IT Ministry Wants to Match China, beat Vietnam in Smartphone Exports Race, Documents Show

India risks losing out to China and Vietnam as it seeks to become a major smartphone export hub and must “act fast” to lure global companies with lower tariffs, the deputy IT minister said in government documents seen by Reuters.

Smartphone manufacturing is a key plank of Prime Minister Narendra Modi’s ambitions to boost the economy and create jobs by attracting companies such as Apple, Foxconn and Samsung to India, the world’s second-largest mobile market where production grew 16% year-on-year to $44 billion last year.

That success, PM Modi’s government says, is mostly due to financial incentives given to companies to produce more. But lawmakers and lobby groups for Apple and other firms argue India’s high tariffs are a deterrent for companies de-risking their supply chains beyond China, and nations such as Vietnam, Thailand and Mexico have raced ahead in phone exports by offering lower tariffs on components.

A Jan. 3 letter and a confidential presentation drafted by Indian deputy IT Minister Rajeev Chandrasekhar, and sent to the Finance Minister, show the extent of his ministry’s concerns about losing out due to the uncompetitive tariffs.

“India has high production cost due to highest tariffs amongst key manufacturing destinations,” wrote Chandrasekhar in the documents, which were seen by Reuters.

“The geopolitical realignment is forcing supply chains to shift out of China … We must act now, or they will shift to Vietnam, Mexico and Thailand.”

Chandrasekhar and India’s IT ministry did not respond to Reuters requests for comment.

Lower tariffs on components is key to India’s ambitions to attract smartphone manufacturers.

“Made in India” phones use many parts made locally, but companies import many high-end parts from China and elsewhere due to supply chain limitations. These parts are then subject to the high tariffs the government has put in place to protect the local manufacturers, raising overall costs.

U.S. Ambassador Eric Garcetti recently said foreign investments were not flowing into India at the pace they should be, and were going to countries like Vietnam instead, because of the tariffs. “If you tax inputs … you’re not protecting a market. What you are doing is limiting a market,” he said.

Chandrasekhar in his documents flagged how lower taxes in China and Vietnam helped boost their exports. Exports accounted for only 25% of India’s smartphone production last year, compared with 63% of China’s $270 billion worth of production and 95% of Vietnam’s $40 billion worth, he said.

“Match China, beat Vietnam”

India is seeking to account for 25% of global electronics manufacturing by 2029, but the official documents showed its stake was currently at just 4%, even though Apple, Foxconn and Xiaomi had all boosted production recently.

Chandrasekhar’s documents were addressed to India’s Finance Minister Nirmala Sitharaman last month to lobby for lower tariffs in the annual budget. The finance ministry did lower taxes on some components, including battery covers, to 10% from 15%, but did not agree to many other tariff cut requests.

The finance ministry and Sitharaman’s office did not respond to requests for comment.

India still imposes a 20% tax on parts including chargers, some circuit boards and fully assembled phones. The IT minister wanted those taxes to be reduced to 15% this year.

Chandrasekhar also argued that Vietnam and China do not levy tariffs above 10% on components from their “most-favoured nation” trading partners or nations with whom they have free-trade agreements. India does not do that and imposes “high” tariffs on many components, he said.

“We have to match China and beat Vietnam on tariffs to attract” global supply chains, Chandrasekhar wrote. “No country with high tariffs has or can attract” them.

Local market saturating, exports focus

Last week, Xiaomi privately asked New Delhi to lower tariffs on more components used in cameras and USB cables, saying it will help “aligning with the competitive manufacturing economies like China and Vietnam.”

While surging local demand has helped keep the local manufacturing industry profitable, Chandrasekhar said in his letter that this “domestic market of smartphones will shortly near saturation” and as users don’t change phones that often.

India’s goal to take mobile phone production to over $100 billion a year – with 50% of that exported – needs a new strategy, the minister said.

“Tariffs are becoming a hurdle,” the minister said in his presentation. “We need to shift tariff policy to suit our new ambitions. Exports, not domestic.”

© Thomson Reuters 2024


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India puts tech firms on notice over deepfakes inaction

India has warned tech companies that it is prepared to impose bans if they fail to take active measures against deepfake videos, a senior government minister said, on the heels of warning by a well-known personality over a deepfake advertisement using his likeness to endorse a gaming app.

The stern warning comes as New Delhi follows through on advisory last November of forthcoming regulations to identify and restrict propagation of deepfake media. Rajeev Chandrasekhar, Deputy IT Minister, said the ministry plans to amend the nation’s IT Rules by next week to establish definitive laws counteracting deepfakes. He expressed dissatisfaction with technology companies’ adherence to earlier government advisories on manipulative content.

