for smart cards. With the aim to secure and safeguard identities against theft, this vertical will receive special attention. Also, the Delhi Metro Railway Corporation (DMRC) has been using the technology extensively. Siepmann’s Card Systems Pvt Ltd won the DMRC tenders for the fourth in 2010 consecutive time in 2010. The company is one of India’s leading smart card manufacturers and has been in the business for close to a decade now. “There has been an enormous increase in the use of DMRC smart cards over the last two years. The demand rose from 0.45 million to 1.32 million from the first year of implementing the technology, growing to 2.1 million. There has been almost a five fold increase in demand within a span of just three years,” says P Viswanatha Bhas, managing director, Siepmann’s Card Systems Pvt Ltd.
Major application areas for these smart cards are automatic fare collection (AFC) at tolls, mobile communications, identification, banking and financial usage, retail, healthcare, etc. As per the government’s guidelines, all states and union territories will have to compulsorily start issuing smart cards for all driving licences (DL) and registration certificates (RC). Upgrading DL and RC books from paper to smart cards is going to result in high volumes. Many states such as Gujarat and Madhya Pradesh have already adopted it and others are yet to follow. “Till now, about eight states have started issuing DL/RC on smart cards. As per my understanding, the minimum number of smart cards to be issued in each state would be not less than 10 million on an average. Hence, the requirement for smart cards in this sector is extremely high,” opines Anil Agarwal.
Besides, the security requirements in the country are expected to result in government initiatives for smart card based national ID cards and e-passports. The unique identity (UID) is another application area which might become the backbone for all such government initiatives.
Huge potential for private players
Use of smart cards will be seen in almost all verticals in the years to come. Though India is still in the nascent stage of smart card adoption, it is witnessing tremendous growth. Considering the potential, the Smart Cards Manufacturers Association was recently set up. This is a platform where members can inform, educate, advise and interact with private and government bodies about the technology. It works towards ensuring quality products and protects the manufacturers’ interests.
“Looking at the current manufacturing scenario, 50 per cent of the smart cards is still being imported. But with the number of players setting up new facilities in India, we expect that more than 70-80 per cent of manufacturing will be done locally. The private sector is yet to contribute significantly to the growth of smart cards in India. However, the government has played a vital role in successfully building up the smart card industry in India. We expect quite a few more projects to be announced by the government, which will be mainly for the welfare of citizens—to ensure that the benefits being announced reach the correctly identified and deserving beneficiaries,” says Anil Agarwal.
Opines Bhas, “Indian manufacturers do have the capacity to meet current as well as future demand. We must aim to work towards curbing or banning the import of smart cards as it affects the growth of local manufacturers. There should be strict import duties levied so that Indian companies procure smart cards from local manufacturers and, hence, promote the smart card industry.”
The trends in the smart card market can be grouped into three major areas—technology, functionality and security. Today, awareness of the latest technology has increased, which is another key driver behind the demand for smart cards. Due to this, the level of technological support and development has also increased, making it possible to implement smart card based solutions.
“Growth in this sector indicates that trends of fast contact less smart cards will grow, supporting interfaces such as universal serial bus (USB), wireless USB, etc. Quick adaptation of the technology other than smart card, such as near field communication (NFC) and reader NFC, trusted platform module (TPM) to add hardware security in computers, secured USB token for secured Internet transaction, and machine to machine (M2M) communication for various industrial applications, are the latest developments in this area,” says Deepak Agarwal.
E-purse, which is a new segment, is being explored and if the technology succeeds, it has huge potential. E-purses are issued by banks to their account holders. Money is loaded into the e-purse by a transfer from the cardholder’s bank account at a load device. The cardholder’s account is immediately debited, and the value loaded into the e-purse is transferred to a float account at the bank or the systems operator. This transaction is online and PIN protected, just like a cash withdrawal from an ATM. The e-purse cardholder goes to a point of sale location where the e-purse is accepted. During the e-payment, the value is transferred from the e-purse to the terminal, and the value remaining in the e-purse is adjusted. This is an offline transaction and the technology is yet to be widely adopted.
According to Deepak Agarwal, the application of these smart cards will drive higher memory sizes.
It has been observed that the recent tenders are on 64K instead of 32K electrically erasable programmable read only memory (EEPROM) for the government projects. “Today, semiconductor suppliers are designing the chip using standard secured ARM cores instead of proprietary cores, which will result in standard operating system (OS) offerings from third parties. Other than this, there have been improvements in performance and power efficiency as we shift to 90 nm and beyond,” he says.
Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine