Tag: India

Religion and Governance: An Important Lesson from India’s History

The fortunes of India had irrevocably changed on May 29, 1658, when two Indian armies clashed on the dusty fields of Samugarh, near Agra. India’s history changed forever. Aurangzeb’s victory over his brother Dara Shikoh marked the beginning of Islamic bigotry in India that not only alienated the Hindus but also the much more moderate Sufis and Shias as well.

Aurangzeb’s narrow Sunni beliefs were to make India the hotbed of Muslim fundamentalists, long before the Wahabis of Saudi Arabia sponsored the fanatics of the Taliban and the Islamic State. It was not only a battle for the Mughal throne but also a battle for the very soul of India

Aurangzeb’s victory here and other successful campaigns resulted in the creation of the greatest and biggest imperial India till then. But the seeds of India’s collapse were sowed.

In 1620 India had the world’s greatest national income, over a third of it, and was its greatest military power as well. It was the envy of Europe. The European traders came to seek Indian goods for their markets. But no sooner was the iron hand of Aurangzeb no more that his imperial India began to disintegrate. The iron hand that ruled by dividing rather than uniting and that sought to impose a hierarchy by theological preferences gave rise to much discordance. But for Aurangzeb, Shivaji Bhonsle might have remained a minor western Indian feudatory? There are important lessons to be learned from all this for those who rule and seek to rule India.

The weakening central rule and profit-seeking peripheral kingdoms allowed European trading posts to be established. Weakening regimes led to the trading posts raising armed guards. Soon the overseas trading companies began warring each other and with so many minor states now free to make their destinies joining hands with one or the other it was the Europeans who got gradually got established. The Anglo-French wars of the Carnatic were fought by Indian armies beefed up by trading company levies. The East India Company of the British ultimately prevailed and the French, Dutch, Portuguese and Danish got reduced to pockets.

A hundred years later, in 1757, the era of total foreign supremacy over India began when the East India Company’s troops drawn from South India and officered by English company executives defeated the army of Nawab Siraj-ud-Daulah at Plassey (Palashi) in Bengal, with the now usual mix of superior drilling, resolute leadership and a bit of treachery. At a crucial time, Mir Jaffar and his troops crossed over. India lay prostrate before Robert Clive.

Within a decade, on August 12, 1765, Clive obtained a firman from the then Mughal Emperor, Shah Alam, granting the Diwani of Bengal, Bihar, and Odisha to the Company. A Muslim contemporary indignantly exclaims that so great a “transaction was done and finished in less time than would have been taken up in the sale of a jackass”. By this deed the Company became the real sovereign ruler of 30 million people, yielding a revenue of four millions sterling. The John Company grew from strength to strength, and by 1857 the Grand Mughal was reduced to his fort conducting poetry soirees. It was the golden age of Urdu poetry.

The events of 1857 led to the formal establishment of India as a directly ruled colony of the British empire. It was yet another epochal event. India changed, for the better and for the worse. Once again India absorbed from outsiders, as it absorbed from the Dravidians, Aryans, Greeks, Persians, Kushans, Afghans, Uzbeks, and all those who came to seek their fortunes here. The British were the only ones who came to take away its vast wealth in a systematic manner. The wealth taken from India to a great extent financed the Industrial Revolution in England.

From then to another epochal year ending with seven took ninety years. In 1947, India became independent. Its GDP is now the world’s third-biggest. In a few decades, it could conceivably become its biggest. But have we learned any lessons from history?

Given its abject failures on the economic front, the BJP/RSS regime in New Delhi is now pushing India towards a Hindutva nationhood, by seeking to victimise a minority for the perceived wrongs and slights of the past. An intolerant religion can never be the basis of nationhood and national unity in India. The legacy of Aurangzeb tells us that. Aurangzeb had created the greatest empire that India had seen since Ashoka the Great. But it didn’t take very long for it to dissipate. In the hundred years that followed, a foreign mercantile company gained control over all of India.

The BJP under Narendra Modi might keep gaining electoral dominion over all or most of India. But has the BJP learned any lessons from history? Does the PM want to become the Hindu Aurangzeb? What is worrisome is that we know well that history is not Narendra Modi’s forte.

This article was published earlier in Deccan Chronicle. The opinions expressed in the article are the author’s personal views and do not reflect TPF’s institutional position or analysis.

Featured Image: Shah Alam conveying the grant of the Diwani to Lord Clive. en.wikipedia.org

August 16, 2021
Elections and Democracy: Germany’s Mixed Member Proportional System
It is now well-established that the First Past The Post system of elections followed in Indian democracy is thoroughly unsuited to Indian conditions, as it is more feudal and less of democracy. The German mixed system is better suited to India to ensure a more representative system of elections and accountability.

When it comes to choosing an electoral formula, the world often takes extreme positions which range between any variant of the Majoritarian System or that of the Proportional Representation. Proportional representation, to a great extent, has been an apt choice for ethnically divided societies with scholars such as Arend Lijphart asserting that it would strengthen the consociational approach in the political system. Yet, it has been criticized for the unstable governments it may produce and its inability to connect a voter with its representative. On the other hand, Majoritarian systems while praised for their simplicity and ability to produce stable governments, lack inclusivity, and induce tactical voting due to wastage of votes. However, the Parliamentary Council of Germany structured a mid-point for the two extremes to meet, which was initially considered provisional but has remained unchanged. It follows the Mixed-Member Proportional System.

The Mixed-Member Proportional System combines First Past The Post (FPTP) system (Majoritarian System) with Closed-Party List System (Proportional Representation) and thereby, enables the formation of a Government that is inclusive, stable, and remains connected with the voters.

Understanding how MMP works in Germany

The Bundestag (the German Parliament), elected for a four-year term, has 598 seats, distributed among the 16 federal states in proportion to the states’ voting population. Out of the 598 seats, 299 seats are filled through the FPTP system and the other 299 through the Closed-Party List System. This means that every voter has two votes on the day of the election: a constituency vote and a party-list vote. The first vote of electors decides the 299 representatives to be elected through the FPTP system, won based on a plurality of votes, and the second vote decides the proportional number of seats each party would get in the national assembly.

Once the FPTP seats are filled, the second votes are totalled. Those parties that obtained 5% of votes at the national level or have three representatives elected directly through the single-member constituencies are considered for the allocation of PR seats. The PR seats are allotted in proportion to each party’s vote share using the Sainte-Laguë formula.

The Sainte-Laguë formula divides the parties’ total votes using a series of divisors (i.e., 1,3,5,7,9….) to form a table of averages. The seats are then allotted to the parties with the highest averages in the table.

source: Washington university

Furthermore, these allotted seats are then subtracted from the respective party’s FPTP seats, and the remaining seats are the actual number of party-list seats allocated in the Bundestag. Often, the number of seats allocated to a party through FPTP is greater than those allocated through the Party List and these surplus seats are then kept by the party leading to an increase in the number of seats in the Bundestag for that governing year.

Implications of the electoral formula
- Electoral participation
Over the years, scholars have suggested that Proportional Representation tends to increase the voter turnout in a country. This is said to stem from the fact that the disproportionality between the number of votes received and seats allotted is significantly lower thereby reducing vote wastage, which encourages more voters to go and vote. Unlike FPTP’s ‘winner takes all’ formula, PR provides a chance to even smaller parties to secure their representation in the legislative council. This encourages their support base to vote and at the same time provides an incentive to the party to not limit their campaigning to specific areas (Blais & Carty, 1990). Germany’s electoral participation was 78.5% in 1949 and escalated to 86%, 87.8%, 86.8%, 91%… in successive elections. The lowest turnout was in 2009 with 70.8% and escalated slightly to 76.2% in 2017.
- Gallagher index
The Gallagher index created by Michael Gallagher is a statistical analysis methodology used to measure an electoral system’s relative disproportionality between votes received and seats allotted in a legislature. While countries following the PR system do generally tend to do well, Arend Lijphart points out that the German system, which is a mixed system, does exceedingly well compared to pure PR variants.

Germany scored an average of 1.95 in the 2017 national elections and has consistently maintained a low average in terms of disproportionality in comparison to others. Their highest average was 7.83 for the year 2013. On the other hand, countries that continue to use FPTP such as Canada, Bangladesh, and India record pretty averages of 12.01 (2015), 21.38 (2001), and 16.06 (2019) respectively.
- Representation
PR systems generally enable conditions for a more representative legislative council because political parties no longer restrict their discourse and activities to the interests of the dominant communities, given winning a plurality of votes is no longer a deciding factor in their pursuit to secure a seat in the parliament. This provides an incentive for them to look appealing to a larger voter base.

Germany has seen a steady increase in the percentage of women representatives in the Parliament, starting from 7% in 1949 to 31% in 2017. The need to encourage ethnic minorities to cast a vote provides an incentive to political parties to field candidates who are non-German in origin, and this has enabled the participation of candidates originating from Turkey, Poland, Austria, Romania, and so on.
- Effects on the Far-Right
Lisa Harrison in her paper ‘Maximizing Small Party Potential: The Effects of Electoral System Rules on the Far Right in German Sub-National Elections’ writes that far-right or extremist parties see limited success at the national level elections, but they may play a significant role at the sub-national level elections. A major hindrance that keeps these far-right parties away from the Bundestag is Germany’s minimum threshold of votes policy, which allows only those parties that have won 5% votes or 3 FPTP seats to claim representation in the parliament.

This however changed in 2017 when Alternative for Germany became the first nationalist far-right party to secure seats in the German Parliament since World War II. They received 12.6% of votes, translating into 94 seats in the Bundestag. The rise of the party coincides with the rise of hate crimes against immigrants. In March 2021, it was reported that Germany’s domestic intelligence forces have kept the party under surveillance on the suspicion of trying to undermine the democratic constitution.

