India leaves Pakistan far behind in telecom sector: experts

Massive incentives in the Indian budget 2017-18 coupled with providing a level playing field for information technology have left Pakistan far behind in the digitization race on all indexes, said telecom experts. India is among the world's leading telecommunications market and has registered strong growth with estimated IT &T services export remittances of around $7-8 billion compared to Pakistan with around $560 million. Pakistan Software Export Board (PSEB) is projected to increase the country's information technology export to $5 billion by 2020.
India continued its policy of incentivizing the telecom and IT sector and in the budget 2017-18 introduced new initiatives and allocated funds which may directly and indirectly impact the telecom sector. The Indian Finance Minister announced Rs 745 crore incentives for electronic manufacturing in the country which is expected to benefit the device makers and handset makers of the country. The tech giant Apple is likely to start manufacturing iPhones in India by April 2017. The company was trying for quite some time to get approval from the Indian Government to manufacture its devices in India. The IT minister for the Indian state of Karnataka has said that Apple will soon begin assembling iPhones in the country.
However, no such incentives and plans exist in Pakistan and it is one of the major reasons that Telephone Industry of Pakistan, once a source of huge foreign exchange earnings has an annual revenue of about Rs 20 million - down from Rs 700 million in the recent past. The incumbent government has failed to initiate its revival and revitalisation. Telephone Industry of Pakistan is a State Owned Enterprise (SOE) currently running at a loss and draining an average Rs 500 million a year for salary support from the treasury.
The Indian government announced a number of steps in the budget which would encourage people to use digital or electronic modes of payment, particularly addressed to those who still do not have payment cards like launch of a merchant version of Aadhar Enabled Payment System which will not require other payment modes like debit cards, mobile wallets or mobile phones, and launch of two new schemes - Referral Bonus Scheme for individuals and a Cashback Scheme for merchants to promote the use of BHIM. On the supply side, 20 lakh Aadhar based PoS machines will be introduced by banks by September 2017. Announcement of abolition of service tax on railway tickets that are booked online will also increase the popularity of e-tickets further in India.
To promote digitization in rural areas, Indian government has announced the involvement of a host of entities like post offices, fair price shops, banking correspondents as well as petrol pumps, fertilizer depots, municipalities, universities, colleges, hospitals etc. This is a smart move which could bring the rural sector at par with the urban areas in terms of digitization.
The India government has proposed to connect more than 1.5 lakh gram panchayats with high speed broadband internet connection and increased expenditure on the Bharat Net project to Rs 10,000 crore for the next fiscal year. This will help create more internet users, and eventually digital modes of transaction. Also, as part of a recent initiative called 'Digital Village', the India government will be deploying free Wi-Fi in 1050 rural villages in the country.
Telecom sector experts toldBusiness Recorder that such initiatives would help the public especially the farmers living in rural areas get timely information about weather, crops, seeds, pesticides and agriculture equipments.
According to the Global System Mobile Association (GSMA) latest report, compared to the rest of South Asia, Pakistan scores poorly on infrastructure, consumer readiness, and concurrently, mobile internet penetration is 29 percent versus a regional average of 32 percent.
Although mobile broadband (3G/4G) coverage has increased rapidly since launch in 2014, reaching 75 percent of citizens by mid-2016, uptake has remained low, as of June 2016, only around 10 percent of Pakistanis subscribed to mobile broadband services. This is the lowest of any South Asian country except Afghanistan.
More than half of Pakistani citizens do not subscribe to a mobile service, and some (predominantly rural) areas of the country do not have high-quality mobile broadband coverage at all. There is a clear role for the government in addressing some of the factors that lie at the heart of this issue. The current treatment of the mobile sector in Pakistan, including higher taxes and fees, may reduce affordability and lead to inefficient investment decisions. Pakistan has been ranked at 171 position while India is at 157 on the GSMA taxation index.
The government collects 1.5 percent from telecom companies of their gross revenue for Universal Service Fund (USF) for undertaking telecom projects in un-served and under served areas of the country. But the incumbent government converted it to the federal consolidated fund and now the IT Ministry is dependent on Finance Ministry for funds, resulting in projects execution, officials revealed.
The government has set a target to reach all the under-served and un-served areas of the country with rural telephone and e-Services (RTeS) by first quarter of 2018 through projects to be undertaken by utilising collection of USF. However, USF officials revealed that the target can not be achieved even by 2020. Though some contracts would be awarded in the first quarter of 2018, but the project would be completed in two years. Further due to security concerns, the work in FATA and some areas of Balochistan can not be awarded even by 2018, official added.
According to analysts, the liberal and reforms policies of the India government have been instrumental along with strong consumer demand in the rapid growth in the telecom sector.
The Indian government has enabled easy market access to telecom equipment and a fair and proactive regulatory framework that has ensured availability of telecom services to consumer at affordable prices. The Indian telecom sector is expected to generate four million direct and indirect jobs over the next five years, they added.