India has made progress in various components of the 5G ecosystem

The Voice&Data Telecom Person of the Year 2023 and the Chairman of the International Financial Services Centres Authority (IFSCA) K Rajaraman, shared his views on how the telecom sector has evolved during the last couple of years, including achievements in 5G, initiatives in 6G, Satcom, and local telecom equipment manufacturing, and the role of IFSCA in funding innovation. He also touched upon challenges encountered during his tenure at the DoT and some of the toughest decisions he had to make during his tenure as the Telecom Secretary. Excerpts from his interaction with Shubhendu Parth:

The telecom sector has become a cornerstone of the modern economy. How would you characterise this transformation, and do you have concerns about the over-reliance on digital technology?

Technology, particularly in the digital realm, has revolutionised our lives, offering convenience and cost-effectiveness to individuals, small businesses, and large corporations alike. The widespread adoption of digital technologies globally attests to its myriad benefits. While issues such as cybersecurity, fraud, and environmental impacts need addressing, the advantages of technology are undeniable.

During the COVID-19 pandemic, for instance, India swiftly dispersed nearly Rs 60,000 crore to over 40 crore accounts, illustrating the efficiency of digital infrastructure. Contrastingly, countries like the US were still issuing physical checks. India’s success in this endeavour was facilitated by its robust digital public infrastructure and the JAM trinity—the Jan Dhan Accounts, Aadhar, and Mobile penetration—which connected even the most marginalised to formal financial systems. This integration has minimised leakages in welfare schemes, enhancing the efficacy of social security systems.

The exponential growth of the digital economy is evident in projections by the Reserve Bank of India (RBI), forecasting a rise from 8.5% to 20% of gross value added by 2030. This indicates a significant economic shift, with an estimated USD 2 trillion contribution to a likely USD 10 trillion economy. The RBI study also highlights the economic multiplier effect of digital-dependent sectors, emphasising their role in driving economic efficiency, particularly in developing countries.

The exponential growth of the digital economy is evident in projections by the Reserve Bank of India (RBI), forecasting a rise from 8.5% to 20% of gross value added by 2030.

You are credited with creating the roadmap for 5G services in India, including spectrum auctions. How did you manage the pressure to deploy cutting-edge technology, considering India’s delayed entry compared to other nations?

The delay in implementing 5G in India primarily stemmed from spectrum availability issues. Previous administrations had made efforts in collaboration with various ministries to address this challenge. Thanks to these efforts and the government’s decisive actions, the spectrum for 5G was released from various other uses, with cooperation from other ministries. This paved the way for the commencement of the auction process in 2021, which saw significant demand, resulting in the government raising Rs 1.5 lakh crores during the spectrum sale in July 2022.

However, the spectrum auction alone was not the sole focus. Equally important were the enabling conditions necessary for effective 5G deployment. For instance, the presence of a robust optic fibre backbone or fibreisatiion across the country was crucial for high-quality 5G service delivery. This fibre network had been developed over several years, facilitating the connection of base stations to fibre for optimal performance.

It is worth noting that 5G is not solely geared towards individual users but holds immense potential for enterprise applications in both the public and private sectors. Recognising this, we established a high-level inter-ministerial committee to showcase various 5G use cases to different government ministries. These use cases demonstrated the technology’s potential for enhancing economic efficiency across sectors such as logistics, mining, and manufacturing. Thanks to the cooperation of various ministries and state governments, pilot projects to establish 5G use cases are now underway in various locations.

What specific challenges did you encounter during your tenure at the DoT, particularly in formulating changes to foster an environment conducive to 5G development?

A crucial concern that consistently loomed was making available local technology, particularly driven by geopolitical considerations and national security imperatives. Balancing the need for technological advancement with safeguarding national interests posed a significant challenge. We had to ensure that the telecom equipment selected met stringent security standards and was “secure by design,” both from domestic and international suppliers. Collaborating with reliable technology providers, both within and outside India, was essential in addressing this challenge, and I’m pleased to note that it yielded positive outcomes.

