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India and Industry 4.0: Smart Thinking and Smart Politics

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The neologism -Fourth Industrial Revolution or Industry 4.0 is not uncommon for policymakers and technocrats. Klaus Schwab, founder and executive chairman of the World Economic Forum (WEF), published a book titled “The Fourth Industrial Revolution” and coined the term at the Davos meeting in 2016. Since then, “Industry 4.0” has been a buzzword in all major economic and business summits.

In a paper titled – The Fourth Industrial Revolution: what it means, how to respond, Klaus Schwab, said “this revolution is characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres. There are three reasons why today’s transformations represent not merely a prolongation of the Third Industrial Revolution but rather the arrival of a fourth and distinct one: Velocity, scope, and systems impact.” The world is at the cusp of an unrivalled revolution. The first revolution captivated water and steam to mechanise production, the second exploited electric power and the third relied on electronics and IT. The fourth one is a conglomeration of various automation technologies such as artificial intelligence (AI), the internet of things (IoT), blockchain, fintech, autonomous vehicles, 5G telephony, nanotechnology, biotech, machine learning, robotics, quantum computing and the like.

Nicholas Davis, head of Society and Innovation at WEF in this WEF paper, describes this revolution as the emergence of cyber-physical systems which, while being “reliant on the technologies and infrastructure of the third industrial revolution…, represent entirely new ways in which technology becomes embedded within societies and even our human bodies”.

Industry 4.0 is shaped by advanced technologies from different spheres like the physical and digital worlds that combine to create innovations at a speed and scale unparalleled in human history. The fourth industrial revolution demands ubiquitous digitization, automatic machine-to-machine (M2M) communication and is constantly transforming how individuals, governments and companies relate to each other and the world at large. With such sudden disruption, it will radically change macroeconomics and the way the industry responds to the needs of civil society.

Great and sudden change by its very nature is painful to accommodate. Preparing for the Fourth Industrial Revolution is a subjective task. Developed economies like the United States, Russia, China, etc. will have to frame policies according to their economic and technological demands. For a growing economy like India with its under utilised population, young age and cultural diversity, a more people-intensive approach should be adopted. This will require policymakers to harness the industrial change instead of being a reactive agent. In democracies like India, it is effective law-making which plays a major role to deliver regulatory frameworks that change often and respond to the stimulus.

The speed of change is unexcelled. It is disrupting almost every industry in every country, and it presages the transformation of production and governance. The gap between the 1st and 2nd industrial revolution was around 100 years, 2nd and 3rd was approximately 70 years, 3rd and 4th is 25 years. Analysing this trend, it cannot be ruled out that the next industrial revolution may take place within 10-15 years. So, it is very important that economies pool their resources, take risks, make new investments and come together for better agility to adapt quickly to make the best use of this global change. 

Going into the history of industrial revolutions, it is apparent from a layman analysis that whichever country early participated in the industrial process turned out to become world leaders right after that industrial revolution. India is a young nation aiming to be the third largest with a10 trillion-dollar economy by 2030, India has no option but to not only participate but also be the frontrunner in the Fourth Industrial Revolution.

In 1750 AD, India’s share of global industrial output was roughly above 25%. India missed the bus of first industrialisation due to the devious British Raj and by 1900, this had plummeted to 2%. While India’s contribution to the world GDP was 2.6 per cent in 2014, it has increased to 3.3 per cent in 2017. Addressing the joint sitting of the Parliament, the President of India said the country’s GDP has been growing at a rate of 7.3 per cent on an average, making India the sixth largest economy in the world. India is playing a vital role in international trade in the Asia Pacific region. The President also noted that this is an opportune moment for the country to play a decisive role in the fourth industrial revolution considering its economic position. 

Proper channelling of resources towards Industry 4.0 can help India leapfrog traditional phases of development and accelerate its metamorphosis to a developed nation. Being the fastest growing economy, deploying these technologies optimally and strategically can create more sustainable growth. A culturally accommodative nation with more than 70% of its population under the age of 32, India’s role is also going to be crucial in shaping the global Fourth Industrial Revolution agenda in a millennial and inclusive manner. India has the potential to be the global hub for the Fourth Industrial Revolution.

