Armed with a Doctorate in Economic History from the University of London, Subho Ray has been an academician as well as Director-IT & Telecom at CII before taking over as President of the Internet and Mobile Association of India (IAMAI) in 2006. At the helm of the country's apex digital industry body, he interacts with all key players as well as the government. In an exclusive interview to International Business Times India, he shared his views on both, the opportunities and challenges faced by mobile and Internet companies.
2016 has been a busy year for the industry in India with the PM leading the Digital India initiative. Has this made things easier for you or more difficult?
It is always great to have the Prime Minister on your side of the table, especially if he talks and walks Digital and is ready to put his money where his mouth is.
Digital India was envisioned by Mr Modi even before he became the Prime Minister: In February 2014, he delivered the Valedictory Address at our annual event - the India Digital Summit - where he outlined a detailed vision and action plan of how a Digital India would look. Even before that he was a deep user and believer in social media.
Since then he has successfully convinced many of our policy makers that going digital:
a) accelerates development
b) is a key to uplift poor people
c) is a great way to seek direct feedback from citizens and
d) is a solution to corruption.
So, it is great to have his continued support for this industry.
The major push, though, came towards the end of the year when, while announcing demonetisation, he took up the cause of digital payments. His faith in digital payments has been infectious and even the most hardened non-believers are now interested in digital payments. In payments, confidence and trust are the biggest factors for adoption and here is where the Prime Minister, himself, has been able to generate the trust and confidence of the masses for the digital payments industry.
Finally, I would say, as a programme, Digital India per sé focuses on governance. Hence, initiatives like mygov.in, Digital Locker, Aadhar-based systems, etc., are initiatives that boost the industry in three ways:
a) directly helping Industry with authentication as in the case of Aadhar
b) encouraging the Industry to think and code for 1.2 billion Indians and
c) streamline citizen services offered by the Government.
There has been a lot of hype around startups but is the reality in sync with the announcements? Are startups getting encouragement and benefits? If not, what is needed to accelerate and facilitate growth?
The "stand-up start-up" call that the Prime Minister gave in his Independence Day speech was a call for entrepreneurship in general; there was nothing specific about Internet. The Startup Summit organised by Department of Industrial Policy and Promotion (DIPP) and inaugurated by the PM was the announcement of the Startup Policy. Many of the Internet startup founders were invited to this since they are the most visible faces of the startup eco-system in India.
However, the policy was more generic and, once again, not focused on Internet startups alone. The biggest push for startups has come through the Government-supported startup programmes and support for incubators run by NITI Aayog and Department of Science and Technology. Things on this front are yet to settle down, but the signs are bright. The Government needs to be more open and less restrictive in its support for incubators.
The Government needs to be more open and less restrictive in its support for incubators.
Personally, I feel the problems that the genuine startups face at the ground level with the Government are all linked with multiple interactions with Government/tax authorities. The other problems relate to complicated laws that are primarily punitive and not developmental. The third problem that they face is resistance from incumbents and their regulators.
The important thing to note here is that all Government policies are only meant for startups as defined by the Government. Therefore, many of the more visible companies that IAMAI primarily represents, although considered startups by the Industry do not pass the Government's definition of a startup.
Hence the "disenchantment" of certain sections with the startup policy. I think many of the problems that these "larger" companies feel are around managing the market and the environment which needs to be solved through collective action and not through Government fiat.
Where, do you think, the future lies in a country where bandwidth is still poor and telcos are unable to expand their networks?
I think the main problem is backhaul and I believe that the Government is now more open to creating and supporting a "common" backhaul. Once the problem of backhaul is solved, 70% of the problem of lack of broadband would be solved. National Fibre Optic Network (NOFN) which was thought to solve this problem has not been very effective. New solutions outside the spectrum licensing norms are being devised by the Government and the regulator.
How secure are things on the e-commerce front? Some large Indian players are demanding protection from foreign brands whereas offline retail chains are tentatively entering the digital space because they have no choice...
E-commerce, as a category, is very secure which has been proven by the rapid rise of at least three or four large platforms in the last five years.
What these companies have been able to achieve, singly and collectively, is to change the habit of hundreds of millions of people (actually transacting online to buy a product). They have also been able to collectively convince the Government that regulations and laws for this sector cannot be changed frequently. These two are more or less permanent changes in the landscape that is going to drive e-commerce.
Less temporary, perhaps, is that which of the companies survive, perish or morph into something else. If I were to put my own money, it would be vertical e-comm. There are signs of it already: fashion has, in itself, become a large vertical. Food e-tailing has been opened up in the last Union Budget for Indian and overseas investors and I see a $ 10 billion opportunity there.
Finally, I would not want to comment on the so-called protectionist stance of some founders since I don't have a complete understanding of their arguments. Some of the things that I have read in media are very confusing and are probably sending negative signals to policy makers.
On Digital Wallets: the November demonetisation was a dramatic turning point for the industry. Did anyone see it coming? Was the industry prepared?
This was a Black Swan moment for the Industry in the classic sense of the term.
We were not prepared on two fronts:
a) managing the interest and volumes. We quickly recalibrated to adjust to 3x volumes;
b) we had hoped that this deluge would follow some critical policy changes, but it preceded them.
Some key policy issues still remain unaddressed; we are hoping that they would be addressed in the Union Budget. If these policy changes had taken place before the announcement, we would have been much better prepared to take advantage of the situation.
What is IAMAI doing to ensure data privacy and security?
As you know, data protection is regulated under section 43 of the IT Act. There are stringent fines and penalties for companies that violate this. We are trying to strengthen consumer data protection and privacy by suggesting that a suitable encryption policy be brought in by the Government immediately that offers freedom to Internet companies to encrypt data based on their services, nature of the data they handle and perceived need of privacy of their users. The current encryption policy is outdated. Finally, we are also hoping that the privacy bill will be revived and passed by the government.
Some years ago, IAMAI launched a few courses in Digital Marketing. Since these are offered by third-party institutes, how does IAMAI ensure their curriculum and quality are up to the mark?
When we initially launched the Digital Marketing courses, the Industry was going through a human resource crunch: fresh talent was not available and "old" marketing hands were not yet ready to shift to digital.
I think, at that time, our course brought two important elements on the table:
a) recognition of digital marketing as a profession
b) a robust basic training in the art and craft of digital marketing.
In the last four years, many private training institutions have cropped up and many older management institutions have made it a part of their regular curriculum. Our job so far as Digital Marketing is concerned, is possibly done although we still vet out and certify many of the courses offered by our partners.
To come back to the second part of the question, all the courses that we certify for third parties are designed and vetted out by a group of our members.
We have identified a major talent gap in the area of apps development
More recently, we have identified a major talent gap in the area of apps development. We are in the process of offering some training and certifying some courses in this area.
What are the three things on IAMAI's wish list from the Union Budget this year?
This is going to be a post-demonetisation budget and the Finance Minister has indicated that Demonetisation and Digital (D2) are going to lead to accelerated growth.
We are hoping that there would be some important announcements around less cash such as allowing Payment Protection Insurance/Wallets inter-operability and access to the United Payments Interface.
GST has to have a Digital Industry face
We are hoping that second factor authentication will be relaxed for small value (under Rs 2,000) and for subscription renewals and so on. These are a part of the Ratan Watal Committee for Digital Payments report published by the Finance Ministry.
For the Digital Industry to grow, among other things, GST has to have a Digital Industry face by:
a) recognition of Digital as a separate GST item and
b) allowing Digital and other services companies to file from one location while providing services to all states.