The collaborative efforts between the government, private, and public organisations have laid a strong foundation for India’s indigenous 5G technology.

Unlike previous generations of telecom technology where India lagged in local development, the scenario with 5G was markedly different. Presently, numerous Indian companies, including startups and established players, are actively involved in developing 5G technology products. For instance, Reliance has ventured into developing its own 5G technology following its acquisition of a US-based technology supplier, Radisys. Similarly, TCS is engaged in 5G development initiatives. Noteworthy startups such as Signal Chip have made significant strides in developing 5G chipsets, while companies like Tejas Networks are focusing on radio access network solutions for 5G.

Moreover, with the launch of its 5G NSA, India has demonstrated progress in various components of the 5G ecosystem. Although these advancements require further refinement to meet global standards, the collaborative efforts between the government, private enterprises, and public institutions have laid a strong foundation for India’s indigenous 5G technology. It is a source of pride that these endeavours are poised to mature and contribute significantly to India’s technological landscape in the coming years.

Your contributions to the telecom equipment manufacturing sector have been notable. However, India still has a distance to cover to emerge as a significant global supplier. Where does the country stand at present?

The telecom sector is heavily reliant on technology, which, in turn, hinges on patents. For India to carve a niche in the global market, we must bolster our technological prowess, particularly in patent filing and standardisation processes led by organisations like 3GPP, IEEE, and others. Traditionally dominated by a select few global players, entering this domain requires India to fortify its patent portfolio, a goal that is achievable with time and concerted efforts.

Encouragingly, India’s telecom equipment manufacturing sector has made strides, with over Rs 10,000 crore worth of equipment exported globally in recent years. However, to address challenges such as high manufacturing costs and low volumes, the government introduced the Production Linked Incentive (PLI) scheme in October 2021. Additionally, the Design Linked Incentive (DLI) scheme incentivises companies with their patents and designs, nurturing indigenous innovation.

Efforts are underway to incentivise the “reverse flipping” of Indian startups registered overseas, based on the Padmanabhan Committee recommendations.

On the procurement front, government directives mandating the purchase of local equipment, like the directive to BSNL to buy 4G equipment from the local consortium, underscore India’s commitment to fostering domestic manufacturing capabilities. Notably, the development and deployment of indigenous telecom technology, exemplified by the collaboration between C-DOT, TCS, and Tejas Networks, signifies a significant leap forward. Although India might have entered the race later than some, these efforts paved the way for enhanced competitiveness in the 5G era.

Moreover, active participation in standardisation bodies like ITU and ETSI, supported by partnerships with esteemed institutions like IITs, underscores India’s commitment to establishing a robust standards ecosystem. It is heartening to see private companies like Tejas Networks and TCS establishing dedicated standards verticals within their organisations, recognising the importance of standards compliance in global competitiveness.

Considering your emphasis on supporting the startup ecosystem, does IFSCA have a role in enabling startups to raise capital from the global market?

Let me add a point to my earlier answer to begin with. The government is coming very strongly in support of R&D in the private sector with the launch of two instruments. First, the Telecom Technology Development Fund, makes available Rs 500 crore investment every year from the US in R&D by private and public sector organisations. Secondly, the government also enacted the National Research Fund Act that will put on the table nearly Rs 50,000 crore, of which about Rs 5,000 crore will find its way into the digital sector R&D. So, the pool of R&D investments is increasing in the country. However, the country needs to set up a Sovereign Patent Fund to support the local industry. This would facilitate access to essential patents for local manufacturers, expediting product development.

About IFSCA’s role: it serves as India’s premier offshore platform, offering comprehensive support to Indian corporates, startups, SMEs, and other businesses seeking cost-effective foreign exchange finance. With two stock exchanges under its purview, IFSCA facilitates the listing of bonds and soon, Indian companies will have the option to list on the IFSC Stock Exchange and conduct IPOs, raising capital in foreign currencies.