“If a platform thinks that they can get away without taking down deepfake videos, or merely maintain a casual approach to it, we have the power to protect our citizens by blocking such platforms,” Chandrasekhar told a press conference.

Chandrasekhar said the ministry has bluntly informed technology platforms that failure to effectively combat deepfakes will prompt legal consequences from New Delhi. Deepfake content is unlawful and dangerous, and it is unacceptable for companies to hide behind claims of ‘best-effort’ while allowing these fabrications to spread, he stated.

Deepfakes made headlines in India again as the nation’s cricket icon Sachin Tendulkar took to social media this week cautioning his countless fans that manipulated video advertisements falsely using his video to endorse an online gambling platform were fraudulent.

“It is disturbing to see rampant misuse of technology,” he wrote in a post. “Social media platforms need to be alert and responsive to complaints. Swift action from their end is crucial to stopping the spread of misinformation and deepfakes.”

Trepidation is mounting over a potential proliferation of deepfakes ahead of India’s general elections, expected to commence starting April. IT Minister Ashwini Vaishnaw said late last year that technology platforms understood the gravity of deepfake content and agreed such media should not be shielded under free speech defenses.



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India to Support Startups Innovating in Web3, IT MoS Rajeev Chandrasekhar Tells Lok Sabha

The government of India is committed to supporting startups that are working in the Web3-related fields, with blockchain being an important area of focus. The information was revealed by Rajeev Chandrasekhar, the Union Minister of State for electronics and technology. Chandrasekhar called Web3 the future of Internet as we know today while answering to Web3-related concerns at the Lok Sabha on December 6. He further said that the IT ministry has established collaborative initiatives to identify and incubate promising Web3 startups in the country.

In order to identify and evaluate blockchain startups, a centre of excellence (CoE) in blockchain technology in collaboration with MeitY, Software Technology Parks of India (STPI), Government of Haryana, Padup Venture Private Limited, IBM, Intel, Global Blockchain Association (GBA), and Foundation of Innovation and Technology Transfer (FITT) has been established.

This CoE is domain-specific in nature and provides incubation facilities for Web3 startups seeking assistance.

“Web3 represents the future of Internet and the government is committed to ensuring that the innovators and innovation from India create the future of Web3 and internet. MeitY supports startups that are innovating in the emerging technologies in the form of incubation or mentorship,” Chandrasekhar said.

In addition, the IT ministry has also initiated a programme titled ‘FutureSkills Prime’ — that offers nine courses designed around exploring the use cases of blockchain. A total of 1,999 enrolments have been registered for this programme so far. Over 1,000 government officials have also already been trained in Blockchain in the recent past.

“We are delighted to see initiatives such as Algobharat, Regulatory Sandbox, and a startup-friendly environment created by the government. Such initiatives will not only create jobs for the youth of the country but also bring in a lot of foreign investment to create a thriving Web3 startup ecosystem in India. We remain optimistic that India will lead the world in blockchain innovation by leveraging the power of its technical workforce and a ready market for using Web3-related products and services,” Om Malviya, President at Tezos India told Gadgets360.

Chandrasekhar has however noted that the government is yet to come up with a proposal to collaborate with industry stakeholders and create awareness and understanding about the potential of Web3 technologies.

Earlier in November this year, Chandrasekhar reacted strongly to Binance founder and former CEO Changpeng Zhao’s admission to having violated US’ anti-money laundering laws. At the time, he had warned crypto firms against misusing technology to flout laws and accomplish illegal activities.

“Using new technology to break the law does not make you a disrupter. It makes you a criminal,” Chandrasekhar had noted at the time.


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Indian IT MoS Rajeev Chandrasekhar Reacts to Binance and Changpeng Zhao Debacle

Rajeev Chandrasekhar has reacted strongly to Binance founder and former CEO Changpeng Zhao’s admission to having violated US’ anti-money laundering laws. Chandrasekhar, who is the Union Minister of State for electronics and technology, has warned crypto firms against misusing technology to flout laws and accomplish illegal activities. The warning comes in the backdrop of India still awaiting the execution timeline for the crypto roadmap that has been agreed upon to be adopted by all G20 member nations.

In the early hours of Tuesday, November 21, Zhao announced that he was stepping down from his role at the crypto exchange, touted as the biggest in the world. As per the SEC, Binance broke US’ anti-money laundering and sanctions laws. This led the firm ad Zhao to hide over 100,000 suspicious transactions with organisations like Hamas, al Qaeda, and the Islamic State of Iraq and Syria, all of which are recognised as terrorist groups.

