Is India now a a Digital Colony?

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New Delhi | Published: April 28, 2017 7:16 AM

Of the top 10 IT services companies by market cap globally, five are Indian by origin, headquartered in India—with over 2 million employees, of whom at least 1.5 million are Indians.

We need to invest in our future, free our universities from the stranglehold of Delhi regulators, create excitement for the future. (PTI)

India is fast on its way to becoming a Digital Colony while our leaders solve problems of the past and remain oblivious to the challenges of the future. Since India liberalised in 1991, there have been four waves of industrial growth. The first was the Indian IT services revolution that dramatically changed India, gave 4.5 million direct jobs to the educated middle-class and helped solve our insolvable Balance of Payments challenge. It has worked very well. Today, over 60% of global IT outsourcing comes to India, with $115 billion in exports (having a street value of over $200 billion), creating a $175 billion industry—the largest ever in terms of revenues. Of the top 10 IT services companies by market cap globally, five are Indian by origin, headquartered in India—with over 2 million employees, of whom at least 1.5 million are Indians.

A truly unbeatable feat. What’s more, they only have around 4% of their revenues coming from India; the balance is from overseas! Globally, is there any large industry which dominates the globe with a small percentage of its revenues coming from the home country?

The second wave was the telecom revolution that again changed India. Today, there are over 1.1 billion connections, over 700 million individuals own mobile phones. It created a $35-billion industry, mostly owned and managed by Indian capital and Indians. The whole country is connected, on one single platform, with the lowest cost in the world. To add to the excitement, India’s biggest company has invested over $30 billion to create one of the worlds largest intelligent telecom networks to offer low-cost data services to citizens. It is designed to make India the largest consumer of data in the world. Once again, Indians and Indian capital dominate.

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The third wave is in infrastructure. Infrastructure companies have been founded and managed mainly by crony capitalists who have created the largest NPAs in India’s history, over capitalising many projects, ‘creating’ capital for themselves but, at the same time, building India’s ports, steel plants, power plants, airports, roads and the like. World over, only two set of entities could build infrastructure on such scale, either governments or the ‘Robber Barons’. Since the government failed earlier, the cronies came into the picture and now own majority of such assets. But these are owned and managed again by Indian capital and Indians.

The fourth wave is the digital revolution, riding on the telecom wave. Here, India is lost and well on the way to becoming a Digital Colony. Of the eight ‘Indian’ unicorns (start-ups valued at over $1 billion), seven are domiciled overseas, largely owned by foreign capital with most founders reduced to being ‘managers’ dictated to by overseas investors and overseas capital. Of course, some claim to be Indian companies, crying for ‘protection’ by the government, when they are actually subsidiaries of overseas companies that are dictated to by their foreign owners.

To add to this Amazon, the biggest e-commerce player in the US, threatens to invest over $6 billion, suffering huge losses to control our market and win the battle for our purse, in a winner-takes-all battle. All owned and dictated by overseas investors. In addition, we have Microsoft, SAP and Oracle of the older generation owning the enterprise and government market—again overseas capital and control.

To add to the danger, India is owned digitally by Facebook, Google, Twitter, etc. All network companies who have no competition in India, with millions of Indians on their network and growing more powerful. An almost total monopoly. They have our personal data, can track every movement of ours digitally, exercise full control over our digital footprint with the data stored outside India, beyond the control of the Government of India.

With their data-centres in the US, they are subject to American law. This means the US NSA can snoop on our data at will, with none of us even knowing about it. Our political leaders, many of our academic and business leaders, many of our generals and military staff, are owned by them in their data-centres, with Uncle Sam merrily using our data at will.

The fourth wave has indeed made us a Digital Colony where any one of us can be shut off from the network and the world at their will, all our data access denied to us and be subject to snoopingby the US NSA with no hope now of our being in control of our digital destiny. Our courts and our government can no longer protect us. Sadly, even our government seems to celebrate their dominance over us.

How can we get back our Digital Independence? Well, the only country which has escaped from their full control is China which banned Google, Facebook, Twitter and Amazon! Possibly, being a wise old civilisation antithetical to the West, they had the wisdom to see future dangers. Because of shutting out the networks China saw Baidu, Tencent, WeChat and AliBaba come up to dominate China, all with largely Chinese capital, management and control. They also created nearly a trillion dollars in value within China and gave a tremendous boost to its economy. The data of all on these networks is in China, under the control of the Chinese government, with the Chinese very happy that Beijing will snoop on them and control them, not Uncle Sam.

India has completely lost the plot. Is there any way to remedy the situation and get back our Digital Freedom? Yes, partially, if we enact a data privacy and residency law immediately to ensure that all data of citizens in India resides in data-centres located in India, subject to Indian laws and government regulation. We would rather be snooped upon by our government than Uncle Sam as we will have recourse to our courts—to protect us against any abuse of our rights—rather than be subject to the US where we have no legal recourse. This will create a data-centre industry and thousands of new jobs—a small way of standing up to the H1B threat. Of course, some malcontents will scream about restricting the internet, but Europe and many others have such laws mandating protection and location of citizens data. This is also a big national security issue.

In addition, we need a massive increase in Indian capital flowing into Indian innovation and start-ups. Today, only 5% of the funds invested annually into start-ups is Indian capital. In China, 65% is domestic capital. We have sold our innovation and our future to overseas investors because our capitalists dislike risking their money. But, many cronies delight in taking risks with the banks’ monies. Even our tech billionaires, who earned their billions from IT/software, keep their money in bank deposits, or in old economy stocks, or government debt and fixed income. Very little of their wealth is in venture capital or start-ups—a sad state of affairs.

India needs long-term capital to flow into start-ups. The government has done its bit by creating the `10,000-crore Fund of Funds to catalyse at least `50,000 crore of investment over five years. But, we need more—about `60,000-70,000 crore investment a year. Our insurance companies have long-term funds and should invest at least 5% of their huge annual inflow here, but they are hobbled by archaic, backward-looking regulations set by IRDAI, their regulator.

We also need at least `10,000 crore of from the government every year, invested in R&D in our universities and laboratories, start-ups and innovators in frontier areas like robotics, AI&ML, biotechnology, liquid display and laser, chip design, nanotech and material science, electric vehicles and battery tech, automation, genetic research, etc—all value-creators of the future. NITI Aayog, our national think-tank, recently presented a 3/7/15 year vision, mostly about solving our past and current challenges, but there was not much about future-tech and innovation.

We need to invest in our future, free our universities from the stranglehold of Delhi regulators, create excitement for the future. There is no time to lose. Only one Indian company, the biggest of them all, is investing massively to save us. We should reverse this massive drive to becoming a Digital Colony and strive towards Digital Independence! Nobody is against overseas capital and investment, but not at the cost of our Digital Independence.

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