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India's Third Giant Leap
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India's AI Revolution

Nov 15, 2023

This Stock is the Nerve Centre of Indias AI Revolution

In 1999, Pakistani troops took secret positions in Kargil. To find them, the Indian military sought the global positioning system data for the region.

At that time, the space-based navigation system called GPS (Global Positioning System) was maintained by the US government. The US denied India vital GPS information.

India's need for an indigenous satellite navigation system was felt earlier, but the Kargil experience made India realise its importance.

Amid increasingly shifting geopolitical realities, it is even more crucial for India to be self-reliant in satellite navigation today.

It is not just important in war, where satellite navigation helps. Yes, the GPS does track enemy location and movement as well as guide precision weapons. But a homegrown, secure GPS technology helps the economy in a significant way.

ISRO's NavIC - Answer to GPS

NavIC is a navigation system recently developed by the Indian Space Research Organisation (ISRO). It operates on similar principles and functions akin to the GPS.

The key difference is that GPS is owned and operated by the United States, whereas NavIC is owned and operated in India.

Devices that receive and interpret NavIC (Navigation with Indian Constellation) signals must come equipped with compatible microchips. These components are built to handle the signals beamed down by the Indian satellites.

Being a regional navigation system, NavIC offers more accurate and comprehensive coverage of the Indian geography. So far, the system is dependant on the imagery from seven satellites but this infrastructure is set to expand.

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Google's Envy, NavIC's Pride

Globally Google Maps is the default GPS software.

So, Google supports direct integration of Google Maps in automotive systems. However, the technology has seen roadblocks from Google's American competitors.

Naturally, car manufacturers are wary of sharing too much data with Google. Because the latter is their competitor in autonomous driving.

Similarly, Apple would not use Google Maps data to power it's iOS mapping product. Amazon also directly competes with Google in the advertising space. So it would not like to share information with a competitor.

Third, companies in the customer experience businesses are reluctant to share data with Google. Especially since Google competes with them in many different fields. For example, fintech company such as PhonePe would prefer not to share data with the parent company of its competitor - Google Pay.

That makes an independent company with technology similar to GPS extremely relevant in the Indian tech ecosystem.

This company has tied up with ISRO to incorporate the NavIC technology in Indian tech ecosystem.

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Since the company does not directly compete with its clients in other businesses, not just Indian but even American companies are more willing to incorporate the software in their devices.

Further, in September 2023, India made it mandatory for both smartphone and automakers to use NavIC by December 2025.

Smartphone maker Apple has already agreed to incorporate NavIC, in its latest iPhone 15 smartphones.

Plus, NavIC could present new use cases for navigation-based gaming apps.

It can also help auto insurance companies to track vehicles they have mortgaged.

Advertising companies could develop better location-sensitive advertisements.

The travel and tourism industry can create location-based use cases by making the tour more informative and interactive.

NavIC will also help India's drone industry grow and become more efficient, especially in drone delivery businesses.

Discover: Why you should consider investing in 'Safe Stocks'

Age of AI

Satellite navigation systems like NavIC are not just about mapping. They are also about leveraging AI to offer users more intelligent inputs.

AI-enabled systems in vehicles, for instance, are able to anticipate and make suggestions for optimal routes and destinations. AI-enabled systems can also be used to find the best gas prices and restaurants in the area.

Overall, AI is transforming the way we use satellite navigation systems. And the Indian company that has the first mover advantage in offering the Indian satellite navigation system NavIC is all set to profit immensely from India's AI revolution.

Warm regards,

Tanushree Banerjee
Tanushree Banerjee
Editor, StockSelect
Equitymaster Agora Research Private Limited (Research Analyst)

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