Conclusion

Electoral systems don’t come up in a vacuum. Rather, they are selected and implemented within the socio-political conditions of a particular nation. This implies that there is no electoral system that is universally applicable. Depending upon the suitability, countries could either side with the Majoritarian system or the Proportional Representation system or could apply both, as in the case of Germany. Germany’s Mixed-Member Proportional System catered to the needs of a constituent assembly which was divided over the question of an apt electoral system and at the same time has continued to do the two things that the constituent members hoped for, maintain stability and remain inclusive.

As India enters the 75^th year of its independence, and as the world’s largest democracy, its electoral experiences of the last seven decades point to the unsuitability of the present FPTP system. Given the large population and the diversity of India, the FPTP system has proved to be a complete failure. The FPTP system does not truly reflect the principle of “one person one vote”, according to which each ballot should have ‘equal force’ in the sense of the share of seats in the parliament. Indian elections system has resulted in a skewed system of vote-bank politics, endemic corruption, and the feared majoritarian tyranny in the name of democracy. The German model of a mix of Proportional Representation and the FPTP system is what India needs at this to revive and strengthen its democracy.

References:

Gallagher, M., & Mitchell, P. (2008). The Politics of Electoral Systems (Illustrated ed.). Oxford University Press.

Zittel, T. (2017). Electoral systems in context: Germany. Oxford Handbooks Online. Published.

https://doi.org/10.1093/oxfordhb/9780190258658.013.37

https://www.statista.com/statistics/753732/german-elections-voter-turnout/

https://www.tcd.ie/Political_Science/people/michael_gallagher/ElSystems/Docts/ElectionIndices.pdf

https://blogs.lse.ac.uk/europpblog/2017/09/21/measuring-the-diversity-of-each-partys-candidates-in-the-german-election/

https://www.statista.com/statistics/753494/seat-distribution-bundestag-germany/

https://www.thehindu.com/news/international/how-serious-is-germanys-far-right-problem/article30952770.ece

https://www.reuters.com/article/us-germany-security-afd-idUSKBN2AV1M3

Feature Image: angusreid.org
August 16, 2021
Marginalised among the invisible: The case of female migrant domestic workers
The Pandemic, lockdown, and the chain of events that followed made the country wake up to the state of the most unfortunate group of the labour force; the migrant workers. They have always remained invisible to the development agenda of the government and only the catastrophe of a pandemic could shed light on their woes. Among this invisible workforce, there remains yet another marginalised group of female migrants.

In India, female migration was initially considered insignificant by equating their movement merely as associational or followers of men. However, this has certainly changed in the last decade. Marriage was seen as the central motive behind female migration, though lately more women are seen to enter the labour market post-migration as their labour demand rose in sectors of so-called “female occupations” of domestic work, care-work and certain informal labour requirements in sectors such as in construction, garment work, food services and as coolies and vendors. As family migration from rural to urban abodes saw a rise in the country, both male and female migrants were required to join the labour force to meet their mere subsistence needs. Lack of employment, low income and other economic reasons pushed females, especially from rural areas, to migrate to urban zones of the country (Singh et al., 2015). While in urban areas, the migrants especially females and children are exposed to extreme vulnerabilities with regard to their dismal conditions of work in the informal sector, urban policies are deeply flawed in omitting migrant welfare and the sheer denial of their civil rights and entitlements.

Precarious domestic work and female migrants

Domestic work is often regarded as an invisible and insignificant addition to the social and economic values of a country. The work is increasingly feminised with over 80% of the world’s domestic work occupied by women (International Labour Organisation [ILO], 2013a). And this mirrors the traditional notions of domestic work being a woman’s task. These tasks include traditional housework such as cleaning, cooking, washing clothes or utensils etc. or care-work such as a child or elderly care. Female migrants with low skills, low levels of education and migrating from rural abodes in search of employment form a predominant part of the labour pool. With no recognition and regulation of work, the female domestic workers are subject to unequal power dynamics at the workplace, making their lives precarious in terms of wages, security and wellbeing.

In India, domestic work employment among females saw an upsurge, especially in urban areas. This surge is mainly accounted for by the increasing need for care work given the changing demography, lack of work opportunities in other sectors and the gender constructions moulded by the society (Chandrashekar & Ghosh, 2012). According to the National Sample Survey (NSSO-2011-2012, 68^th round), 39 lakh (3.9 million) people are occupied in domestic work, among which 26 lakh (2.6 million) are females. Micro-level surveys suggest a predominant concentration of female migrants in domestic work, especially in urban areas (Mazumdar et al., 2013). There are two forms of workers: live-in workers, who are accommodated in the household and live-out workers, who return to their respective houses after work and may be involved in work with multiple households. As there is no relevant national data on migrant workers involved in the sector, micro-level surveys or sector-based studies are the only sources in understanding the conditions of these migrants in domestic work. Studies have stated that migrants with low vocational qualifications and often seen as unregulated and undocumented cheap labour, work under low wages for long hours and in dismal working conditions affecting their health and safety. Live-in domestic workers are more prone to the dangers of sexual and physical abuse. Live-out domestic workers migrating to a new city, struggle with the inaccessibility of social security schemes and entitlements. Exploitation by private placement agencies in terms of wages and work conditions is another area among their hassles.

The domestic work arena, already an unregulated and unorganised sector, puts female migrants with low bargaining power on a higher vulnerability scale. The task of identifying domestic work hinders the formulation of a sound regulatory mechanism to confront such vulnerabilities.

Barriers to effective Regulation

Regulating domestic work is impeded by cultural and structural barriers. The traditional notion and disregard of domestic work by women in households is extended to the understanding of paid domestic work as unproductive and hence, making it undervalued. The structural barriers relate to the unusual workplace in private spheres, which makes it difficult in enforcing labour laws and any form of scrutiny against the privacy norms of a household. The informality of work and its complexities aggravates the barriers in regulation. The employment relationship is uncertain as it is without any legal titles of employee and employer, making the relation very personalised and often not under any form of contract or agreement. Even if labour laws are made inclusive of domestic work, implementation and assurance of compliance of these laws in households are challenged until the household is recognised as a ‘workplace’ and the person hiring as an ‘employer’ in the legal framework (Chen, 2011).

Even though these barriers existed, the International Labour Organisation (ILO) convention 2011 attempted in ensuring decent work to domestic workers and this is recognised as the most important landmark in identifying domestic work under a legal framework. ILO defines domestic work as “work performed in or for a household or households” and domestic worker as “any person engaged in a domestic work within an employment relationship”. The convention specified a comprehensive labour standard for domestic workers in areas of their wages, hours of work, occupational safety and health and social security. The convention addressed and standardized the various concerns in the sector regarding child labour, migrant workers, trafficking, live-in domestic labourers and private recruitment agencies (C189 – Domestic Workers Convention, 2011). Even after the completion of 10 years of the convention and 32 ILO member countries enforcing the landmark treaty, India is yet to ratify the convention.

As domestic work remains undefined in the country, no significant statistical standard in estimating domestic workers exist. In the ILO policy brief on “Global and regional estimates of domestic workers” (ILO, 2013b), ambiguous nature of data on domestic workers were noticeable from the widely distributed figures, ranging from 2.5 million estimates from a household survey, 4.5 million workers estimated from official statistics (NSSO 2004-05) to an exaggerated figure of 90 million in news media. This difference in estimation is related to the difference in the identification of domestic work among different establishments (Mahanta & Gupta, 2015). With no clarity in identifying domestic workers inclusive of its peculiarities, these figures could be heavily underestimated too. Being a female migrant in the sector aggravates the problem of estimation as National statistics narrows down female migration patterns merely as associational. And thus failing to understand the true motives behind female migration and the subsequent scale of occupations they reside in (Indu et al, 2012). Macro data narrows down domestic female labour into regular workers based on their duration in employment and disregarding the conditions of low wages and other insecurities, while the temporary and casual nature of work goes unrecognised (Neetha & Indrani, 2020). The informality of work is another area that India has failed to regulate. Labour laws for industrial labour often disregard informal workers. This is evident in the isolation of migrant workers, especially female migrants in domestic work (Poddar & Koshy, 2019).

Lacunae in the legal framework

Domestic work and most feminised occupations, in general, in unorganised sectors, are isolated from the legal framework given their unique characterisation of workplace and employment relationships and not to mention the challenges in recognising their work given the cultural and structural barriers. For female migrants in domestic work or any other informal activity, the situation is similar.

There were certain positive steps in attempting to recognise the domestic workforce in the country. First of such attempts were their inclusion in the Unorganised Workers Social Security Act 2008 which gave hope, but failed to be implemented across different states (Agrawal & Agarwal,2018). Subsequently, the government also set up a task force to recommend a framework for policymaking and after 10 years, in 2019, we see a draft on National policy on domestic work formulated by the government covering their recognition, access to civil rights and social security schemes, skill development, regulating private placement agencies and a grievance redressal system (“National Policy for Domestic Workers”, 2019). Upon the recommendations of the task force, the domestic workers were to be included under the National Health insurance scheme – Rashtriya Bhima Yojana (RSBY). But the limited awareness of the scheme, its functioning and benefits, coupled with corruption reduced the domestic worker’s accessibility of the same (Mahanta & Gupta, 2015). The suggestion of the task force to include domestic worker rights in existing legislations, pertaining to industrial or organised labourers, was widely criticised because it does not adapt to the peculiarities of the feminised domestic work (Poddar & Koshy, 2019). Ensuring minimum wages to the domestic worker through the Minimum Wages Act 1948 with a task-based approach, while ignoring the aspect of personalised nature of employment completely, puts the live-in workers whose tasks are not quantifiable, out of the ambit of the act’s provisions. Similarly, the inclusion of domestic workers in the Sexual Harassment of Women at Workplace Act (2013), Employees’ State Insurance Act (1948) and Unorganized Workers’ Social Security Act 2008 is considered inadequate. Even though such inclusion is appreciated, these legislations fail to cater to the rights of a domestic worker if they are based on organised sector labour standards and without understanding the complexities of the domestic work (Poddar & Koshy, 2019).

Private placement agencies, one of the main recruitment channels of domestic work, remain unregulated. This has led to the rise in exploitation in terms of payment and working conditions. The Delhi government drafted a Delhi Private Placement Agencies (Regulation) Bill in 2012 which was widely rejected by the domestic workers’ unions and groups. The proposed bill was criticised to be ineffective as it does not include the registration of the employers and lacks clarity in the process of inspection of these agencies (Chigateri et al., 2016). A study on one of the frequently travelled migrant routes, which is from Jharkhand to Delhi, reveals that migrants were subjected to conditions of exploitation and forced labour under such placement agencies. Conditions of forced labour are witnessed mainly among live-in domestic workers, who have to work under the agent for the stipulated period. The Inter-State Migrant Workmen’s (Regulation of Employment and Conditions of Service) Act 1978 fails to address this issue as placement agencies relating to domestic work do not come under the ambit of the act. The act considers only those labour contractors who are registered at the origin state. Placement agencies involved in domestic work function through several sub-agents and mostly are unregistered (ILO, 2015)

There were some positive responses from state governments. The state of Tamil Nadu set up the Tamil Nadu domestic workers welfare board. Similarly, Maharashtra set up a domestic worker welfare board under Maharashtra Act (Agrawal & Agarwal, 2018) in 2008 while Kerala adopted a domestic worker bill in 2009. States like Kerala, Karnataka, Andhra Pradesh, Maharashtra, Tamil Nadu, Bihar and Rajasthan have set the minimum wage rate (Madhav, 2010). Neetha and Palriwala (2011) analysed the state legal framework on domestic workers and pointed out the same inadequacies noted over and over again, that is of not recognising the intricacies of domestic work, workplace, its several sub-categories, unregulated placement agencies and its unique employment relation. With no data on domestic workers and at the same time their numbers continuing to increase, these loose legislations and provisions go unnoticed by the workers.

In 2019, with the view to improving compliance and bringing about uniformity of laws, 29 labour laws were consolidated into 4 labour codes: a) code on wages, b) code on industrial relation c) code on social security and d) code on occupational health and working conditions (“Overview of Labour Law Reforms”, n.d.). While the notion was to make the labour laws more transparent and such consolidation was expected to increase the coverage of different workers under the law, these codes remain ambiguous when it comes to certain sectors of informal work. Neetha and Indrani (2020) analyse these codes through a gender lens focusing on domestic and migrant workers. Code on wages does not incorporate private households as an entity hiring employees and thus domestic workers who struggled to attain minimum wages under the previous Minimum wages act (1948) have no mention, leaving them ambiguous. Code on industrial relations dealing with collective bargaining and industrial disputes, do not mention freedom of association in unorganised sectors and curbs the right to strike which has serious implications of registration of domestic workers under trade unions and their right to collective bargaining. Code on social security (CSS) has consolidated the unorganised workers’ social security act 2008, which was the first attempt towards the recognition of domestic workers and the new code puts the functioning of such acts and provisions for the unorganised sector under the discretion of the government, leaving out legislative scrutiny. Hence, there is uncertainty of the efficient functioning of these acts under CSS. Under the code, maternity benefits were applied only to the registered establishment of work. And domestic workers with no recognition of the workplace become ineligible for the same. Code on occupational health and working conditions is also seen to have not recognised the need for laws based on different sectors of work. It has again failed to include private households as a workplace, leaving the conditions of domestic work unregulated. Another failure relates to ignoring the Sexual Harassment of Women at Workplace Act (Prevention, Prohibition and Redressal) 2013, which further leaves out the scrutiny of abuse or exploitation of domestic workers. The fact of being migrants among domestic workers isolates them even further from these labour codes.

The lacunae in existing legislation in recognising domestic work and migrant labour continues to be beset in ambiguities with the new labour reforms.

Present scenario: Covid-19 adding to the vulnerabilities

The onset of the Covid-19 and the resultant lockdowns have led to massive disruptions of normal life resulting in the shocks of sudden unemployment, financial strain and increased burden for workers in the unorganised sector. The migrant workers bore the highest brunt. In such a scenario, female migrants in an unregulated and isolated sphere of work such as domestic workers have been subject to severe distress. The lockdown and reduced mobility left the workers unemployed and without income. Live-in migrants faced increased workload but no change in wages. Even with the slow revival of the economy, they are under threat of being infected or being carriers, given their precarious work and living conditions. Sudden dismissals and financial strain have forced many to the situation of borrowing money for subsistence and eventually ending up in debt. Workers struggle to meet the basic needs of health, food, education of the family with lower income and savings (Sumalatha et al., 2021). With dismal employment relations and working conditions, coupled with the exclusion from the legal framework and social protection, Covid-19 has expanded the existing inequalities.

Government intervention: The need of the hour

Government intervention both in ensuring basic rights and providing for the welfare of the domestic workers have been negligible. The cultural and structural barriers are not the only challenges in regulating domestic work. There is a lack of political will in acknowledging domestic workers and their woes. As they remain scattered and invisible, the domestic workers are not seen as potential vote banks and hence remain without any political influence. The sector which is comprised largely of female migrants is devoid of any political voice and agency in their origin or host states since there are barriers in pursuing their voting rights given the nature of their migration. Their interactions with civic authorities and politicians in the host state are marginal and hence, their issues do not come to the fore (Bureau, 2018). There is a lack of awareness among the migrant workers on their voting rights. They are largely unaware as to who should be approached in the host state to resolve their problems. Even a migrant worker, well aware of his/her political rights and agencies, refrain from pursuing any form of interaction as they have either lost faith in the system or are disillusioned by the long time and effort spent pursuing the cases with no results to show. This highlights the need for effective political inclusion of migrant workers and the generation of political and electoral awareness among them (Bureau, 2018).

Further, identification and protection are the two essentials in creating an inclusive environment for female migrants in domestic work. The feminized nature of domestic work in the country, concentrated predominantly among poor and marginalised migrant workers, need to be recognised as dignified “work” and households they work in as “workplace”. Only separate comprehensive legislation on domestic work can incorporate the varied complexities of the sector, rather than a mere extension of organised sector legislations. Such separate legislation would provide the domestic worker with an identity that can ensure them their rights and entitlements (Sharma & Kunduri, 2015). The legislation should address the working conditions, violations and exploitations, provisions for mobilisation, illegal channels of private placement agencies and establishing basic civil rights from a gender perspective to incorporate the differential experience of females in the sector. Efficient implementation and scrutiny of the same require statistically significant data, the absence of which is another flaw in the system.

Domestic worker’s inaccessibility of social protection is the result of the lack of recognition. Migrant workers in the sector without any identity proof or formal registration are excluded from social protection schemes. Agrawal and Agarwal (2018) suggest setting up an independent welfare board in every district responsible for registering, ensuring availability of social security benefits, conducting dispute resolution, dissemination of information and providing skill development and training for domestic workers. The provision of financial incentives can help in coping with sudden unemployment situations during any form of crisis such as the pandemic. Allowing for the organisation of domestic workers into unions and cooperatives can also be beneficial in attaining social and legal protection. Domestic worker groups such as SEWA and National Domestic Workers Movement (NDWM) in the country have been attending to the woes of the domestic workers by providing a platform for collective bargaining and assertion of rights.

The introduction of the draft on National Policy on Domestic workers can be seen as a positive development, however, the policy still remains in consideration. Vulnerabilities of the domestic workers, exacerbated by the pandemic, highlight the urgent necessity for the ratification of the ILO convention on domestic workers. There is an urgent requirement in increasing the government’s sensitivity towards domestic workers and their precarious existence.

References
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19. Neetha N., & Indrani, M. (2020, June 01). Crossroads and Boundaries : Labour Migration, Trafficking and Gender. Retrieved July 19, 2021, from https://www.epw.in/journal/2020/20/review-womens-studies/crossroads-and-boundaries.html
20. Overview of Labour Law Reforms (n.d.) Retrieved from https://prsindia.org/billtrack/overview-of-labour-law-reforms#_edn2
21. Poddar, M., & Koshy, A. (2019). Legislating for Domestic’Care’Workers in India-An Alternative Understanding. NUJS L. Rev., 12, 67
22. Shanthi, K. (2006). Female labour migration in India: Insights from NSSO data(Vol. 4, p. 2006). Chennai: Madras School of Economics.
23. Sharma, S., & Kunduri, E. (2015). Of Law, Language, and Labour: Situating the Need for Legislation in Domestic Work. Economic and Political Weekly, 50(28).
24. Singh, N., Keshri, K., & Bhagat, R. B. (2015). Gender dimensions of migration in urban India. In India Migration Report 2015(pp. 200-214). Routledge India.
25. Srivastava, P., & Shukla, P. (2021). Crisis behind closed doors domestic workers’ struggles during the pandemic and beyond. Economic and Political Weekly, 17-21.
26. Sumalatha, B. S., Bhat, L. D., & Chitra, K. P. (2021). Impact of Covid-19 on Informal Sector: A Study of Women Domestic Workers in India. The Indian Economic Journal, 00194662211023845.
Image Credit: ucanews.com
July 22, 2021
Wage theft plagues India’s migrant workers

Though the South Asian country has relied heavily on remittances from its international migrant workers, the government has been remiss in ensuring their protection and welfare. As labor violations spike amid the COVID-19 pandemic, these workers are left to fend for themselves.

In August 2020, a group of around forty Indian construction workers staged a hunger strike in Kraljevo, Serbia, demanding to be paid. In addition to not receiving months’ worth of wages from their employer, they had been working 10-12 hours a day without proper food or access to healthcare and were living in cramped, unhygienic quarters during the COVID-19 pandemic.

The migrant workers from across India first arrived in Serbia in mid-2019. According to the Building and Wood Workers’ International (BWI), a global union federation, around 150 Indians were employed across the Balkan country for the construction of the Corridor 11 project. In a Zoom interview, two of the workers recounted how their troubles with getting paid had begun soon after arrival. When their situation didn’t improve, the first group was repatriated to India in January and February 2020. The rest, including those protesting in Kraljevo, were repatriated by September 2020.

Much of the Indian government’s efforts have been focused on Gulf countries, where, based on data from the International Labour Organization (ILO), around 9 million Indians live and work. However, the BWI warns that Europe is fast becoming a hub for the exploitation and trafficking of third-country nationals. In Serbia, other reports of exploitation of migrant groups from China and Turkey have recently come to light.

When he heard about the stranded Indian workers, Ramachandra Khuntia, chair of the BWI Indian Affiliates Council and a former Member of Parliament (MP) contacted the Indian Ministry of External Affairs (MEA) and the Indian embassy in Belgrade multiple times.

the BWI warns that Europe is fast becoming a hub for the exploitation and trafficking of third-country nationals.

What followed was a cross-border initiative involving labor unions, the Indian government, and Serbian anti-trafficking organization ASTRA. “We were finally able to bring the workers back home. But ‘til today, they have yet to receive their wages from the employer,” says Khuntia.

“The payment of arrear wages is usually dealt with by the labor department in the host country, but the matter can be pursued through the Indian embassy,” explains Khuntia, adding that despite assurances from the Indian government and the Indian embassy in Serbia, the payments seem nowhere in sight.

Indian construction workers stage a hunger strike in Kraljevo, Serbia, in August 2020. Amid the COVID-19 pandemic, wage theft has soared across the world, and often, the victims are migrant workers from India, who receive patchy support from their own government and have to rely on unions or non-profits for help. (Photo credit: BWI/Boobalan D)

Job loss and other ordeals

Wage theft — the illegal practice of denying workers the money that they are rightfully owed — has dramatically increased during the COVID-19 pandemic. In addition to the non- or incomplete payment of wages, employees have to deal with job loss, non-payment of termination benefits, poor working conditions, and hurried repatriation without the chance to register their grievances.

Migrant workers’ troubles begin in their country of origin, not abroad. “It is a new form of slavery that begins before they even leave the country in the form of recruiting fees. Recruiting agents and others involved are selling dreams to migrant workers.”

Ponkumar Ponnuswamy, president of TKTMS, a construction workers’ union in Tamil Nadu that was directly involved in the process of repatriating the stranded workers, says that each of the workers is owed anywhere between the equivalent of US$1,300 and US$2,600 by the aforementioned company, depending on how long they were in Serbia. For the workers who were put through this trying ordeal, their unpaid wages represent a substantial amount of money that would have otherwise gone towards debt repayments, medical treatments, and basic subsistence.

“I think it is a huge loss not only at the individual level but also at the country level,” says S. Irudaya Rajan, an expert on Indian migration and member of the Kerala government’s COVID-19 expert committee. Migrant workers constitute an integral part of the global economy, with their remittances adding up to over three times the amount of international aid and foreign direct investment combined. India, the world’s largest source of international migrants, received US$82 billion in remittances in 2019 according to World Bank data, a sum that has helped keep millions out of poverty.

“COVID-19 has become a great opportunity for exploitation,” says Rajan, who is currently heading a study on counter-migration from the Gulf to assess wage theft.

But according to him, migrant workers’ troubles begin in their country of origin, not abroad. “It is a new form of slavery that begins before they even leave the country in the form of recruiting fees,” he says. “Recruiting agents and others involved are selling dreams to migrant workers.”

The Indian government requires recruiting agents to register themselves with the Protector General of Emigrants. Despite this, many illegal agents continue operating across the country. (Photo credit: Yamuna Matheswaran)

Is the Indian government doing enough?

In theory, the Indian government offers various resources for those who emigrate for work: registration portals, insurance schemes, awareness programs, and helplines. They also provide a list of registered recruiting agents (RAs) across the country.

But the reality of emigration is far more complex, even confusing. For instance, it would be safe to assume that only a fraction of the RAs operating in India is registered with the MEA. A 2018 investigation by the Migrant Forum in Asia (MFA), with the support of ILO, found that in the state of Punjab alone the number of unregistered agents ran into several thousands, despite the 2014 Punjab Travel Professionals Regulation Act requiring mandatory registration of all consultants, agents, and advisors involved in sending people abroad.

These unscrupulous agents make emigrants more vulnerable to exploitation by charging illegal fees and pushing unfair contracts. Some workers arrive in a foreign country only to learn that the job they were recruited for doesn’t exist, says Rajan. Others end up without appropriate visas or permits and are never registered in the system.

The MEA limits the service fees RAs can charge their clients, which caps at INR 20,000 (around US$270). But Rajeev Sharma, Regional Policy Officer at BWI’s South Asia office, says that many of the workers have paid far more depending on the state they hailed from.

“Workers from Punjab, for instance, paid up to INR 100,000 (US$1,365) to 150,000 (US$2,048) to the agent,” he says. “We don’t know how they managed to fund their journey, they may have run into debt – so it’s not just the salary, so many other issues are involved.” When asked about this practice, one of the agencies involved – an unregistered ‘Shakti Tread Test Centre’ run by Muktinath Yadav in Deoria, Uttar Pradesh – gave no response.

“Covid-19 has become a great opportunity for exploitation” – Dr. S Irudaya Rajan, an expert on Indian Migration

Indian missions abroad are tasked with ensuring the welfare of overseas Indian nationals. The migrant workers and union members state, however, that the Indian embassy in Serbia failed to even register their grievances properly. The Embassy of India in Belgrade did not respond to requests for comment. In response to an inquiry about grievance redressal mechanisms for repatriated migrant workers, the MEA’s Protector General of Emigrants instead pointed to the Pravasi Bharatiya Sahayata Kendra, a general helpline.

Amnesty International raised concerns about the state of migrant workers under Covid-19 in the Gulf.
Image Credit: amnesty.org

“Grievance portals address a lot of topics, including pre-departure issues. However, there needs to be a specific focus on wage theft, particularly during COVID-19,” says Rajan. He stresses the importance of collective bargaining by various governments at the South Asia level, as well as proper grievance registration by Indian embassies in order to pursue the necessary legal steps.

Recognizing the lack of global mechanisms to address wage theft, Congress MP Shashi Tharoor stated during a panel discussion last year that an escrow fund could be set up, with employers depositing six months’ worth of wages in order to protect workers against non-payment.

Need for awareness building

In the case of the Indian migrant workers in Serbia, it was labor unions that initially came to their rescue, following through until they had arrived safely back to their respective homes. When asked if there is enough awareness among migrants themselves about their rights and the resources available to them, Rajan says: “Absolutely not, and I think that is where we are failing.”

“Migration has three cycles,” he explains. “The first — pre-migration cycle — happens in our country,” and steps to protect migrant workers need to start here. Rajan believes that the government should make pre-departure orientation programs, including skills training, mandatory. “Most workers don’t even know the currency of the host country. They know, in rupees, how much they expect to make and in how much time.”

Khuntia, of the BWI Indian Affiliates Council, highlights the utter importance of signing bilateral agreements with host countries regarding wages, healthcare, and social security so that those emigrating can feel secure. “And if anything were to happen, by virtue of this bilateral agreement, the Indian government can negotiate with the host country and provide relief to the workers,” he concludes.

“If everybody were cheated, there would be no migration,” says Rajan. But it’s important to share not only success stories but also those of struggles, he continues, to raise awareness among prospective migrants. It’s not about “how many people we send” but about how well-informed our migrant workers are when they are deployed abroad, he says.

This article was first published on Asia Democracy Chronicles.

Feature Image: dw.com

July 13, 2021
Analysing Denmark’s Offshore Wind Energy Sector: Lessons for India
Globally, Europe has the highest capacity of power generated from offshore wind energy. Amongst the European countries, Denmark, the UK and Germany have been pioneers and are currently leading as the largest power producers from offshore wind energy. Danish assistance has been in high demand to help countries shorten their implementation time for offshore wind turbine projects. In 2019, India entered into a bilateral agreement with Denmark to develop an offshore wind market and related technical capabilities. According to a document published by the Danish government, their authorities have specialised technical knowledge that can help Indian authorities establish framework conditions for the rollout of offshore wind power.

Denmark’s Offshore Wind Energy Sector

The Danish Government has set a target of reducing greenhouse gas emissions by 70%, as compared to 1990 levels, by 2030 and having 100% of Danish energy supplied through renewable sources by 2050, apart from achieving net-zero emissions by the same time. The scarcity of proper onshore sites and the abundance of shallow waters with wind resources drove its move to offshore wind, in the early 1990s,. In Denmark, there is a strong symbiosis between energy and industrial policy because of many leading offshore wind energy companies having Danish roots such as DONG, Vestas, Bladt, Siemens Wind, etc. India must achieve such a symbiosis in its offshore wind policies so that the industry can be successful in the long term.

Denmark’s ambitious targets coupled with their evolving policies in terms of bureaucratic procedures, environmental safety, and finance, among others, have driven the growth of the offshore wind energy sector since the 90s. This analysis looks at each of these segments.