Moreover, IFSCA boasts a robust Alternative Investment Fund (AIF) industry, with over 113 registered fund managers managing more than 115 funds, including venture capital and angel funds. This creates ample opportunities for startups to access equity capital. Furthermore, IFSCA’s focus on green finance aligns with the growing trend of climate-based startups seeking investment and 26 banks now have policies in place to extend green credit.

To safeguard the national interest, DoT had to ensure that the telecom equipment used in setting up 5G infrastructure was “secure by design”.

The recent announcement of a Rs 1 lakh crore debt financing provision in the Union Budget further underscores the government’s commitment to supporting startups and innovative enterprises. Additionally, efforts are underway to incentivise “reverse flipping” of Indian startups registered overseas to return, based on the recommendation by a committee led by G Padmanabhan, Former Executive Director of RBI exploring policy initiatives for this purpose. Overall, IFSCA is playing a pivotal role in facilitating equity and debt capital flows for startups, providing access to global markets and fostering growth opportunities.

About standards, the initiative surrounding 6G, including the Bharat 6G Vision document and the Bharat 6G Alliance, bears your imprint. What triggered this initiative at the national level?

The interest within the government, whether at the ministerial or Prime Minister’s level, has been remarkable. Their drive has inspired bureaucrats like us to deliver on such initiatives. The initiative was triggered partly by a geopolitical storm, prompting us to look inward and develop our products.

One key concern was the realisation that, in previous generations of technology such as 5G, Indian companies often ended up paying royalties to multinational corporations for essential patents embedded in standards. This underscored the importance of India entering the standards game to become a leader in technology development.

To achieve this, several measures were identified, such as increasing funding for R&D, establishing strong standards verticals within private companies and government research labs, and expanding the talent pool of highly trained professionals focused on R&D. Efforts were also made to embed topics like 5G and 6G into core curricula and to produce more PhDs in these areas.

Despite India’s capability to produce top-line chipsets and radio access networks, there was a recognition of the need to develop high-quality research professionals who could generate patents for Indian companies. This required Indian companies to hire R&D professionals and incentivise them to deliver innovative solutions.

Satcom is emerging as a viable solution to address Digital Bharat’s connectivity needs. However, some argue that India is late to the party. What are your thoughts on this?

Satellite communication serves two main purposes in India: strategic, such as for military use, and secondary, for remote and inaccessible areas like forests and hilly terrain. These regions, often considered the bottom of the pyramid, require reliable connectivity for socio-economic development. Unfortunately, the discussion about satellite spectrum allocation became tangled, delaying its implementation. Recognising this, the government included it in the Telecom Act, passed recently, resolving the issue.

With spectrum allocation settled, clearances are expected to be swift, facilitating rapid deployment. However, satellite communication also poses security challenges, necessitating stringent scrutiny. While there was a delay, I’m optimistic about the imminent rollout of Low Earth Orbit (LEO) and Medium Earth Orbit (MEO) satellites. The government is committed to ensuring inclusive telecom services for all.

Reflecting on your tenure as the Telecom Secretary, what were the major challenges you faced at the DoT, and what were the toughest decisions you had to make?

The DoT has a rich history dating back to pre-independence times, with its legislation originating in 1885. Over time, however, the bureaucratic structure governing telecom became burdensome, impeding progress in the sector. Recognising this, the government initiated significant reforms to open up the telecom sector to private participation, leading to a surge in investment. Yet, bureaucratic hurdles persisted, imposing financial and operational strains on telecom service providers.

As part of the reform process, I spearheaded efforts to streamline regulations and reduce compliance burdens, notably through the Wireless Planning and Coordination (WPC) committee’s comprehensive reforms. These initiatives significantly eased the compliance burden on the industry. Additionally, key financial reforms, such as eliminating bank guarantees and redundant procedures, were implemented in September 2021.

The passage of the Telecom Act 2024 marks a milestone, ushering in a new era of regulatory clarity and ease of doing business in the telecom sector. These reforms are crucial for achieving India’s developmental goals outlined in the India 2047 goals.

shubhendup@cybermedia.co.in