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Smart
Cards
September
15, 2003
Smart cards to hit 21.7mn units by
2005
NEW DELHI -- Though India's population has passed the
one billion mark, it does not have a national identification
(ID) document scheme till date. The Indian citizen has
a paper-based document known as the ration card, which
serves as an identification and for claiming other government
benefits. Due to the lack of proper ID, India faces
the problem of identifying and tracking illegal immigrants,
of counterfeit identification, travel documents, bogus
voting and inaccurate voting rosters during each election.
Hence, the introduction of smart card-based national
ID documents is natural in such an environment.
In
2001, the smart card unit shipments of the Indian market
were approximately 3.7mn with a CAGR of 56.2 percent
during the forecast period. The unit shipment is likely
to reach 21.7mn units in 2005, according to a recent
report by Frost & Sullivan. In India, five basic
sectors are using smart cards -- telecommunications,
banking and retail, transportation, healthcare and government.
There are other segments, such as universities and electronic
access control system (EACS) that are gaining acceptance
in this country.
Gaurav
Dua, industry analyst -- IT practice, Frost & Sullivan,
said: "Smart cards were introduced in India way
back in 1990 by companies, which offered telephone cards,
employee cards and ATM cards. However, their entry was
too early for the Indian market and they suffered huge
losses. The real growth came in 1995 with the arrival
of mobile phones in the country, where the red card
(SIM card) is a smart card. Till date, the growth of
smart cards is limited to the telecom applications market,
which includes GSM and the smart card payphone markets.
Mumbai's experiment with smart cards for ticketing for
its Brihanmumbai Electric Supply and Transport (BEST)
buses, and the Gujarat driving license project are probably
the most successful ones to be implemented."
According to the Frost & Sullivan report, the smart
card market in India is poised to see greater maturity
in terms of technology upgrade. The technology trend
of the Indian smart card market is gradually drifting
toward open platforms, which minimises entry barriers
and creates open, dynamic and competitive environment
with greater choice when it comes to suppliers. An open
platform supporting multi-applications can be advantageous
to a highly populated country such as India. However,
the main barrier to the open platform technology is
the cost. In addition, multi-application may appeal
to many, but it is actually far less attractive because
of its complexity and has become more of a closed environment
application as opposed to an open environment.
According
to Frost & Sullivan report, the key drivers of smart
cards market in India in near future will be:
- Increasing
use in mobile phones as SIM cards;
- Large
potential market size attracts market participants;
- Lack
of proper national identification scheme;
- Huge
appeal for banking and retail applications;
- Increasing
pilot projects by state governments; and
- Penetration
of the Internet and e-commerce in the large and medium-sized
cities.
Dua
added: "For a developing country like India, where
technology would play an important role in the overall
growth and development of the country, smart card evolution
is very critical. For faster services, growth in areas
such as banking and finance to reach the grass root
level, smart cards would be a critical tool. Personal
identification cards and applications such as utilities
that presently have strong bottlenecks in distribution
would have greater positive impacts on the overall systems
if an application such as smart card penetrates faster."
According to Frost & Sullivan report the major bottlenecks
of smart card market in India are:
- Low
purchasing power;
- Low
technology awareness/cultural shifts;
- Delay
in approval standards;
- Other
cheaper competing technologies; and
- Poor
allied infrastructure such as telecom infrastructure
and ATMs and card readers, etc.
According
to Frost & Sullivan's report, the Indian government
has to play an active role in three areas:
- Promote
awareness of such technologies among the end users;
- Use
efficient systems like smart cards and replace rudimentary
and inefficient systems such as ration cards and other
major identification documents; and
- Fasten
the process of overall standard approval.
Dua
noted: "The government's plan to issue multipurpose
identity based on smart cards in border and coastal
areas is a suitable one as the usage of technology would
yield higher effectiveness in those sensitive regions.
Also, multipurpose cards would bring down the overall
cost structure and reduce breakeven time for such technologies
to be used on large scale."
Contact:
Frost & Sullivan
Tel: +91-44-431 4263/5/6/7
Fax: +91-44-431 4264
Email: bbanerjee@frost.com
www.frost.com
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