Consent Procedures: The Danish Energy Agency (DEA) has been a single point of access to all offshore wind energy companies when it comes to issues related to permits. Meaning, the DEA grants all permits which include permits from other appropriate government authorities such as the Danish Nature Agency, Ministry of Defence, and the Danish Maritime Authority. This is the one-stop-shop and has been adopted not only in Denmark but in many other European countries. Such a method ensures rapid and un-bureaucratic application processing and ease of doing business. This also avoids a lot of confusion.

Grid Connectivity: The financing of the grid connection for offshore wind farms depends on how it is established:
- Enterprises can follow the Government’s action plan for offshore wind development wherein the DEA will invite bids to tender for pre-specified sites or
- Enterprises can follow the ‘open-door principle’ wherein independent applications can be made for any site and upon complete assessment by the DEA, it will invite bids to tender for the site, given that the results of the assessment are positive.
In the first case, the grid operator will finance the connection, including step-up transformers. Such socialisation of grid costs is an attractive feature for project developers in Denmark.

However, in the second case, the responsibility falls on the developer. We may also expect costs of any necessary grid reinforcement to be borne by the developer. The three private offshore wind farms established in Denmark, following the ‘open-door principle’ – Samsø, Rønland, and Middelgrunden – have had no notable problems. These projects are, however, within 3km of the coast, which would imply that the grid connection costs were not exorbitant.

Environmental Assessment: In Denmark, an extensive environmental assessment takes place before the construction of an offshore wind farm. The DEA provides companies or enterprises a license to conduct preliminary studies, including environmental (Environmental Impact Assessment) and technical (ground investigation) studies, either directly after a tender (first process) or following the receipt of the first satisfactory planning documentation (second process).

For instance, in the case of the Anholt farm, one of the largest offshore wind farms with a capacity of 400 MW, the project team performed an extensive environmental assessment that included the impact on marine animals in the area and their habitats, noise calculations, air emissions, and the potential risk to ship traffic. Using data from other wind farm projects like Denmark’s Nysted Wind Farm, and undergoing their analysis, the Anholt project team projected only minor, insignificant affects.

Financial Incentives: In Denmark, they support offshore wind farms through a feed-in tariff system, which is set through a competitive auction process. Power off-take in Denmark is largely managed through the DEA. There is no renewable purchase obligation in place in Denmark, but electrical power from renewable energy has priority access to the grid. In some cases, the owner may choose to sell the electrical power to utilities or other power suppliers through a Power Purchase Agreement (PPA). If the power price drops to zero or negative, there is an oversupply of electricity – then renewable projects do not receive any support. Hence this motivates generators to curtail output and help supply-side grid management.

De-risking the development process: The Danish Government undertakes geotechnical studies, wind resource assessment, and environmental surveys before a site being leased. The lease areas are then auctioned off to the lowest bidder. This hugely benefits developers as the site is effectively de-risked, leading to a lower tender price. If this were not the case, the developers would have to include risk provisions and contingency, owing to uncertainty regarding the ground conditions. Further, de-risking a site would increase willingness to plan and bid for the sites leased.

Simply put, the Danish offshore wind energy policies developed by the DEA and the Government have evolved over the years to tackle situations as they occur. This has led to sustained growth in the sector and has succeeded in powering close to 50% of the country’s electricity demand. Besides successfully developing its sector, it has been an outstanding example to many countries in Europe such as the UK and Germany. The UK has adopted the one-stop-shop model to ease procedural difficulties. Germany has adopted the open-door procedure of establishing offshore wind farms.

India’s Offshore Wind Energy Sector

The offshore wind energy sector in India is in its nascent stage. Its 2015 National Offshore Wind Energy Policy shows that the Ministry of New and Renewable Energy (MNRE) will act as the nodal Ministry for the development of Offshore Wind Energy in India that will monitor offshore wind energy development in the country. It will also work closely with other government entities for the use of maritime space within the Exclusive Economic Zone (EEZ).

The Ministry has set a short-term target of 5.0 GW of offshore wind installations by 2022 and a long-term target of 30 GW by 2030 which, according to government documents, is expected to give the confidence to project developers in the Indian market. Over 95% of commercially exploitable wind resources are concentrated in seven states – Andhra Pradesh, Gujarat, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan, and Tamil Nadu. But the land resources required for onshore wind projects are gradually becoming a major constraint. This could very well cause an increase in the market-determined tariffs of onshore wind energy in the future. Offshore wind power, however, offers a viable alternative in such a scenario. The Indian government, like Denmark, has to make policies to the best of their effort that will bring confidence to developers and de-risk the development of the sector to further encourage developers.

Although India has a huge potential in the renewable energy sector, the developers’ issues remain unresolved. For instance, Gujarat and Tamil Nadu have most of the high potential sites off their coasts to develop offshore wind energy. But a major concern for offshore wind developers would be the problem of grid integration. The two states already have a high degree of solar and wind renewables integrated into their power grid. By adding on power generated through offshore wind energy, they will face a significant hurdle with the evacuation and integration of this additional power. Without proper renewable energy storage systems, there is also the added burden to maintain an equilibrium between the supply and demand of power generated through the variable sources as otherwise, there will be a great deal of wastage and an unnecessary surge in the prices.

Adding on to the problems faced by developers, benefits such as accelerated depreciation were recently withdrawn and as a result, investments have slowed down. Thus, project developers not only want accelerated depreciation to be reintroduced, but they also want assurance from the government that such fiscal benefits will continue for the long-term. If these fiscal benefits are reintroduced, developers will feel more optimistic about their prospects in the sector. Further, it would also encourage small developers to invest more in the sector.

Another area that is causing considerable angst for the wind project developers in India is the delay in realising the payments due to them from the state electricity boards. These delays affect the cash flows, thereby threatening the viability of many of these projects. Such experiences will make offshore project developers cautious in venturing into making large investments into the sector.

In terms of policies that Indian policymakers can adopt from Denmark are the one-stop-shop and an open-door procedure of establishing offshore wind farms. Having the MNRE as a single point of access would make the bidding and tendering process more efficient. This is because a developer has to coordinate with various departments such as the MNRE, the ministry of defence, the ministry of external affairs, nature and wildlife, etc before they can start producing in an offshore wind farm. It would also benefit to have an open-door procedure, but only in the long term. Initially, though, the government should identify possible sites and work on de-risking the development process to encourage more participation in the bidding process.

Conclusion

In line with its Paris Agreement commitments, India is working to ensure that by 2030, 40% of its power generation capacity will come from non-fossil fuel sources. Currently, renewable energy makes up 36% of India’s power capacity through mainly small and large hydro, onshore wind, and solar energy. Producing power through offshore wind energy will be a welcome addition to the existing sources.

During the RE-Invest 2020 conference, the MNRE Joint Secretary announced that the Indian government is looking into setting up structures for power purchase agreements and offshore wind auctions. Thus, to successfully implement its plans, it will require further offshore wind resource data and analysis to identify viable project sites and, revive industry demand for this market.

Feature Image Credit: www.renewablesnow.com

Image: Anholt Offshore Wind Farm
March 2, 2021
Dealing with China in 2021 and Beyond

TPF Occasional Paper
February 2021

The Current Situation

As Eastern Ladakh grapples with a severe winter in the aftermath of a violent and tension-filled 2020, much analysis concerning happenings on the India-Tibet border during the previous year has become available internationally and within India. Despite variance in individual perspectives and prognoses, the one issue starkly highlighted is that 2020 marks a turning point in the India-China relationship, which, shorn of diplomatese, has taken a clear adversarial turn.

Enough debate has taken place over the rationale and timing behind the Chinese action. It suffices to say that given the expansionist mindset of the Xi regime and its aspiration for primacy in Asia and across the world, it was a matter of time before China again employed leverages against India. In 2020 it was calibrated military pressure in an area largely uncontested after 1962, combined with other elements of hard power – heightened activity amongst India’s neighbours and in the Indian Ocean plus visibly enhanced collusivity with Pakistan This, despite platitudes to the contrary aired by certain China watchers inside India, who continued to articulate that existing confidence-building mechanisms (CBMs) would ensure peace on the border and good relations overall. Multiple incidents on the border over the last few years culminating in the loss of 20 Indian lives at Galwan have dispelled such notions.

Currently, in terms of militarization, the LAC in Eastern Ladakh can vie with the Line of Control (LOC) on the Western border.

As an immediate consequence, the Line of Actual Control (LAC) in the arena of conflict in East Ladakh is seeing the heaviest concentration of troops in history, supplemented by fighter jets, utility and attack helicopters, the latest artillery acquisitions, armoured formations, road building teams and an inventory of drones, backed by matching logistics. Currently, in terms of militarization, the LAC in Eastern Ladakh can vie with the Line of Control (LOC) on the Western border.

Within the country, the perception of China as the principal foe has crystallised. At no other time since 1962 has China come in for such intense scrutiny. Indian public discourse is focused on China, towards interpreting its policies and implications for India and the world – all against the backdrop of international geopolitics churned further by the Covid pandemic.

China and the World in 2021

In 2017, President Xi Jinping had given a foretaste of things to come when spelling out his vision during the 19^th Party Congress – that China has entered a “new era” where it should take the “centre stage in the world’[1]. In an insightful essay, Jake Sullivan (now National Security Adviser in the Biden administration) and Hal Brands have observed that ‘China has two distinct paths towards achieving this aim’ [2]. The first ‘focuses on building regional primacy as a springboard to global power’ while the second ‘focuses less on building a position of unassailable strength in the Western Pacific than on outflanking the U.S. alliance system and force presence in that region by developing China’s economic, diplomatic, and political influence on a global scale’. In the same piece, the authors sombrely conclude that the US ‘could still lose the competition with China even if it manages to preserve a strong military position in the Western Pacific….softer tools of competition—from providing alternative sources of 5G technology and infrastructure investment to showing competent leadership in tackling global problems—will be just as important as harder tools in dealing with the Chinese challenge…’ [3] These observations are prescient.

China and the Pandemic. A look at China’s conduct in this context and those of other nations over the last 12 months is instructive. The first aspect is its reaction to worldwide opprobrium for initially mishandling the Corona crisis – reprehensible wolf warrior diplomacy, crude attempts to divert the narrative about the origin of the Virus, unsuccessful mask diplomacy[4] and successfully delaying a WHO sponsored independent investigation into the matter for a full year without any guarantee of transparency. Secondly, it has exploited the covid crisis to strengthen its hold on the South China Sea commencing from March 2020 itself. Some examples are the renaming of 80 islands and geographical features in the Paracel and Spratly islands, commissioning research stations on Fiery Cross Reef and continued encroachment on fishing rights of Indonesia and Vietnam[5], in addition to a host of aggressive actions too numerous to mention, including ramming of vessels. Retaliatory actions from the US have continued, with the Trump administration in its final days sanctioning Chinese firms, officials, and even families for violation of international standards regarding freedom of navigation in January 2021[6]. The outgoing administration delivered the last blow on 19 January, by announcing that the US has determined that China has committed “genocide and crimes against humanity” in its repression of Uighur Muslims in its Xinjiang region[7]. As regards Taiwan, the Australian Strategic Policy Institute had recently forecast that China Taiwan relations will be heading for a crisis in a few weeks’ time,[8] (as borne out by serious muscle-flexing currently underway). If so, it would put the American system of alliances in the region since 1945 squarely to the test.

Pushback in the Indo Pacific. With China constantly pushing the envelope in its adjoining seas, the Quadrilateral Dialogue, whose existence over the last decade was marked only by a meeting of mid-level officials in Manila in November 2017, has acquired impetus. Initially dismissed as ‘sea foam’ by China, the individual interpretations of roles by each constituent have moved towards congruence, with Australia openly voicing disenchantment with China. Though an alliance is not on the cards, it can be concluded that increased interoperability between militaries of India, Australia, Japan and the US is both as an outcome and driver of this Dialogue, deriving from respective Indo Pacific strategies of member nations. Further expansion of its membership and tie-ups with other regional groupings is the practical route towards an egalitarian, long-lasting and open partnership for providing stability in this contested region. Japan’s expression of interest in joining the Five Eyes intelligence-sharing network of the US, UK, Canada, Australia and New Zealand[9], is a step in this direction. European nations like Germany, the Netherlands and France have recently declared their Indo Pacific strategies. France has provided the clearest articulation, with the French Ambassador in Delhi spelling out the prevailing sentiment in Europe about China, as ‘ a partner, a competitor and a systemic rival’[10], while further stating that “when China breaks rules, we have to be very robust and very clear”[11] . A blunt message befitting an Indo Pacific power, reflecting the sentiments of many who are yet to take a position.

BRI will see major reprioritisation – though its flagship program, the China Pakistan Economic Corridor (CPEC) is unlikely to suffer despite disagreements on certain issues between the two countries.

Slowing of a Behemoth. China’s other driver the Belt and Road Initiative (BRI), has considerably slowed in 2020. Lee YingHui, a researcher with Nanyang Technological Institute Singapore wrote last September ‘..in June this year, the Chinese Foreign Ministry announced that about 20 per cent of the projects under its ambitious Belt and Road Initiative (BRI) had been affected by the COVID-19 pandemic. At the same press briefing, Wang Xiaolong, director-general at the Foreign Ministry’s International Economic Affairs Department, also revealed that a survey by the ministry estimated that some 30 to 40 per cent of projects had been somewhat affected, while approximately 40 per cent of projects were deemed to have seen little adverse impact[12]. Given the parlous condition of economies of client states post Covid-19 with many including Pakistan requesting a renegotiation of loans[13], BRI will see major reprioritisation – though its flagship program, the China Pakistan Economic Corridor (CPEC) is unlikely to suffer despite disagreements on certain issues between the two countries.

Resilient Economy. China’s economy has rebounded fastest in the world, growing at 6.5 % in the final three months of 2020[14]. Despite the rate of annual growth being lowest in 40 years[15], its prominence in global supply chains has ensured some successes, such as the Comprehensive Agreement on Investment with the EU in December 2020. The deal, which awaits ratification by the European Parliament is more a diplomatic than an economic win for China, being perceived as detrimental to President Biden’s efforts to rejuvenate the Trans-Atlantic Alliance. China has notched up another win with the signing of the Regional Comprehensive Economic Partnership (RCEP), where it along with 14 Asian countries from ASEAN and others (including Quad members like Australia and Japan) have agreed on an ‘ integrated market’. Given India’s position on the RCEP, how this agreement pans out and implications for its members will be watched with interest.

America in the New Year. The Biden Administration’s initial actions reaffirm the bipartisan consensus achieved last year on dealing with China. Comments of Secretary of State Anthony Blinken that ‘China presents the “most significant challenge” to the US while India has been a “bipartisan success story” and the new US government may further deepen ties with New Delhi,’[16] were indicative, as were those of Gen Lloyd Austin the Secretary of Defence during his confirmatory hearing[17]. President Biden’s first foreign policy speech on 04 February that ‘America is Back’ have provided further clarity. Earlier, Blinken and Austin had dialled Indian counterparts NSA Doval and Defence minister Rajnath Singh to discuss terrorism, maritime security, cybersecurity and peace and stability in the Indo Pacific.[18]Economically, American interest in joining or providing alternatives to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP, with an 11 nation membership, born out of President Trump’s withdrawal from its previous format, the TPP), will be another determinant in matters of trade with China. Harsh national security challenges will test the new administration’s resolve, as has already happened in the South China Sea over Taiwan where at the time of writing, the USS Theodore Roosevelt is conducting Freedom of Navigation operations[19]. Similar tests will occur over North Korea and Tibet, where the Senate’s passage of the Tibet Policy and Support Act 2020 mandates that decisions regarding the Dalai Lama’s succession be taken exclusively by the Tibetan people and the incumbent. Overall, a sense of how the world including the US will deal with China in 2021 is well captured by Commodore Lalit Kapur of the Delhi Policy Group when he states that ‘ …China has become too unreliable to trust, too powerful and aggressive to ignore and too prosperous, influential and connected to easily decouple from………[20] Going back to the views essayed by Sullivan and Brands, it appears that China is following both paths to achieve its objective, ie Great Power status.

India and China

The Early Years India’s attempt, soon after independence to develop a relationship with China, its ‘civilisational neighbour’ was overshadowed by the new threat to its security as the PLA invaded Tibet in 1950 – effectively removing the buffer between the two large neighbours. Dalai Lama’s flight to India in March 1959, the border clash at Hot Springs in Ladakh six months later and the subsequent 1962 war shattered our illusions of fraternity. Documents published recently pertaining to the period from 1947 to the War and beyond[21], reveal differences in perception within the Indian government in the run-up to 1962 despite the availability of sufficient facts. This combined with Chinese duplicity and disinformation, Indian domestic and international compulsions resulted in disjointed decision making, leading to the disastrous decision to implement the ‘Forward Policy’ with an unprepared military. A brief period of security cooperation with the US ensued including the signing of a Mutual Defence Agreement.[22] However, the US-China rapprochement of the early 70s and India’s professed non-alignment ensured its diminished status in the great power calculus.

Reaching Out to China. India’s outreach to China commenced with Prime Minister Rajiv Gandhi’s visit to Beijing in 1988 in the aftermath of the Chinese intrusion at Somdorung Chu in 1986 in Arunachal Pradesh, resulting in a full-fledged standoff which lasted till mid-1987. The consequent push towards normalisation of relations resulted in the September 1993 Agreement on the Maintenance of Peace and Tranquillity along the Line of Actual Control in the India-China Border Areas, the November 1996 Agreement on Confidence Building Measures in the Military Field along the Line of Actual Control in the India-China Border Areas, followed thereafter by the Declaration on Principles for Relations and Comprehensive Cooperation between India and China, of June 2003 and finally the Agreement between the Government of the Republic of India and the Government of the People’s Republic of China on the Political Parameters and Guiding Principles for the Settlement of the India-China Boundary Question of April 2005, signed during the visit of Chinese premier Wen Jiabao, which also saw the India China relationship elevated to a ‘Strategic and Cooperative Partnership for Peace and Prosperity’.

Despite partially successful attempts to broad base the engagement, territorial sovereignty continued to dominate the India China agenda, as can be observed by the number of agreements signed on border management – with minimal outcomes. It appears now that what can only be construed as diffidence in dealing with China on the border (and other issues) arose not because of misplaced optimism over such agreements, but for several other reasons. Some were structural weaknesses, such as lack of development of the border areas and poor logistics. Others arose because of want of a full-throated consensus on how strong a line to take with a visibly stronger neighbour – aggravated by growing economic disparity and the limitations imposed by self-professed non-alignment, especially so in the absence of a powerful ally like the Soviet Union, which had disintegrated by 1991. Also, American support could not be taken for granted, as was the case in the 60s. Overall, the approach was one of caution. This, coupled with lack of long term border management specialists induced wishful myopia on the matter, which was dispelled periodically by border skirmishes or other impasses, before returning to ‘business as usual’.

