View from India: Global supply chain disruption can boost domestic manufacturing

The realignment of global supply chains has changed the dynamics of the Indian technology, media and telecom (TMT) sector.

TMT players now have an opportunity to create a vertically integrated marketplace. This can happen by bringing the global manufacturing base closer to end customers. The sector can get a further boost with government support in the form of tax rebates and concessions.

The Government of India (GoI) has approved a Production Linked Incentives (PLI) scheme under the National Policy of Electronics for 10 key sectors comprising technology products, telecom and networking products. India has an opportunity to cement its position as an attractive and reliable partner for companies looking to rebalance their manufacturing capabilities in the region.

Many firms from countries including the US, Japan and South Korea have already expressed interest in shifting their production facilities to India. The country’s large domestic market, rapidly improving logistics and digital infrastructure, vibrant private sector and supportive regulatory framework makes it a serious contender for global efficiency-seeking investment, especially in the manufacturing sector.

“The disruption in global supply chains has created an urgent need for organisations to diversify across geographies, working across enablers such as workforce availability, cost and infrastructure. For India, it is a huge opportunity to become the next manufacturing hub for global TMT giants. Between April-July 2020, India has witnessed inflows worth USD20 billion,” says Dipayan Ghosh, executive director, TMT sector, at KPMG in India.  

As the country deepens its integration into global supply chains, inflows of foreign direct investment are likely to grow even further in the years to come. However, this would need significant support from the government in terms of policies, rebates and infrastructure.

Yet, upcoming opportunities also bring a share of challenges. With the convergence of various TMT sub-sectors, the security threat is expanding from cyber risk to digital risk. “With the rapid adoption of digital technologies, it becomes even more critical, as more and more data and applications are coming at the forefront. Also, the boundaries across ecosystems are getting blurred, leading to rapid exchange of data and information,” cautions Atul Gupta, head of cybersecurity, KPMG in India. In order to overcome this, most of the organisations are reaching out to establish robust cyber management and data protection policies to create a broader level of trust and transparency.

Cyber security has always been amongst the top business risks and it has continued in that vein with the experience of the pandemic as well. Boards and audit committees have been spending significant time on better understanding this risk but the considerable pace of change on this front has only added to the complexity. Establishing digital trust will be pivotal to maximising the opportunity that is being presented with the rapid adoption of digital and cloud technologies.

GoI has also announced the launch of a renewed National Cyber Security policy to establish a secure cyberspace in India. The Data Privacy Bill is also anticipated to provide a more controlled environment for data. TMT organisations need to build robust cyber security policies and frameworks to ensure that they are able to instil trust across stakeholders and secure data on their platforms.

TMT organisations recognize that effective cyber security is not only an obligation and an opportunity but also a risk. The urgent and increasingly sophisticated security requirements of enterprise clients and the chance to build end consumers’ trust through secure applications and communications are immediate opportunities for TMT organisations to explore.

These insights are part of the December 2020 Report titled ‘TMT Industry CEO Outlook: Smart. Secure. Sustainable’. The report was brought out by KPMG in India in association with IMC (India Mobile Congress) and COAI (Cellular Operators Association of India) and released at the India Mobile Congress 2020.

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