India’s opportunity to lead the world in 5G
In a stirring address to the 2014 graduating class of the Indian Institute of Management, Ahmedabad, the chairman of the $15 billion Mahindra group, Anand Mahindra, said that “the days that I see now as wasted days of my life were those when I didn’t take an acceptable risk that I could have conceivably taken”.
Ruminating on how Ford Motor Co. walking out on his company when it was entering the passenger car business was a blessing in disguise, Mahindra introspected on “what was the source of diffidence that made us ask for an alliance” and why “it took an enormous leap of faith” to go it alone.
He attributed it to a “deep fear of failure” stemming from the “psychological legacy of colonialism”. Mahindra exhorted the young graduates to embrace entrepreneurship, telling them “your generation has no such excuses” because “you carry no mental shackles”.
Centuries of colonial rule dealt a powerful blow to the confidence of the Indian people. The Nobel laureate and writer V.S. Naipaul described India as a “wounded civilization” for this very reason. But the colonialism-induced “mental shackles” weren’t the only barriers to Indian technology leadership.
India has traditionally been regarded as a technology deployment market and not a market that can originate innovations. In this paradigm, a foreign technology company develops an innovation and enters the Indian market. Despite having one of the world’s largest markets, we are only too grateful that finally, this service is now available in India. Alternatively, Indian entrepreneurs would copy those ideas and create their Indian version, trying to build momentum before the entry of the larger American or Chinese firm.
When the 3G and 4G networks finally came to India, entrepreneurs were handicapped because data access was expensive, and, consequently, the domestic market for digital services was too small. The rocket boost provided by the entry of Reliance Jio has expanded the market and opened up new opportunities for entrepreneurship.
This is where deploying 5G-capable networks at scale and without delay, when the technology becomes available, matters enormously. The Tata group’s founder, nationalist entrepreneur Jamsetji Tata, was inspired to enter the steel industry because on a visit to Manchester in the 1870s, he heard Scottish philosopher Thomas Carlyle say in a lecture that the country dominating in steel would control the world’s gold. Steel was, of course, the high-technology business of the 19th century’s industrial revolution. But it was not until 1912 that the Tata Iron and Steel Company of Jamshedpur produced the first steel ingot. Even after independence and throughout the 20th century, oppressive government policies pummeled the spirit of entrepreneurs and triggered a migration of talent to Western countries, where Indians reached a pinnacle of entrepreneurial excellence.
If this time is different, Indian entrepreneurs will not be disadvantaged by a late start. When technological change comes, a start-up must iterate and improve the innovation locally before globalizing. The history of the last 20 years tells us that India missed out on wealth creation opportunities and lost the race because we weren’t even at the starting line when it began.
One of the exciting prospects of the fourth industrial revolution is its impact on global trade. Globalization over the last four decades enabled Asian countries to export their way to a higher standard of living. Manufacturing to export was the mantra adopted across South-East and East Asia—India was an oddity that built a $120 billion export industry in IT services. Notably, both the goods and services export models hinge on labour cost arbitrage.
With 3D printing and industrial automation, production is shifting closer to the final place of consumption. Technological advances are, once again, turning manufacturing from a labour game into a capital game. As these advances gather momentum, what are today deemed “tradable goods” will not be traded. Conversely, what we characterize as “non-tradable” services will be traded despite physical distances. A barber in Mumbai will be able to give somebody in Manhattan a haircut, as the confluence of robotics, augmented reality and digital payments forges a new global services arbitrage model.
Immigration control that imposes barriers on human capital movement will be rendered irrelevant by the fourth industrial revolution’s virtualization wave. Given India’s traditional strength in services and its young population at a time when the rest of the world is aging, this is a huge growth opportunity. In its impact on global economic transformation, this shift will match the influence of the shipping container and maritime freight on the physical trade of goods. As we stand on the cusp of the fourth industrial revolution, the government needs to both reform dated regulations and proactively develop new ones to ensure that this time India’s entrepreneurs get their shot on goal.
Leadership in the fourth industrial revolution and 5G will have foreign policy implications too. Indian leadership in the new technological context will not just empower Indians to bury the ghost of colonialism once and for all, but will bring balance and stability to the world as the spectre of a non-democratic global superpower casts its long shadow from East Asia.livemint