Governments, entrepreneurs, business houses and start-ups are rapidly adopting technologies involving AI, the Internet of Things, 3D-printing, advanced robotics and blockchain. Artificial intelligence can be used effectively to reduce poverty, improve the lives of farmers and make the lives of the differently abled simpler. The application of AI in sectors from health to law, from manufacturing to finance, from elections to governance, is not an impossible reality. Blockchain can facilitate cross-border data and technology transfers to support government services and natural resource management. India recently came up with its unmanned aircraft systems policy, commonly referred to as drones, having the ability to strengthen defence and security, make dangerous jobs safe, and act as a lifeline for remote populations.

Considering the pace of growth of automation technologies, it is absolutely possible that we will reach a point called “singularity” where machines become as smart as humans and then keep getting smarter.  Repetitive processes are increasingly becoming automated. Digital technologies have the potentiality to bring about the balance between green and growth, data and infrastructure, and profits and people. Technology will soon be able to edit genes to create favourable traits and new life forms. 3D Printers may become capable to produce fully functional, usable organs. Artificial blood might soon become a reality and the oceans would be harvested for food. Banks and financial sectors in India are already using chatbots and humanoid robots.  A Kannada-speaking robot in Canara Bank in Karnataka and Ira robot of the HDFC Bank which helps customers choose the right service and financial products are examples of linguistic coding of automation technologies.

It is estimated that between 2018 and 2022, as many as 75 million jobs will be displaced worldwide due to automation; however, as many as 133 million new ones would be created.  In the United States alone, it is estimated that 1.4 million workers will be displaced in the coming decade as a result of the introduction of new technologies. India’s information technology sector is already witnessing jobless growth and there are various reports showing India unemployment rate hit a 45 year high in 2017-18. The biggest concern of Industry 4.0 for every growing economy is the loss of jobs. A potential answer to this problem is – smart politics. In a country like India with 1.3 billion people, it is practically impossible for any government in the world to provide jobs to everyone, what is practical is to engage people. This engagement is not only about job creation but also about start-ups, alliances, businesses, offshoring, etc. which will sufficiently help an economy to capitalise the resource pool.

Like all revolutions that preceded it, the Fourth Industrial Revolution has the potential to raise income levels and improve the quality of life globally. Mitigating the relevancy of jobs is not India specific, it is a global issue. But the peculiarity of this problem is the method of tackling it. Smart policies and smart thinking can reconstruct these challenges into opportunities. When the first computer was invented, there was a worldwide outcry on its impact on jobs, but history is the evidence of the fact that computers created more jobs than it destroyed. India too faced national protests against the computerisation of railway tickets as economists predicted it would take its toll on the jobs. Today, Indian Railways is India’s largest employer and is about to conduct the world largest employment drive with around 2.37 crore applicants competing for 1.27 lakh posts.

Given the Fourth Industrial Revolution’s rapid pace of change, it is important for governments and international organisations to evaluate whether to create change or follow the change.  Legislators and regulators are being challenged to an unprecedented degree and for the most part is proving unable to frame a flexible framework. Unconventional challenges need collaborative efforts. India will have to create a long-term ecosystem with the right mix of accelerators comprising of regulatory frameworks, educational ecosystems and government incentives that train and educates professionals.

India’s philosophy “Vasudhaiva Kutumbakam” or “the world is one family”, has guided the nation since Vedic times. It is based on the blending of science and spirituality for harmonious co-existence reaffirms faith in innovation and adaptability. India can act as a coordinator to collaborate with global economies to form a joint platform or intergovernmental taskforce involving all stakeholders of the global polity for leveraging most of the Fourth Industrial Revolution technologies.

Adithya is a student of Law at University of Mumbai’s School of Law. In the past, he has been a Researcher at an International legal & policy research think-tank and an Intern at the Office of Minister of State for Law & Justice and Corporate Affairs, Government of India.

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Organisations that embed cybersecurity into their business strategy outperform their peers

MD Staff

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Organisations that take a business-driven cybersecurity approach to their digital initiatives achieve better outcomes and outperform their peers, according to PwC’s May 2019 Digital Trust Insights Survey.

The global survey of more than 3,000 executives and IT professionals worldwide found that the top 25% of all respondents – market leaders known as “trailblazers” – are not only leading the way on cybersecurity but also delivering more value and better business outcomes.

Among respondents who say growing revenue is the top value sought from digital transformation efforts, nearly nine in 10 trailblazers say they are getting a payoff that meets or exceeds their expectations (compared to 66% of the other respondents).

Trailblazers are also significantly more optimistic about the potential growth in revenue and profit margin for their companies, with 57% percent expecting revenue to grow by 5% or more, and 53% expecting profit margin to grow by 5% or more.