The extent of Engagement Today. To objectively analyse the relationship, it is important to comprehend the extent of the India China engagement on matters other than security. In the context of trade and industry, a perusal of the website of the Indian embassy in Beijing provides some answers. There is a list of 24 agreements/ MoUs /protocols between the two countries on Science and Technology alone, covering fields as diverse as aeronautics, space technology, health and medicine, meteorology, agricultural sciences, renewable energy, ocean development, water resources, genomics, geology, and others. The Embassy brings out India’s concerns regarding trade including impediments to market access, noting that trade imbalances have been steadily rising, to reach $58.4 billion in 2018, reducing marginally to $56.95 in 2019, a first since 2005. The poor penetration of Indian banks in China, India’s second-largest shareholding (8%) in the Asian Infrastructure Investment Bank (AIIB), and being the largest borrower from the New Investment Bank or NIB, a BRICS bank of which all members have equal shareholding provide an understanding of linkages between the countries in the banking sector[23]. Other areas of cooperation are in petroleum and railways.

Economic Fallout Post April 2020. After the Galwan incident, India has taken strong measures on the economic front against China, from banning over 250 software applications to a partial ban on various categories of white goods,and the imposition of anti-dumping duties on many others. The Consolidated FDI Policy of the Department for Promotion of Industry and Internal Trade dated 15 October 2020, mandates Government scrutiny of every Chinese investment proposal before approval. However, the paradox in the India China relationship is well illustrated by trade figures for the first half of the Financial Year 20-21, where China surpassed the USA to become India’s largest trading partner. India reduced imports from China but exports to China grew by a robust 26.2 per cent at $10.16 billion[24]. Also, conditionalities for borrowing from the AIIB and NIB have resulted in India having to permit Chinese firms to bid for works connected with projects funded by these institutions. Consequently in January this year, the contract for construction of a 5.6 km long underground stretch of the Rapid Rail Transit System in the National Capital Region has been awarded to a Chinese company, Shanghai Tunnel Engineering Company Limited.[25] As noted earlier, decoupling is not easy. Incentives for companies to relocate to India have been announced, with some investment flowing in from Google and Facebook, and plans for Samsung to relocate a factory to NOIDA[26]. Finally, India’s exclusion from the RCEP will also have to be factored in when negotiating a long term trade policy with China.

However, the paradox in the India China relationship is well illustrated by trade figures for the first half of the Financial Year 20-21, where China surpassed the USA to become India’s largest trading partner.

Soft Power and Academia. Indian soft power in China remains subservient to harsh security concerns despite oft-quoted historical antecedents. Some elements like Indian cinema continue to be extremely popular. Student exchange programs have taken shape, especially under the aegis of Confucius Institutes which have secured a toehold in some Indian campuses. Following the trend worldwide, their programs are also under scrutiny[27]. The few Indian students in China (less than 25000)[28] have been hit hard by the coronavirus. Overall, given the current state of engagement, employing soft power as an effective tool has limited potential. Exchange of scholars from policy and security think tanks has been a good way of imbibing a sense of the other, resulting in greater awareness. While the trust deficit and reasons for the same have always been highlighted by the Indian side, it has been the general experience that China has been less forthcoming in its responses.

Building Blocks for a China Policy

In the middle term, unless there is a concerted and verifiable effort by China, trade with that country will be overshadowed by security issues (the huge trade imbalance also becoming one of these !). The Indian economy has commenced its post-Covid recovery in the new year. The budget for FY 21-22, trade policies of others like the EU and the US, will impact economic policy, as will national security concerns.

Immediate security priorities vis a vis China are a mix of the geopolitical and purely military. These can broadly be outlined – safeguarding Indian interests in the Indian Ocean region and the littorals, holding the line in the high Himalayas and ensuring sanctity over Indian skies. The first being both a geopolitical and security matter would leverage all elements of statecraft including the military. The balance two are a direct outcome of India’s military power. These, intertwined with India’s multilateral approach towards cooperation in world fora would form the basis of dealing with China.

Countries in the neighbourhood other than Pakistan when in distress, look first towards India for relief – natural calamities, food shortages[29], and now the corona vaccine, where Indian generosity remains unsurpassed worldwide. India does not indulge in cheque book diplomacy, nor entice weaker neighbours into debt traps.

Managing the Neighbourhood. In South Asia, India is primus inter pares due to size, geographical location, resources, capability and potential. Its soft power, economic reach ( while not comparable to China’s) and associated linkages with other countries are huge, at times even considered overwhelming. Countries in the neighbourhood other than Pakistan when in distress, look first towards India for relief – natural calamities, food shortages[29], and now the corona vaccine, where Indian generosity remains unsurpassed worldwide. India does not indulge in cheque book diplomacy, nor entice weaker neighbours into debt traps. Despite ethnic linkages and security concerns resulting sometimes in what is perceived by others as ‘interventionist politics’, India’s respect for its neighbours’ sovereignty is absolute. This is in contrast to China, whose recent interventions in Nepal have led to rallies in front of the Chinese embassy[30]. Its pressure on the NLD government in Myanmar over BRI projects had again not been viewed favourably in that country,[31] though the trajectory that the China-Myanmar relationship now follows remains to be seen, with China attempting to support Myanmar’s military in international fora after the coup[32]. Within South Asia, strengthening delivery mechanisms, sticking to timelines in infrastructure projects, improving connectivity and resolving the myriad issues between neighbours without attempting a zero-sum game with China is the way forward for India, which should play by its considerable strengths. Simultaneously, it must look at growing challenges such as management of Brahmaputra waters and climate change, and leverage these concerns with affected neighbours.

Strengthening Military Capability. A more direct challenge lies more in the military field, and in measures necessary to overcome these. The justifiable rise in military expenditure during the current year would continue or even accelerate. The armed forces are inching towards a mutually agreed road map before implementing large scale organisational reforms. Conceptual clarity on integrated warfighting across the spectrum in multiple domains (including the informational ) is a sine qua non, more so when cyberspace and space domains are concerned. This mandates breaking up silos between the military and other specialist government agencies for optimisation and seamless cooperation. Also, while classical notions of victory have mutated, swift savage border wars as witnessed in Nagorno Karabakh remain live possibilities for India, with open collusion now established between China and Pakistan. As always, the study of the inventory, military capability of the adversary and his likely pattern of operations will yield valuable lessons. The armed forces have to prepare multiple options, to deal with a range of threats from full scale two front wars down to the hybrid, including responses to terrorist acts while ensuring sovereignty across the seas. Network-centric warfare will take centre stage, with information operations being vital for overall success, possibly even defining what constitutes victory.

Progress has been achieved in these directions. As an example, the first Indian weaponised drone swarm made its debut on Army Day 2021, and visuals of a ‘wingman drone’ underdevelopment have been shown during the Aero India 2021 at Bangalore. The military would be planning for operationalisation, induction, deployment, staffing and human resource aspects of this weapon platform with the nominated service. An estimate of the time required to resolve these issues as also for full-scale production of such systems and larger variants will dictate procurement decisions with respect to other land and air platforms providing similar standoff kinetic effects, and surveillance capability. A concurrent requirement to develop sufficient capability to counter such systems would doubtless be under scrutiny. In this regard, the outcome of the PLA merging its cyber and electronic warfare functions for multiple reasons merits attention.[33] While the Navy’s requirements to dominate the Indian Ocean are well appreciated, a consensus on its future role and the need (or otherwise) for a third aircraft carrier would decide the nature, type and numbers of future naval platforms – unmanned underwater vehicles, submarines, shore/ carrier-based aircraft and others. With decisions over the Tejas LCA induction finalised, induction of a state of the art platforms from the USA and France over the last few years and hope for the acquisition of new generation indigenous air defence systems[34] on the anvil, the IAF is set to gradually regain its edge. Overall, India’s military has to leverage the latest technology and develop the capability to fight in multiple domains, which its hard-earned experience in third-generation warfighting would complement. With restructuring planned concurrently, each decision will have to be fully informed and thought through – more so when mini faceoffs as has happened at Naku La in Sikkim this month continue to occur.

A Way Forward

Traditional Chinese thinking has simultaneously been dismissive and wary of India. In his seminal publication at the turn of the century, Stephen Cohen noted that ‘…from Beijing’s perspective India is a second rank but sometimes threatening state. It poses little threat to China by itself and it can be easily countered but Beijing must be wary of any dramatic increase in Indian power or an alliance between New Delhi and some hostile major state..’[35] As brought out in this paper, outlines of a grounded long term China policy based on previous experiences and new realities are visible. Rooted primarily in the security dimension followed thereafter by the economic, its success will be predicated on peace and tranquillity on the border, without entering into the trap of competition in either of the two domains. As pointed out by the Minister for External Affairs in his talk to the 13^th All India Conference for China Studies this month [36] the India-China relationship has to be based on ‘mutuality… mutual respect, mutual sensitivity and mutual interests ..’. The EAM further noted that ‘expectations…. that life can carry on undisturbed despite the situation at the border, that is simply not realistic. There are discussions underway through various mechanisms on disengagement at the border areas. But if ties are to steady and progress, policies must take into account the learnings of the last three decades’[37].

Rooted primarily in the security dimension followed thereafter by the economic, its success will be predicated on peace and tranquillity on the border, without entering into the trap of competition in either of the two domains.

In the same talk, the EAM has laid down eight broad and eminently practical propositions as guidelines for future India-China relations. Most prominent of these is that peace and tranquillity on the border are a must if relations in other spheres are to develop. Also, the need to accept that a multipolar world can have a multipolar Asia as its subset. He stressed that reciprocity is the bedrock of a relationship, and sensitivities to each other’s aspirations, interests and priorities must be respected. Concurrently, management of divergences and differences between two civilizational states should be considered over the long term.

A China policy crafted on these principles would ensure that India’s concerns vis a vis its neighbour is addressed, within the larger National goal of all-round growth and development of India and its citizens in the 21st Century.

