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Towards Tech Federalism: Early insights from India’s 1st technology readiness index by India Ahead & Koan Advisory

In a free market economy, technology companies will be able to choose where they want to be located, based on how ‘IT sector-friendly’ a state is. But before states commence their journey to become IT hubs, they must assess their level of preparedness to fulfil such aspirations.

India's Tech Readiness Index
India Ahead and Koan Advisory have developed India’s first Technology Readiness Index to assess how ‘IT sector-friendly’ a state is. (Photo: Rawpixel/Envato)

What is the thread that binds Mumbai with Manchester? 

It’s a not-so-difficult quiz question. In the 19th century, both cities were the epicentre of major industrial changes. In 1830, the first steam engine train rolled out of Manchester and by 1854, over a 100 textile mills were roaring in Mumbai.

The history of industrialisation is proof that every major disruption has a geographical epicentre and the technology sector is no different. In the US, Silicon Valley is home to some of the most influential companies in the world. In India, Karnataka has cemented itself as the country’s IT capital of the country. In fact, cities and regions across the world compete to house IT companies. When Amazon wanted to move its headquarters, it made American states bid against each other. Similarly in India, Karnataka often jostles with Telangana to be known as the country’s technology sector powerhouse.

In a free market economy, where healthy rivalry ensures the robustness of a particular sector, such jostling among provinces is a breath of fresh air. It will motivate states to upgrade infrastructure, skill manpower and, most importantly, court the IT sector. For their part, technology companies will be able to choose where they want to be located, based on how ‘IT sector-friendly’ a state is. But before states commence their journey to become IT hubs, they must assess their level of preparedness to fulfil such aspirations.

India’s first Technology Readiness Index

To help them do so, India Ahead and Koan Advisory have developed India’s first Technology Readiness Index. This Index is a holistic assessment of the extent of digitalisation, across states and union territories (UTs), mapped using diverse quantitative and qualitative parameters.

  1. Access to tech services
  2. State of tech infrastructure
  3. The existence of laws and policies that are attuned to a tech economy
  4. The state of tech businesses in the state/UT 

They are scored across these themes, and then ranked based on overall performance. This Index can help governments and other relevant stakeholders understand their strengths and weaknesses. It can also provide some guidance on the steps they can take to improve their technology readiness going ahead.

The Index offers some fascinating insights. States along India’s western and southern coasts are the most “technology-ready” and have the required institutions (educational and otherwise), enabling laws and nuanced policies that are needed for any digital economy to flourish.

On the other hand, India’s northern and eastern states need to do a lot more to be able to compete with their counterparts in the south and the west. For instance, some states in the East need to evolve their policies on taxi aggregators while others need to put in place frameworks on cybersecurity.

A striking feature of the Index is its correlation with a state’s Gross State Domestic Product (GSDP). In other words, states that score high on the GSDP also rank high on the tech-readiness index. The index informs us that those states with higher incomes have more resources at their disposal to invest in digital infrastructure, and supporting facilities such as electricity, roads, etc. They also have greater scope to provide incentives such as tax rebates to attract businesses.

In contrast, the Index finds almost no correlation between a state’s technology readiness and its human development indices.  In other words, “it is agnostic of the average life expectancy and average years of schooling (actual and expected) – key ingredients of the HDI”. Rather than view this correlation as directionless, policymakers have a golden opportunity: to frame policies that encourage the use of technology as a lever to improve access to education, healthcare and other important HDI indices.

Earlier industrial revolutions brought with them waves of prosperity for their geographic epicentres. The fourth industrial revolution, powered by technology, is no different. Silicon Valley, the fountainhead of all technological innovation, clocked a $128,308 in terms of per capita in annual gross domestic product (GDP) in 2019. In other words, if it were a sovereign country, it would be amongst the richest in the world. For India’s states to become the Silicon Valleys of this century, they must be imbued with a sense of competition that incentivises them to up their technology readiness game. Else, their dreams of becoming the epicentres of future industrial revolutions will remain just those.

(Aayush Soni is Head of Communications, Koan Advisory)

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