To take advantage of a promising market, smart card industry, which has not seen significant growth in the past, has to cross several hurdles
Wednesday, June 05, 2013: India is emerging as one of the world’s fastest growing smart card markets, which is expected to grow at a CAGR of about 15 per cent during 2011-14. According to a study by RNCOS, an industry research and consultancy firm, smart card market has got an impetus due to factors that include a number of government programmes like the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), e-passports and e-driving licences. The growing shift towards EMV (Europay, Mastercard and Visa, a joint effort between the three to ensure security and global interoperability of these cards) is further driving the adoption of smart cards. Also, demand for mobile SIM cards has been growing at a double digit rate. Other potential areas for smart card applications include rapid transit systems, loyalty cards, and toll and parking smart cards.
Smart card ecosystem
Building a smart card application needs a combination of skills from semiconductor developers, operating system developers, smart card manufacturers, application developers, readers or terminals suppliers, and systems integrators.
Almost all components of the ecosystem exist in India, except for silicon module manufacturing. The various players also include chip suppliers, technology standardisation and government agencies (which play a key role in rolling out national level projects).
The smart card market in India is expected to jump from the current base of about 40 million cards to 400 million cards in the next few years. So both Indian as well as foreign smart card solutions providers are showing a keen interest in this market.
Some of the globally recognised card manufacturers who also dominate the Indian market are Schlumberger, Gemalto, G&D, Obethur, VCT and Orga. Among the major systems integrators are Shonkh, Rolta, Smartchip, CMS, Siemens (SISI), CA Satyam and E-Cube.
Suppliers within the industry are essentially semiconductor manufacturers like Infineon, STMicroelectronics, Atmel, Philips, Siemens Semiconductor, etc.
Chip suppliers and card manufacturers are the technology drivers, while the market is driven by government projects. End users seem to have limited influence in driving the adoption of smart cards.
A majority of the smart cards and components (chipsets, SIM cards, readers, etc) are imported. Chipsets account for 40-50 per cent of the total project cost, while the card, OS and integration costs account for the balance. Smart card chips are mainly imported from China, the European Union, Taiwan and the US.
There are numerous domestic card manufacturers with the production capabilities to support the local demand for smart cards. Since most of the new projects in the pipeline will take a few years to be operational, capacity building will happen at a gradual pace, as and when volumes ramp up.
Industry’s position in India
Smart card projects are not new to India. However, the industry didn’t see significant growth in the past. One reason has been the uncertainty in the minds of the decision makers regarding a project’s success. The success stories in the implementation of flagship programmes like Coastal ID Card, RSBY and MNREGA are beginning to change the mindset of policy makers, encouraging them to take faster decisions in favour of new smart card projects.
Besides, India has traditionally shied away from adopting new technologies. Given the long tenure of its programmes, especially in government ID related businesses, adopting newer technologies will ensure longer product and project lifetimes.
“Currently, we have a scenario where a person has to carry various smart cards for identification—the RSBY (Rashtriya Swasthya Bima Yojana or the national health insurance scheme) card, ration card, etc. It will be much easier to have one single card with various applications. Smart card technology provides the flexibility to have various applications on a single card. However, this also requires collaboration between the different bodies providing the services,” says Deepak Agarwal, senior manager, technical marketing, Secure Microcontrollers, India operations, STMicroelectronics.
Challenges and opportunities
Commenting on the opportunities for smart card industry that lie ahead, Merlin Lucas, head, chipcards and security, Infineon Technologies India, says, “With certified secure flash based products, the reaction time for government projects dramatically improves, bringing down project execution time by as much as half. This throws open opportunities for the entire value chain as they benefit by way of faster, reliable and secure project implementation.”
With the successful launch of India’s open standards based Smart Card Operating System for Transport Applications (SCOSTA) by the National Informatics Centre (NIC), there is tremendous growth potential in the government ID projects. The SCOSTA standard allows interoperability between solutions and sourcing from various chip suppliers and OS developers, enabling them to simultaneously participate in government tenders with their latest technologies. SCOSTA also offers substantial cost benefits.
However, several hurdles need to be crossed to target the potential market. “The primary challenge for any pan-India project is investment in infrastructure and timely supply and execution. This clearly calls for smart card solutions that allow a fast response to the diversified market. Fortunately, smart card technology is evolving. In high security, mass market applications like payment and government ID, ROM mask-based smart card products are being substituted by certified (secure flash) products,” says Merlin Lucas.
Cost reduction is important for the extensive adoption of smart cards. Smart card processor providers are trying to meet this need by minimising the gate count, increasing the code density and making the card’s features (including security) configurable.
On the technology front
On the technology front, all smart card components (the microprocessor core, memory and some means to power its functioning) need to improve in terms of price, performance and area. Chip providers are constantly working to offer a bigger memory size, increased security levels, speed and flexibility in interfaces.
Products based on the ST23 platform cover various aspects of large scale, government programmes. These are based on advanced 0.13µm and 90nm EEPROM technologies, and support the specific requirements of security, reliability, speed and flexibility in interfaces, apart from interoperability and tight deadlines.
NXP Semiconductors’ MIFARE platform offers a full range of compatible contactless smart card and reader ICs, as well as dual interface ICs that provide a link between the contactless and contact card markets.
The data on smart cards needs to be secured against hacking. To overcome this challenge, secure smart cards have put several technologies together, including high level ones like biometric identification. The processor core, too, needs to be tamper resistant and must prevent retrieval or modification of on-chip information even during the most sophisticated physical attacks. Also, the security features should be highly configurable.
With the increasing complexity of applications and security measures comes the requirement for a bigger memory. New generation microprocessors meet these requirements with higher code density.
The functioning of a smart card, especially the communication task, requires power. While some cards require contact to a source of power, some contactless ones (certain models of near field communication (NFC) smart cards and radio frequency identification (RFID) smart cards) draw power from the terminal itself during the read operation. There is pressure on the industry to reduce the size of the power unit and increase its efficiency.
In the high security mass market applications in India, it is apparent that ROM mask based smart card products won’t be able to fulfill the future challenges of government projects at a competitive total cost of ownership. Therefore, they will be substituted by state-of-the-art certified secure flash products. This development demonstrates a significant value addition to the value chain—be it to the OS developer, card manufacturer, government agencies or logistics—like increased logistic flexibility and faster time to market.
Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine
