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Digitization is affecting all aspects of the global economy, including international trade and competitiveness. As imports and exports enter the digital realm, a new Economic and Political Weekly study suggests India needs to improve its digital infrastructure to take advantage of these trends.

In the study, Rashmi Banga of UNCTAD assesses India’s digital infrastructure and value addition by digital services using data from the World Input-Output database. The author finds that while India has made significant progress in digital infrastructure, it still lags behind internationally. India’s software developer population was estimated to surpass that of the US and hit 5.2 million in 2018, but contributed only 2% of global software products in 2017. Internet users have increased from 0.1% of the population in 1998 to 36.5% in 2016, but India ranked 134 out of 176 countries in the UN’s Information and Communication Technology (ICT) development index.

Similarly, India has made huge strides in promoting cloud infrastructure, which enables e-governance and e-banking services, but is hindered by poor internet bandwidth, speed and secure services.

She argues that India needs to significantly improve its data infrastructure to sustain its manufacturing competitiveness. Compared to China, India’s progress in big data analytics, AI and robotics have been lacklustre. Our robot density stands at 3 against China’s 68. However, one positive area is the value added by digital services for exports, wherein India ranks third in the world.

This value addition, though, is only concentrated in digital services, such as computer programming and consultancy. Banga argues that India needs holistic digitalization with value addition by digital services to be extended to other sectors. To do this, she proposes that the government implement a digitally-informed foreign trade policy, which would extend value addition to different sectors and improve India’s data infrastructure.

Also read: Is India Digitally Prepared for International Trade?

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