The survey revealed key demographic information about trailblazers. Many are large companies; 38% of respondents from companies worth at least US$1 billion are trailblazers. The financial services (FS) industry and the technology, media, and telecommunications (TMT) sector are particularly well represented in the leader group. Thirty-three percent of FS respondents and 30% of TMT respondents are trailblazers, compared to roughly a quarter of the survey base in other industries.

Geographically, just 21% of EMEA (Europe, the Middle East and Africa) respondents are trailblazers, compared to 30% in the Americas, and 30% in Asia Pacific.

The leading behaviours that set trailblazers apart from their corporate peers include aligning their  business and cybersecurity strategies, taking a risk-based approach, and coordinating their teams that manage risk. Key findings from PwC’s Digital Trust Insights survey illustrate the edge that trailblazers maintain in all three areas:

Connected on strategy: 65% of trailblazers strongly agree their cybersecurity team is embedded in the business, conversant in the organisation’s business strategy and has a cybersecurity strategy that supports business imperatives (vs. 15% of others)
 

Connected on a risk-based approach: 89% of trailblazers say their cybersecurity teams are consistently involved in managing the risks inherent in the organisation’s business transformation or digital initiatives (vs. 41% of others)

Coordinated in execution: 77% percent of trailblazers strongly agree their cybersecurity team has sufficient interaction with senior leaders to develop an understanding of the company’s risk appetite around core business practices (vs. 22% of others)

“By focusing on building digital trust, trailblazers are driving more proactive, pre-emptive and responsive actions to embed these strategies into the business, as opposed to their peers who primarily look to minimise the operational impacts of cyber threats in reactive manner,” comments TR Kane, PwC US Strategy, Transformation & Risk Leader.

More than eight in 10 trailblazers say they have anticipated a new cyber risk to digital initiatives and managed it before it affected their partners or customers (compared to six in 10 of others).

“Organisations that take a proactive approach to cybersecurity and embed it into every corporate action will be best placed to deliver the advantages of digital transformation, manage related risks and build trust,” adds Grant Waterfall, EMEA Cybersecurity and Privacy Leader, PwC UK.

“Our research highlights the need for organisations to embed their cybersecurity teams within the business to support strategic goals. It’s not just about protecting assets – it’s about being a strategic partner in the organisation,” adds Paul O’Rourke, Asia Pacific Cybersecurity and Privacy Leader, PwC Australia.

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Business in Need of Cyber Rules

Anastasia Tolstukhina

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For more than 20 years, countries have been struggling to introduce a set of rules of conduct and liability requirements for digital space users. Progress in designing a code of cyber conduct is all the more relevant since digitalization is sweeping the planet at breakneck speed, creating new risks along with new opportunities. Businesses that are confronted with new challenges and threats in the digital space are putting forward their own initiatives, thereby pressing governments to speed up the process of adopting an international cyber code.

Why is the business community interested in setting rules in the cyber environment? There are many reasons for this.

Firstly, the quantity and quality of hacker attacks on the private sector increase every year. Hackers target any enterprises — whether they are small enterprises or technological giants. Attacked by the NotPetya virus, the world largest container carrier Maersk sustained $300 million damage and had to shell out nearly $1 billion for restoration. In total, according to Sberbank’s estimates, the damage to the global economy from hacker attacks in 2019 can reach about $2.5 trillion, and by 2022 — as much as $8–10 trillion.

Secondly, many technology-oriented companies, facing a lack of trust on the part of government agencies, experience severe difficulties in promoting their business projects abroad. At present, the UK, Norway, Poland, and other countries are involved in a debate about whether Huawei should be allowed to build fifth-generation mobile communication networks (5G). Huawei is suspected of stealing intellectual property and espionage. The US, Australia, New Zealand have introduced a ban on the use of 5G equipment from Huawei.

Not only Chinese companies face distrust. Google, Apple, Microsoft, Kaspersky Lab, and many others are often accused of illegally spying on people.

Thirdly, IT companies are forced to pay huge sums to protect their customers against hacker attacks and guarantee information security. Microsoft allocates more than $1 billion for this purpose yearly.

In the absence of a political solution to ensure international information security, private companies, which are keen to safeguard themselves and their customers, have chosen to conduct negotiations with each other on information security cooperation and are launching their own initiatives. Thus, coming into existence is a business information security track running parallel to the government.

In February 2017, Microsoft’s President Brad Smith launched the Digital Geneva Convention initiative. The Convention is expected to oblige governments not to take cyber attacks on private sector companies or the critical infrastructure of other states, and not to use hacker attacks to steal intellectual property.

Overall, the document formulates six basic principles of international cybersecurity:

  1. No targeting of tech companies, private sector, or critical infrastructure.
  2. Assist private sector efforts to detect, contain, respond to, and recover from events.
  3. Report vulnerabilities to vendors rather than to stockpile, sell, or exploit them.
  4. Exercise restraint in developing cyber weapons and ensure that any developed are limited, precise, and not reusable.
  5. Commit to non-proliferation activities to cyber weapons.
  6. Limit offensive operation to avoid a mass event.

However, while the Digital Geneva Convention is still on paper, 34 technology companies, including Microsoft, without waiting for decisions at the government level, signed the Cybersecurity Tech Accord in April 2018. Thus, the largest ever group of companies have become committed to protecting customers around the world from cybercriminals.

Cybersecurity Tech Accord members have called for a ban on any agreements on non-disclosure of vulnerabilities between governments and contractors, brokers, or cybersecurity experts; they also call for more funding for vulnerability detection and research.

Besides, signatories of the agreement have come up with a series of recommendations to strengthen confidence-building measures, which are based on the proposals of the UN and OSCE.

Such measures include:

-Develop shared positions and interpretations of key cybersecurity issues and concepts, which will facilitate productive dialogue and enhance mutual understanding of cyberspace and its characteristics.

-Encourage governments to develop and engage in dialogue around cyber warfare doctrines.

-Develop a list of facilities that are off-limits for cyber-attacks, such as nuclear power plants, air traffic control systems, banking sectors, and so forth.

-Establish mechanisms and channels of communication to respond to requests for assistance by another state whose critical infrastructure is subject to malicious ICT acts (organizing, i.e. tabletop exercises).

By now, Cybersecurity Tech Accord has been signed by 90 companies, including Microsoft, Facebook, Cisco, Panasonic, Dell, Hitachi, and others.

Another initiative was presented in 2018 by Siemens, which came up with the Charter of Trust. The Charter, which was signed by 16 companies, including IBM, AIRBUS, NXP, and Total, urges companies to set up strict rules and standards to foster trust in ICT and contribute to further development of digitalization.

Facebook has become part of the process too. In late March 2019, Mark Zuckerberg — the founder and CEO of Facebook — urged governments to become more actively involved in regulating the Internet. In particular, Zuckerberg spoke in favor of introducing new standards related to the Internet and social networks. These standards would come useful to guarantee the protection of personal data, prevent attempts to influence elections or disseminate unwanted information, and would assist in providing a solution to the problem of data portability.

Another initiative worth mentioning is the creation in 2014 of the Industrial Internet Consortium TM, IIC, which was founded on the initiative of AT & T, Cisco, GE, IBM, and Intel. This is a non-profit open-membership group that seeks to remove barriers between different technologies in order to maximize access to big data and promote the integration of physical and digital environment.

Some initiatives are coming from the Russian private sector. In particular, since 2017, Norilsk Nickel has been active on the international scene promoting the Information Security Charter of critical industrial facilities. The Charter’s main provisions include condemnation of the use of ICT for criminal, terrorist, military purposes; supporting efforts to create warning and detection systems, and assist in the aftermath of network attacks; and sharing best practices in information security.

In turn, Sberbank has launched an initiative to hold the world’s largest International Cybersecurity Congress. Last year, such a congress took place with the participation of 681 companies from 51 countries. The second such Congress is scheduled for this June. The Forum serves as an inter-sectoral platform that promotes global dialogue on the most pressing issues of ensuring information security in the context of globalization and digitalization.

Most business initiatives hinge on the fact that they all call for developing confidence-building measures and rules of conduct in the digital space. Besides, the business community welcomes the need to adjust international law to the new realities of the digital economy.

Private sector initiatives can perfectly be streamlined with initiatives put forward by countries within the framework of the UN. After all, by and large, governments pursue the same goals as business in this area. The use of ICT for peaceful purposes, confidence-building measures, the supply of information about vulnerabilities — all this is significant both for business and for most states.

Fortunately, the global discussion under the aegis of the UN on issues related to International Information Security is getting back on track after a pause of about one year. From now on, it will be attended by representatives of the private sector. According to the resolution (A/RES/73/27), the mandate of the future Open-Ended Working Group (OEWG) allows for the possibility of holding inter-session consultative meetings with representatives of businesses, non-governmental organizations and the scientific community to exchange opinions on issues within the group’s mandate. The first inter-sessional meeting with representatives of global business is scheduled for November 2019.

