By Deepsekhar Choudhury
The government is aiming to almost double the share of the technology sector in the country’s economy from just over 10 percent to about 20 percent by 2025.
Its goal of the current decade being a “techade” is being supported by two broad types of policy interventions — creating laws to ensure a safe, trusted and transparent internet for citizens and deploying incentive schemes to encourage domestic manufacturing of high-end electronics.
The Ministry of Electronics and Information Technology (MeitY) is leading the charge on these fronts. In the last few months, it has brought out a Rs 17,000-crore production-linked incentive (PLI) scheme for advanced computer makers, kick-started a national programme to boost artificial intelligence development and begun consultations on a new law to govern the internet, among other things.
Moneycontrol sat down with Union minister Rajeev Chandrasekhar to take stock of these developments. Edited excerpts of the conversation:
How has the industry reacted to the new version of IT hardware PLI?
In the IT space worldwide, there is a problem that the market is flat if not negative. India is the only hotspot in terms of IT hardware demand. Now, both Dell and HP, which are two potential players, already have capex on the ground. So, they will continue to grow and apply to this PLI for subsequent years.
Where we are also seeing a lot of interest is Indian IT hardware players who are new and smaller companies. In the Bengaluru event that I had to postpone recently, there were at least 11 Indian IT hardware companies that had registered to show up. It is not just the Dells and HPs, but also Indian champions we are focusing on.
The new IT hardware PLI scheme has introduced a provision saying that beneficiaries have to use firmware from Indian companies or trusted foreign sources. What’s behind this?
A machine consists of firmware, at the heart of it, the operating system and the hardware. For those who understand technology, firmware is the heart and soul of the system. There is no point if the hardware — i.e., the boards and the microprocessor — is trusted and the firmware is coming from some other source. We are basically saying that the entire system should be trusted. There is no point making the system in India and calling it a trusted system while the firmware is coming from China, or wherever.
Is the penalty for a shortfall in production going to be a dampener?
We will keep it back, but it will be payable over the life of the PLI. You can plan for six out of any eight years. If there’s a shortfall in one year, you can make it up in the next year. And you will get the balance in the next year. It is not a penalty as in penalty forgone, but it is a penalty withheld that can be paid later.
Is there a realisation on the part of the government that despite the capex-linked incentive scheme, semiconductor fabs or fabrications are going to be hard and so we are now prioritising semiconductor design and packaging?
It was always clear that there will be many more design firms, there will be fewer packaging firms and there will be least number of fabs. It’s a pyramid because the capital intensity is highest in fabs, next is packaging and the least is design. There is no change in perspective at all. All that has happened is because the 28 nanometre fab technologies have not happened yet — and they are continuing to negotiate — we have said we will not wait.
We will open the window for anybody who wants to submit proposals for 40 nanometres and any other mature technology. Nobody is saying that we will only do packaging and we will not do fab.
Is the idea that let’s get packaging off the ground first and then think about fab?
It is correct that we may end up approving packaging first. But that is not to say that packaging is first priority and fab a second. If you say design is first because we have approved, packaging is second as we may approve it next and then fab, certainly that sequence is correct because the capital intensity and complexity of each one of them is in that order.
Are we looking to go up the value chain in the same way as mobile phone manufacturing?
What Foxconn and Pegatron are doing here today is what they’re doing in China. There’s no going up the value chain. Assembly and testing is the manufacturing of mobile phones. But do you also make the components that you assemble in India? That’s a different question.
The guys who are doing packaging are going to be different from the guys who are going into the fab. Nobody’s going vertically anywhere. We are not going up the value chain. We are creating the entire value chain at the same time. Prime Minister (Narendra) Modi ji wants to do in 10 years what China has taken 30 years to do. That’s what we are doing.
A controversy erupted after OpenAI CEO Sam Altman during his recent visit to India commented that it would be hard to build foundational large language models. What is your take and is the government thinking of building foundational models in artificial intelligence?
Sam Altman is a bright man who certainly has done a lot of work in OpenAI. And he has to be respected for his work. But we should not consider him anything other than an important man in AI. He’s certainly not going to be the last word on what India’s aspirations for AI are going to be. He certainly doesn’t have an understanding of India’s capabilities in AI.
We will take Sam Altman’s comments with the respect that it deserves. But to assume that everything he says or does is exactly what Indian startups are going to do is to miss the point. I think there are many areas that Sam Altman and I are never going to agree on.
There are certain things where we have to create Indian capability. AI is an area where we will create Indian capability — not government of India capability, but Indian startups and ecosystem capability… Maybe we’ll end up doing it in partnership with him.
Was there any discussion of such a partnership during his visit?
Obviously, Sam Altman did not come to India to see Qutub Minar and Taj Mahal… He understands India’s potential and he has said it publicly. Therefore, there will be hundreds of opportunities for us to work together — between Indian startups, Indian government, Open AI and other companies. Those are a partnership that will organically evolve.
Tech companies are scraping the internet to train their large language models. Lawsuits are being filed by creative professionals who are saying their consent was not taken by these companies. Are we going to see any provision related to this in the Digital India Bill?
With the Digital Personal Data Protection (DPDP) Bill, the National Data Governance Policy and the Digital India Bill, there will be a lot many more rules about how you scrape the internet, what type of stuff you get out of the internet, whether it’s violative of individual privacy, whether it’s violative of somebody else’s rights. These are all issues that are now coming up front and centre.
Scraping amounts to privacy protection, personal data protection. It has to do with the whole data protection and privacy regime that evolved after the DPDP Bill. The ability of companies to use personal data, whether they are LLMs, search engines or e-commerce companies will change substantially after the law is enacted.
The problem with LLMs is that you can’t trace back to the source it scraped.
That is anonymised personal data which is derived from personal data, but that is not identifiable. It is an issue that I have raised repeatedly during my Digital India Bill consultation — who owns that data, what should be the dos and don’ts about monetising that data… Those things have to be talked about.