The Electronics and Computer Software Export Promotion Council (ESC) was set up to promote exports of electronics and software from India. But, for a long time, as a reflection of the Indian tech ecosystem, its activities too were primarily focused on software. However, a lot has changed recently, and to gain insights into its new initiatives and focus, Rahul Chopra, editorial director, EFY, spoke to Sandeep Narula, chairman of ESC. Here are excerpts from the conversation.
Q. What is your vision for the role of ESC? What is the legacy you would like to build here, while at the helm of this prestigious trade body?
A. Right from its inception, ESC has been playing a very vital role in the growth of exports while representing two important pillars — software and electronics hardware. Technology plays an important supporting role, as it has a greater interplay in both segments. We are now in the process of strengthening the members and other stakeholders with the aim of utilising quantum digital technologies and concepts like artificial intelligence, the Internet of Things (IoT), 5G, robotics, 3D, cloud, etc, to make solid forays into the digital world. That, I believe, is the logical extension of our activities and not a departure from the past.
Primarily, I will be aiming to align the organisation and its members with the dream of our Honourable Prime Minister of not only creating a self-sufficient Bharat but also developing an export-oriented ICT sector. The thrust will be on making India the next global factory in the most sustainable way possible. ESC’s 2500 members have been tirelessly working towards building India’s software and IT industry from scratch to the mammoth industry it is today. As we are moving rapidly towards digitalisation and AI, electronics hardware and sensors are becoming more and more necessary. At ESC, we plan to support our startups and MSMEs by setting up incubation centres in markets like North America and Europe (in addition to India), helping them work in a highly skilled and creative atmosphere. This will enable them to not only develop world class products but also capture those markets.
Q. To a newbie, how would you explain the role and importance of ESC?
A. ESC represents about 2500 member companies spread across the country, which includes a mix of large companies like TCS, Infosys and Wipro, apart from various mid-sized and small companies that are growing fast. We have realised that we need to do handholding and extend a lot of support to micro, small and medium enterprises and startups because they face various limitations when approaching the world market. So we are evolving programmes and strategies to promote their products, solutions and services as well as help them in exporting, whether they are in the software or electronics hardware domain.
Being an autonomous organisation having organic linkages with both the Ministry of Commerce and Ministry of Electronics and Information Technology (MeITY), we have a distinct advantage and the bandwidth to ensure more value added services for the stakeholders, be it concessional participation in important trade fairs across the world or taking up the core issues that affect their exports. I would like to highlight another key area of support that we provide through our three reverse buyer-seller meets, namely, Indiasoft, India IOT Expo and INDE, where we host buyers from the world and enable very focused B2B meetings between exhibitor members and foreign buyers.
Q. With the growing importance of electronics and IoT, how do you see the role or responsibility of ESC changing?
A. As the world is moving towards electronics and IoT, ESC is now focusing on manufacturing and development in these domains. We organised our first ever virtual expo, which was completely focused on IoT solutions, in February this year. Owing to the interest generated by it, we have decided to make it a permanent event like our annual Indiasoft, which has completed 21 editions.
When ESC was set up, India’s software exports were worth just a few million dollars, the majority of which were to a single destination — the US. Now India’s exports of software and IT-enabled services are about to breach the US$ 150 billion mark to over 150 destinations. As a partner in progress, we have handsomely contributed to that phenomenal growth in exports. I am sure that in the coming years, India will have a similar performance profile when it comes to Internet products, electronic devices, IoT, and more.
“No other country in the world except India can compare with China in terms of cheap and talented human resources, land banks, and many other factors.”
Q.What are the key initiatives taken up at ESC during your tenure that you are proud of? What else is on your TO DO list?
A. Let me, first of all, tell you that at ESC we take decisions democratically. We have an executive committee consisting of stakeholders in software, electronics, hardware and other technology focused domains. If you ask me specifically what my contribution is, with all humility I’d say that I will be introducing initiatives related to IoT, semiconductors and other cutting-edge digital technologies, for I believe the future of India’s digital surge very much depends on these domains. I will continue to be a votary of these domains wherever I am.