Reacting to the development, Chandrasekhar said that the Indian government’s gradual approach towards inviting the crypto sector in, has kept India’s investor community safeguarded against market meltdown events like the collapse of FTX last year that had wiped out over $200 billion (roughly Rs. 16,66,428 crore) from the crypto market.

“Using new technology to break the law does not make you a disrupter. It makes you a criminal,” he added.

Emerging among the heftiest corporate penalties in the US history, Zhao has agreed to a $4.3 billion (roughly Rs. 35,828 crore) settlement deal in a Seattle court including a personal payout of $50 million (roughly Rs. 416 crore) to close the matter.

In the aftermath of the Zhao debacle, most cryptocurrencies stepped into the trading rink today reeling under losses.

Binance’s own native BNB token plunged by 11 percent within hours of Zhao pleading guilty to have violated US’s anti money laundering policies.


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Digital Personal Data Protection Act Will Ensure Firms Handle Data of Indians Legally: IT Minister

Union Minister of State for Electronics and Information Technology Rajeev Chandrasekhar on Thursday said the Digital Personal Data Protection Act (DPDP Act) passed by Parliament recently will make digital companies handle the data of Indian citizens under absolute legal obligation.

Calling the law an important milestone in the cyber law framework, Chandrasekhar said there will be punitive consequences of high penalty and even blocking them from operating in India.

“The Digital Personal Data Protection Act that was passed by Parliament a few days ago is a very important milestone in the global standard cyber law framework that Prime Minister Narendra Modi wanted to build for the India ‘Techade’ (a decade of technology) for a trillion-dollar digital economy,” the union minister told PTI.

“The DPDP Bill is aimed at giving Indian citizens a right to have his or her data protected and casts obligations on all companies, all platforms be it foreign or Indian, small or big, to ensure that the personal data of Indian citizens is handled with absolute (legal) obligation,” Chandrasekhar said.

“If they do not comply with the Indian regulations, then there will be punitive consequences of high penalty and fines, and if they repeatedly violate the law they can be blocked,” he added.

The minister claimed that the law would put brakes on the practice of misuse and exploitation of personal data by some companies.

Chandrasekhar opined that the bill would bring deep behavioural change among all digital platforms that deal with the Indian citizens and their personal data.


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Digital Economy to Contribute Over 20 Percent of India’s GDP by 2026: IT Minister

Union Minister of State for Electronics and Information Technology Rajeev Chandrasekhar on Thursday forecast that the digital economy will contribute more than 20 percent of the country’s GDP in 2026.

Addressing the ‘G20 Digital Innovation Alliance Summit’ here, he said India is a preeminent nation that adopted technology very fast and has started offering solutions to the world.

“The digital economy has gone from 4-4.5 percent in 2014 of the total GDP to 11 percent of the total GDP today. And we expect the digital economy to contribute over 20 percent of our GDP by 2026,” Chandrasekhar said.

According to him, India adopted technology not just for innovation in a broader sense, but to deliver real solutions that have transformed people’s lives, governance and democracy in the last few years.

“This pace of digitalisation means we are now looking at every citizen, every consumer consuming digital products or services, whether it is Instagram reels or Digital Public Infrastructure that connect them to the government and governance, or using the cloud and all of the upstream and downstream impacts that are created by this space and trend of digitalisation,” the minister said.

Chandrasekhar said ‘the centre of gravity of tech’, which used to be in a few countries and centred around a few corporations and a few companies is moving to open source systems to younger and younger startups that are disrupting the normal.

These trends, according to him, are in turn capitalising on the broader trend of increased digitisation.


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Hailing Prime Minister Narendra Modi for his vision of maximum usage of digital technology, the Minister said he had called the coming decade as a ‘Techade’, a decade of technology opportunities.

“In a lot of ways our Prime Minister exhorted young Indians that ‘the India Techade’ will be built by, architected by, designed by, innovated by determination, energy, creativity of young startups around the country and around the world,” Chandrasekhar said. 

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Web3, Crypto are Future of Internet, but Lack of Regulations Can Stir Chaos: IT Minister Rajeev Chandrasekhar

Authorities in India seem to be warming up to the crypto sector, as we get closer to December when India’s G20 Presidency will conclude, hopefully with a detailed set of regulations to govern the sector. Rajeev Chandrasekhar, the Union Minister of State for Electronics and Information Technology, has acknowledged that crypto and Web3 are indeed, elements of the next generation of Internet. Having said that, the minister did add that rules and regulations are most needed to govern the space to make it safe for everybody to use and engage with.

Chandrasekhar, 59, was speaking on a podcast hosted by Indian YouTuber Ranveer Allahbadia when he said that the topic of cryptocurrencies has come up for discussion several times among the policy makers of India.

