Who is he?
Mr. Ravi Shankar Prasad is India’s new minister of Communications & Information Technology (IT). As such, he oversees the sector that has been a driver of U.S.-India business ties, IT Services. He also inherits policies on local content requirements, safety testing and security testing, which have collectively been a major source of aggravation for multinational telecom firms in recent years.
During the tenure of the previous Congress government, Mr. Prasad raised key issues on the inconsistent manner in which spectrum airwaves were allocated to telecom service companies in 2008. The airwaves scam not only cost India foreign investment in telecom services, but also hurt network equipment makers, as service providers scaled back the process of upgrading their infrastructure.
Why is he in the news?
In one of his first public appearances, Mr. Prasad identified his chief focus area as restoring investor confidence in the IT services industry. Noting the importance of a stable legal regime, Prasad stated that retrospective taxation would be avoided, a highly contentious issue that has been a source of frustration for several foreign firms.
Additionally, according to industry officials, Mr. Prasad is looking to encourage multinational telecom equipment manufacturers to produce equipment locally in India.
What can we expect?
While American technology firms remain interested in investing in India, they are equally apprehensive over the restrictive telecom policies in India. For IT and telecom service firms, mandated local content requirement for certain telecom products remains a controversial issue.
Further, American IT and telecom equipment manufacturers are concerned over two proposed measures- one on a domestic safety certification requirement for imported telecom goods and the other on testing all “security-sensitive” telecom equipment.
The last time the BJP was in office, the party took important steps to encourage the growth of India’s (then-nascent) IT services industry. With sluggish growth in recent years, the IT industry in India hopes Mr. Prasad will look for ways to build this important sector.