Friday, June 2, 2017

Understanding the strategy behind Digital India campaign and its challenges


Digital India campaign is a much-needed relief for the citizens of India in order to take leverage of an infrastructural support in order to spread e-literacy, curb middle man corruption and to empower brand India to meet the current global forces which are shaping the world. Digital India is a campaign involving a visionary style of strategic planning. The mission aims to provide digital access evenly to all the citizens of India[1]. The methodology of the plan is based on a public- private partnership model[2] similar to the KaBOOM! Case Study. Here, the ministry is itself working as a non-profit organisation and is working on public-partnership based projects inviting various stakeholders from the industry. There have been some pilot based projects like "E-choupal" that has provided direct benefits to the citizen. The plan also aims to ensure that the ministries are taking leverage of ICT infrastructure to ensure "citizen-centric governance". 

The importance of this campaign cannot be ignored given the fact that technology is a global force that is changing the face of the world [3]. Technology is disrupting the way business is done and is forcing the countries to make policy changes in the alignment of the global force.Also, since India is one of the emerging markets, it is important for the country to increase the spread of IT knowledge on a wide population. The government of India has timely realised this and is looking for a revolution in the field of IT in India through Digital India campaign.

In the recent talk given at the business meeting on May 30, 2017, Prime Minister Narendra Modi reiterated his vision of making India a digital economy[4]. Digital India is a great vision but has certain associated challenges with it. Let us try to have an overview based on Porter's five forces paradigm[5]:

1) Bargaining power of Supplier: Under this campaign, the secondary aim also lies in creating an entrepreneurial culture in the emerging market of India. However, the investors are already aware of the low labour cost and they are investing mostly in the service based industries to get outsourcing leverages. This is causing the market to become stagnant with little focus on product-based research and development. In order to improve the economy, more care has to be given to product development.

2) Bargaining power of Buyer: The customers of India want cheap products. Since the purchasing power is more in the urban areas of India as compared with the rural areas, the products are mostly catering to a set of urban needs causing lesser innovation in the market. The service based online applications like Ola have emerged but there has hardly been any development in the IT product manufacturing industry. The reason can be attributed to the market scenario which demands quality products at a very competitive price. This deters the IT firms to spend more on research and development.

3) The threat of new entrants: Recently, Apple has announced that it is going to start assembling iPhones in India. The result would be a sharp decline in the price of iPhone in the Indian market. This is going to harm the digital India's vision of creating more IT based products in India because the consumers now would have a better choice of choosing Apple over new local products. Also, it is going to be an increased competition for the local firms like Micromax.

4) Rivalry among Existing Competitors: Since the local IT market in India works on a large scale volume-centric model, there is a fierce competition in the market to survive given the very thin operating margin. Firms would need a strong incentive to contribute to the Digital India campaign. This can be provided by giving tax incentives in the Special Economic Zones (SEZs) where the IT firms are given lands to build up offices at minimal costs.

5) The threat of substitute products or services: Since IT industry in India mostly comprises of service providing firms, there is an imminent threat caused by the job market because of increased competition from emerging services hub like the Philippines. Also, many products enter the market through China that has firmly placed itself in the Indian market. Also because of automation, services are being substituted. Digital India Campain has failed to address this issue and needs to accommodate this policy dearth.

It would be really interesting to see how the digital economy of India changes in near future and how the strategic policy making is going to adjust to the global changes in the market.


References

1) http://www.digitalindia.gov.in/content/approach-and-methodology
2) "KaBOOM!" , James Austin, Harvard Business School Case Study, September 19, 2002
3) "The four global forces breaking all the trends", by Richard Dobbs, James Manyika, and Jonathan Woetzel, published by Mckinsey&Company, April 2015
4) http://www.mea.gov.in/Speeches-Statements.htm?dtl/28499/Speech_by_Prime_Minister_at_the_Business_Meeting_in_Germany__May_30_2017
5) "Five Competitive Forces that Shape Strategy, Michael E.Porter, Harvard Business Review

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.