Crypto, Web3, and Blockchain we cannot fight because it is the inevitable future of the Internet,” he said while emphasising on the utmost need for regulations in the sector.

As per the IT minister, crypto and Web3 without a guard have the capability of creating chaos and has a scope for misuse by notorious elements.

“On crypto, while everybody loves the technology, we think that the issue of INR to dollar conversions, that whole fungibility, exchange, and money transfer needs to be governed by some bond. And unfortunately, in India what happened, as well in the US, billions of dollars have been lost with the (industry) meltdown,” Chandrasekhar said, notably referring to the collapse of FTX and Terra last year, that left the crypto sector dry for months as investors flocked to safer, more traditional investment options.

FTX, the US-based crypto platform succumbed to liquidity crunch and shook-up the crypto market in November last year, leading to the wipe-off of nearly $200 billion (roughly Rs. 16,40,298 crore) from the market. The drastic reaction from investors who pulled back capital from digital assets, left several crypto firms gasping for breath.

In a December report last year, research firm Glassnode estimated that around 550,000 Bitcoin had left crypto exchanges in 2022. At the time, BTC was trading at $16,858 (roughly Rs. 13.9 lakh) that bought the value of 550,000 to $9.2 billion (roughly Rs. 76,760 crore).

Chandrasekar said, concerns had begun to brew when Indians started looking at Bitcoin and other cryptocurrencies as speculative assets, betting on how their prices would go up or down to churn profits.

“People started saying, how much is BTC today, how much will it be day after tomorrow, instead of saying I want to use BTC to transact my finances. So, when it became a speculative asset class in a bubble, the government had to intervene and say no. And as a matter of fact, the way we (India) approached it way back in March 2022, was the reason why many young Indians saved themselves from the meltdown that happened afterwards,” the minister noted.

In India, crypto profits are taxed by 30 percent, a rule that went live in March last year. In addition, one percent TDS is also deducted at each transaction in order to keep some trace of these largely anonymous fund transfers.

At this point, India is spearheading the formulation of global rules to regulate this volatile digital asset space as the President of the G20 group. Clarity on the situation is expected by December this year.

“Crypto is a great area, I encourage innovations to continue there – but it certainly needs some global rules before it could be widely used,” Chandrasekar added.


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Consumers’ Right to Data Protection, Privacy and Safe Internet Can Never Be Compromised, MoS IT Says

The government will ensure that consumers always have their platforms accountable to them in the digital space, and the rights of Indian consumers to have safe Internet will not be allowed to be compromised or diluted, Union Minister Rajeev Chandrasekhar said on Friday.

The Minister of State for Electronics and IT — who is spearheading an extensive and in-depth nationwide consultation on the new Digital India Bill that will replace two decades old the Information Technology Act — noted that for years, the big tech platforms masqueraded as innovation and misused market dominance necessitating overhaul of regulatory and legal frameworks.

“…it is a commitment that we have to the people of India…1.2 billion Indians who are going to use the Indian Internet, that we will keep the Internet open for them. We will deliver safety and trust on the Internet for them. And we will make sure that regardless of whether you’re a big tech or small tech, Indian or foreign that consumers will always have their platforms accountable to them,” the minister told PTI.

He said “change” is normal in the tech and digital world.

“As we look to the future, and we look to the past, disruptions are going to be increasingly normal…So, we are essentially creating these laws or rules to help make this movement forward, as non-disruptive as possible,” Chandrasekhar said.

For several years now, the big tech, be it search engines or social media platforms have, in a sense, avoided being regulated by governments all around the world “because they masqueraded as innovation”.

Most governments around the world and consumers are finding out that as much good they these big platforms do, there is also a flip side. For instance, they may be helping users search faster, but they may also track movements.

“…as the competition commission has recently pointed out…certainly, they (digital platforms) allow you to do many things more efficiently, but they’re also certainly misusing the market power and market dominance,” the minister said.

The government’s approach is that platforms must continue to add value to the lives of the citizens, not exploit citizens or their data.

“So, there are many things that are wrong about the big tech platforms even as they masquerade as innovations, and they do good…And therefore, these guardrail approaches that we are taking…the prism of user harm is the basic principle of making sure that regardless of whether you’re big tech or small tech, foreign or Indian (platform), the Indian digital nagrik, the Indian consumers’ rights to data protection and privacy, and of having a safe Internet, will never be compromised, will never be diluted,” the minister said.

The Internet today is vastly different from what it was back in 2000, when the IT Act was enacted.

“Internet in 2000, when the IT Act was enacted, and the Internet in 2022-2023, from a complexity, diversity, risk and harm point of view…they are two very different animals. And therefore, it is certainly clear…that a legislative framework that dealt with the benign Internet and Internet that only did good, that legislative framework is certainly not going to be useful in an era where the Internet is not just good, but it is also bad,” he explained.

Today’s Internet has several layers of user harm and complexities.

“It is certainly not about the Internet having only one intermediary, which connects the user to the Internet. Now, there are many, many different types of intermediaries with very different characteristics of benefits, harms, risks, etc,” the minister said.

Algorithmic biases and accountability are among the challenges being thrown up in digital space.

“The Digital India Act is an Act that proposes to address these issues. But we will not address this by making it very complex to resemble the complexity of the Internet. It will be based on the simple principle that the Internet should always be open, and there should be no disruption of the choice that Indian consumer has. Nobody should be able to assert or use or misuse their market power to distort choices,” Chandrasekhar said.

Given that 120 crore Indians, old and young, women and men, are all going to use the Internet in their lives for pensions, various benefits, education and skilling, the Internet has to be safe and trusted, the minister asserted.

“We cannot afford to have our Internet to be anything but safe and trusted where anybody who does user harm is immediately identified and held accountable under the law. So, we are moving from an era of a very simple Internet to a very complex Internet, from an era of the Internet doing good to the Internet as much as representing bad and therefore, the legislative framework is going from IT Act to Digital India Act,” the minister said.

He said the issue of whether social media platforms should have safe harbour provisions at all is a “legitimate question” to ask and “a conversation worth having”.

“When publishers…today are held accountable for the content they have, post, create, under the laws of the land, what is so special about a platform that makes it exempt, and therefore denies its users recourse to natural justice if there is something that is wrong, which is patently false, which is creating harm, which is defamatory,” he said.

These issues on why users are not being fully protected in such cases, and why platforms should have that immunity “is a conversation worth having”.

“We are inclined to believe today in the conversation that we’ve had with various stakeholders that the government, which is playing the role of an arbiter between the platforms that have this harmful content and the user who’s aggrieved by the content, the government should step aside,” he emphasised.

In cases where a user aggrieved by the content of a platform wants to go after the platform, the matter should be settled by the laws of the land and the judicial system and not the government.

“The government is, in a sense, wittingly or unwittingly placed itself in the middle by giving section 79 and safe harbour immunity to these platforms. So, I think it’s worth having a discussion about that in this day and age when the Internet is increasingly getting more and more complex, 120 crore Indians are going to be online, platforms are going to evolve and grow, and new ones are going to come, should the government be placing itself in the middle of this,” he noted.

The questioning of the safe harbour provisions has certainly created a ruffle among the platforms for now.

“…but as I explained it to them, as I explain to the consumers and other user organisations, people are beginning to understand the logic of what I’m saying, which is why should the government at all be protecting the platforms…the platforms should start evolving a model where the relationship with their consumers is one where they are accountable, and therefore their own content moderation strategies are aligned to the consumers,” he said.


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Indian Startups Have Deposits of About $1 Billion in Silicon Valley Bank: MoS IT Rajeev Chandrasekhar

Indian startups had deposits worth about $1 billion (roughly Rs. 8,250 crore) with embattled Silicon Valley Bank and the country’s deputy IT minister said he had suggested that local banks lend more to them going ahead.

California banking regulators shut down Silicon Valley Bank (SVB) on March 10 after a run on the lender, which had $209 billion (roughly Rs. 17 lakh crore) in assets at the end of 2022.

Depositors pulled out as much as $42 billion (roughly Rs. 3.4 lakh crore) on a single day, rendering it insolvent. The US government eventually stepped in to ensure that depositors had access to all their funds.

“The issue is, how do we make startups transition to the Indian banking system, rather than depend on the complex cross border US banking system with all of its uncertainties in the coming month?” India’s state minister for technology, Rajeev Chandrasekhar said late Thursday night in a Twitter spaces chat.

Hundreds of Indian startups had more than a billion dollars of their funds in SVB, according to his estimate, Chandrashekhar said.

Chandrashekhar met more than 460 stakeholders this week, including startups affected by SVB’s closing, and said he had passed on their suggestions to Finance Minister Nirmala Sitharaman.

Indian banks could offer a deposit-backed credit line to startups that had funds in SVB, using those as collateral, Chandrashekhar said, citing one of the suggestions he had passed on to the finance minister.

India has one of the world’s biggest startup markets, with many clocking multi-billion-dollar valuations in recent years and getting the backing of foreign investors, who have made bold bets on digital and other tech businesses.

© Thomson Reuters 2023


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