Q. While the Indian government has been taking many steps to accelerate investments in electronics manufacturing and deployment of smart/IoT solutions, is there anything that you foresee it could focus more on, which could be a game-changer — for example, supporting MSMEs?
A. Undeniably, the government’s focus on digital domains is unprecedented with schemes like Digital India, Atmanirbhar Bharat, Startup India, Skill India and the recent production linked incentives (PLI) for the electronics sector. One area I would like to underline, which the government needs to focus more on, is promoting components manufacturing and developing the right ecosystem for electronics manufacturing. With the government’s support and encouragement, India could become a net exporter in a relatively very short time frame from a net importer in the mobile and electronics manufacturing industry. Additionally, India could increase its forex reserves if we become self-sufficient in the manufacturing of components used in mobile telephones, TVs, set-top boxes, washing machines, air conditioners, and other electronic items.
Q. I understand that ESC is working on a study on the importance of a fab in India. Can you shed some light on the report and what are its findings?
A. ESC has already come out with a study on fabs in India, which has been undertaken by some of the smartest brains in the country at IIM, Bangalore. The report presents a blueprint of how fab technology can be deepened in India, the infrastructural and organisational structure needed to do so, and the support system to be extended to the private sector. This includes MSMEs that can become active stakeholders in the fab revolution, which can transform India’s digital economy.
Q. Due to the current pandemic, a lot of trade dynamics have changed for India’s electronics and IoT sector. How do you see it affecting India? Can you share some opportunities and/or challenges that have sprung up?
A. It is now a known fact that the digital economy has been insulated from the onslaught of the pandemic. There is empirical evidence that the relative performance of the sector was much better this year as compared to the previous years. The managing director of WTO has asserted on record that the year 2020 was not as bad as it was thought initially. While the first part of 2020 registered a severe contraction in world trade, the second part bucked the trend and contracted only by 9% or so as against a one-third decline predicted earlier. Also, WTO says that the year 2021 will end with a growth of about 10% globally, which by all standards is a welcoming growth pathway.
Undeniably, two clear themes have emerged. The digital economy will grow, and its growth will be at the same pace or even higher than pre-Covid levels. Second, growth dynamics in the digital sector will further induce growth in the brick-and-mortar sector as a whole.
Q. How do see you India’s chances of emerging as a China-plus-one destination? Can we be considered as ready as other options in South East Asia?
A. I must say that India is the first choice among the world to be chosen as ‘plus one’ after the pandemic and there are facts to support that. Look at the quantum of investments in the ICT sector flowing or proposed to flow into the country. From Amazon to Apple and Dell, most of the digital giants are now focusing on India in an unprecedented manner. Some of them are expanding their operations including setting up electronics manufacturing units, research centres, and incubators.
No other country in the world except India can compare with China in terms of cheap and talented human resources, land banks, and many other factors. We want the world to rely on India for electronics and IT exports, which will eventually decrease their reliance on China.
Q. As a successful entrepreneur in India’s electronics and IoT ecosystem, how do you see the current scenario vis-à-vis when you started? Has it become easier or more difficult to do business?
A. Since the past few years, the Indian government has been working effectively to improve the ease of doing business in India. That trend will continue, since there is total commitment from the top. That is one of the pet projects of Prime Minister Narendra Modi. About the question on IoT, being a stakeholder in that sector, I can vouch without any reservation that the sector will grow phenomenally in the coming years. India will have an edge over China in this sector in a short span of time, and eventually take up a significant position in the world’s supply chain.
Q. There are reports that many MNCs could not export their products from India because of excessive demand in the country (Xiaomi has just reiterated this in March 2021). Do you view this as good news or bad?
A. There are reports about constraints on export surplus. I feel this is both good and bad news. The good news is that our domestic demand is growing and the bad news is that we cannot capitalise on the global growth in demand by creating an exportable surplus. The solution lies in increasing the production capacities of both the end products and components. I am sure the PLI scheme will motivate more manufacturers of electronic products to up their production, since they can avail more incentives then.
Q. Last, but not the least, are there any minimum qualifications for a firm to become a member of the ESC?
A. There is a very basic qualification of becoming a member, like having a legal entity with GST and IEC code. The application form is available on the website, and the entire membership process can be completed online.