In conclusion, we would like to remark that the issue of information security is dynamic and for this reason, it can be adequately addressed only with the close cooperation of governments and technology companies, since it is the latter that keep pace with the development of technologies and are the drivers of the digital economy. Governments should keep a close eye on the initiatives of non-state actors and put the most useful proposals on the agenda of discussions at international forums. Moreover, once adopted and approved at the government level, these standards and regulations should have a legal force, rather than be recommendatory — this is the only way to guarantee the order in the cyber environment.

First published in our partner RIAC

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Technology for Social Good in India

MD Staff

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From using drones to plan water supply schemes in hard-to-reach locations, to deploying satellite imagery for enhancing land usage, or using mobile phones to track children’s health, technology is changing the way we live. The World Bank is supporting several interventions where new-age technology is being used for social good, giving a new tool to policymakers to improve governance and the quality of our lives

Making farmers resilient

Digital applications are helping farmers in Bihar and Madhya Pradesh make faster and better decisions on crop planning based on weather conditions, soil and other indicators

This $12.67-million Sustainable Livelihoods and Adaptation to Climate Change project that started in 2015 has so far empowered more than 8,000 farmers to adopt climate resilient practices.

Prioritizing interventions

Satellite images taken from a height of 900 km in Karnataka capture crucial data like land use as well as land cover, groundwater prospects, and soil characteristics. When this data is fused with rainfall patterns and literacy rates, it helps experts and communities to prioritize action plans such as those for soil and water conservation

Geographic information system (GIS) technology can also map nutrient deficiencies in the soil, which helps with crop planning.

The Karnataka Watershed Development Project, known locally as Sujala, covered over half a million hectares of land in seven predominantly rain-fed districts in Karnataka between 2001 and 2009 and was the first to deploy the use of satellite remote sensing and GIS mapping effectively over a large area.

Supplying Water in Challenging Terrain

Shimla city in Himachal Pradesh gets water once every two days for a few hours, while bulk water is pumped over 1,400 meters, creating a high cost of service

To tackle this, drones have been used to click high resolution images in high altitudes and challenging topography in World Bank’s Shimla Water Supply and Sewerage Service Delivery Reform Project. This, along with GIS technologies, has helped the state government prepare a 24×7 water supply model for the city that addresses issues such as pressure management, transmission and distribution networks, and identifying illegal connections.

Tracking health

All across India approximately 150,000 Anganwadi workers are using smartphones to track growth and nutrition in children. Photos of the hot lunch served to the children at health and nutrition centers, for example, can now easily be shared with block, district and state-level officials.

“It’s easier to work with mobiles than registers,” confessed an Anganwadi worker in Madhya Pradesh.

The World Bank has so far invested about $306 million in nutrition through the ICDS Systems Strengthening and Nutrition Improvement Project.

In Chhattisgarh, a mobile based application called Nutri-Click provides real time, need-based, one-on-one counseling on appropriate nutrition and care practices to pregnant women and caregivers and mothers of young children and their family members.

The program has so far helped over 4000 pregnant and lactating women

Digitizing Medical Records

Doctors in 36 public hospitals in Tamil Nadu can now access, collect and analyze critical health data for quick and timely interventions with the click of a button. The system also helps with retrieval of manual records as well as maintenance and management of medical equipment, making the entire process transparent and convenient.

The $110.3 million Tamil Nadu Health Systems Project was active in five Tamil Nadu districts. A second phase will now aim to cover another 222 hospitals across the remaining 25 state districts.

e-Governance

In 164 municipalities in Karnataka, property owners are now able to calculate their property taxes online; 10 million birth and death records are now online and searchable; and over 390,000 citizen complaints were lodged over 10 months—98 percent of which were redressed.

Through the Karnataka Municipal Reforms Project, municipal revenues have increased while interface between citizens and local administrations has vastly improved.

Vocational Training

World Bank’s Vocational Training Improvement Project has helped digitize activities such as admissions, examination management, and certifications in Industrial Training Institutes (ITI) under the National Council of Vocational Training.

The portal provides detailed records from more than 13,000 public and private ITIs across the country, including data related to courses offered, admissions, examinations, placements, etc.

So far more than 150,000 e-certificates to past trainees have been issued, and over 2 million certified trainees have received online certificates, saving time and effort.

World Bank

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