Notes:

[1] ‘Xi JinPing Heralds New Era of Chinese Power’ Dipanjan Ray Chaudhury, Economic Times 18 October 2017

[2] ‘China Has Two Paths To Global Domination’ Jake Sullivan,  Hal Brands, Foreign Policy, 22 May 2020

[3] ibid

[4] ‘China’s Mask Diplomacy is Faltering.But the US isn’t Doing any better’ Charlie Campbell Time Magazine 03 April 2020

[5] ‘China’s Renewed Aggression in the South China Sea’ Gateway House Infographic 22 April 2020

[6] ‘US imposes new sanction on Beijing over South China Sea’ Mint 15 January 2021

[7] In parting shot, Trump administration declares China’s repression of Uighurs ‘genocide’ Humeyra Pamuk, Reuters 19 January 2021

[8] ‘Pacific Panic: China-Taiwan relations to reach breaking point in ‘next few weeks’ skynews.com.au 18 January 2021

[9] ‘Japan wants de facto ‘Six Eyes’ intelligence status: defence chief’ Daishi Abe and Rieko Miki Nikkei Asia 14 August 2020

[10] ‘Emmanuel Bonne’s interview to the Times of India’ 10 January 2021 Website of the French Embassy in New Delhi

[11] ‘When China breaks rules, we have to be very robust and clear: French diplomat’ Dinakar Peri, The Hindu 08 January 2021

[12] ‘COVID-19: The Nail in the Coffin of China’s Belt and Road Initiative?’ Lee YingHui, The Diplomat 28 September 2020

[13] ibid

[14] ‘Covid-19: China’s economy picks up, bucking global trend’ BBC.com 18 January 2021

[15] ibid

[16] ‘New US govt may look to further deepen ties with India: Blinken’ Elizabeth Roche, The Mint 21 Jan 2021

[17] ‘What Biden’s Defence Secretary Said About Future Relations With India, Pakistan’ Lalit K Jha, The Wire 20 January 2021

[18] ‘US NSA speaks to Doval, Def Secretary dials Rajnath’ Krishn Kaushik and Shubhajit Roy Indian Express 27 January 2021

[19] ‘As China Taiwan tension rises, US warships sail into region’ The Indian Express 25 January 2021

[20] ‘India and Australia: Partners for Indo Pacific Security and Stability’ Lalit Kapur, Delhi Policy Group Policy Brief Vol. V, Issue 42 December 15, 2020

[21] ‘India China Relations 1947-2000 A Documentary Study’ (Vol 1 to 5) Avtar Singh Bhasin   Geetika Publishers New Delhi 2018

[22] ‘The Tibet Factor in India China Relations’ Rajiv Sikri Journal of International Affairs , SPRING/SUMMER 2011, Vol. 64, No. 2, pp 60

[23] Website of the Embassy of India at Beijing   www.eoibeijing.gov.in

[24] ‘What an irony! Mainland China beats US to be India’s biggest trade partner in H1FY21’ Sumanth Banerji        Business Today 04 December 2020

[25] ‘Chinese company bags vital contract for first rapid rail project’ Sandeep Dikshit   The Tribune   03 January 2021

[26] ‘Samsung to invest Rs 4,825 cr to shift China mobile display factory to India’ Danish Khan Economic Times 11 December 2020

[27] ‘The Hindu Explains | What are Confucius Institutes, and why are they under the scanner in India?’

Ananth Krishnan The Hindu August 09 2020

[28] ‘23,000 Indian students stare at long wait to return to Chinese campuses’ Sutirtho Patranobis Hindustan Times 08 September 2020

[29] ‘Offering non-commercial, humanitarian food assistance to its neighbours: India at WTO’ Press Trust of India 19 December 2020

[30] ‘Torch rally held in Kathmandu to protest against Chinese interference’ ANI News 30 December 2020

[31] ‘Chinese Foreign Minister Wang Yi visits Myanmar with aim to speed up BRI projects’ Dipanjan Roy Chaudhury Economic Times 09 January 2021

[32] ‘China blocks UNSC condemnation of Myanmar coup’ India Today Web Desk 03 February 2021

[33] ‘Electronic and Cyber Warfare: A Comparative Analysis of the PLA and the Indian Army’ Kartik Bommankanti ORF Occasional Paper July 2019

[34] ‘India successfully test fires new generation Akash NG missile’ Ch Sushil Rao Times of India 25 January 2021

[35] ‘ India Emerging Power’ Stephen Philip Cohen Brookings Institution Press 2001 pp 259

[36] Keynote Address by External Affairs Minister at the 13th All India Conference of China Studies January 28, 2021

[37] ibid

Image Credit: Wion and Trak.in

February 8, 2021
India, China, and Arunachal Pradesh

The satellite picture below brilliantly depicts the geographical separation of Arunachal Pradesh (called Lower Tibet by the Chinese) and Tibet. The McMahon Line more or less runs along the crest line of the Himalayas.

The Chinese have never been quite explicit on how much of Arunachal they seek. I once saw an official map displayed in a travel agents office in Lhasa that showed only the Tawang tract as Chinese territory. In other maps they have their border running along the foothills, which means all of Arunachal.

The Chinese have based their specific claim on the territory on the premise that Tawang was administered from Lhasa, and the contiguous areas owed allegiance to the Dalai Lama, the spiritual and temporal ruler of Tibet. Then the Chinese must also consider this. Sikkim till into the 19th century a vassal of Tibet and Darjeeling was forcibly taken from it by the British! By extending this logic could they realistically stake a claim for Sikkim and Darjeeling? Of course not. It would be preposterous. History has moved on. The times have changed. For the 21st century to be stable 20th century borders must be stable, whatever be our yearnings.

At the crux of this issue is the larger question of the national identities of the two nations and when and how they evolved. The Imperial India of the Mughals spanned from Afghanistan to Bengal but did not go very much below the Godavari in the South. The Imperial India of the British incorporated all of today’s India, Pakistan and Bangladesh, but had no Afghanistan, not for want of trying. It was the British who for the first time brought Assam into India in 1826 when they defeated Burma and formalized the annexation with the treaty of Yandabo.

It was only in 1886 that the British first forayed out of the Brahmaputra valley when they sent out a punitive expedition into the Lohit valley in pursuit of marauding tribesmen who began raiding the new tea gardens. Apparently the area was neither under Chinese or Tibetan control for there were no protests either from the Dalai Lama or the Chinese Amban in Lhasa. Soon the British stayed put.

Tibet remained in self imposed isolation and the race to be first into Lhasa became the greatest challenge for explorers and adventurers in the second half of the 19th century. Not the least among these were the spies of the Survey of India, the legendary pundits. The most renowned of these was the Sarat Chandra Das whose books on Tibet are still avidly read today. As the adventurers, often military officers masquerading as explorers began visiting Tibet the British in India began worrying. Reports that the most well-known of Czarist Russia’s military explorers, Col. Grombchevsky was sighted in Tibet had Lord Curzon, the Governor General of India most worried.

In 1903 Curzon decided to send a military expedition into Tibet led by Grombchevsky’s old antagonist, Col. Francis Younghusband. A brigade strong mixed force of Gurkhas and Tommies went over the Nathu La into the Chumbi valley and advanced unhindered till Shigatse. A Tibetan military force met them there but offered what can only be described as passive resistance. Not a shot was fired back as the British Indian troops rained bullets on them. It was a forerunner to Jallianwalla Bagh. From Shigatse Younghusband made a leisurely march into Lhasa. The British got the Tibetans to agree to end their isolation and having extracted trade concessions withdrew in 1904, the way they came.

In 1907 Britain and Russia formally agreed that it was in their interests to leave Tibet “in that state of isolation from which, till recently, she has shown no intention to depart.” It may be of interest to the reader to know that the Great Game nevertheless continued. In 1907 Col. Mannerheim then of the Russian Army, later Field Marshal Mannerheim and first President of Finland, led a horseback expedition from Kyrgyzstan to Harbin on China’s northeast to identify a route for the cavalry.

The next important year was 1913 when the Tibetans declared independence after the collapse of the Qing dynasty and the establishment of a Republic in China under Sun Yat Sen. They attacked and drove the Chinese garrisons in Tibet into India over the Nathu La. Also in 1913 the British convened the Simla Conference to demarcate the India-Tibet border. The British proposed the 1914 McMahon Line, as we know it. The Tibetans accepted it. The Chinese Amban however initialed the agreement under protest. But his protest seemed mostly about the British negotiating directly with Tibet as a sovereign state and not over the McMahon Line as such.

Things moved on then. In 1935 at the insistence of Sir Olaf Caroe ICS, then Deputy Secretary in the Foreign Department, the McMahon Line was notified. In 1944 JP Mills ICS established British Indian administration in NEFA, but excluding Tawang which continued to be administered by the Lhasa appointed head lama at Tawang despite the fact that it lay well below the McMahon Line. This was largely because Henry Twynam, the Governor of Assam lost his nerve and did not want to provoke the Tibetans. In 1947 the Dalai Lama (the same gentleman who is now in Dharamshala) sent the newly independent India a note laying claim to some districts in NEFA/Arunachal.

On October 7, 1950 the Chinese attacked the Tibetans at seven places on their frontier and made known their intention of reasserting control over all of Tibet. As if in response on February 16, 1951 Major Relangnao ‘Bob’ Khating IFAS raised the India tricolor in Tawang and took over the administration of the tract. The point of this narration is to bring home the fact that India’s claim over Arunachal Pradesh doesn’t rest on any great historical tradition or cultural affinity. We are there because the British went there. But then the Chinese have no basis whatsoever to stake a claim, besides a few dreamy cartographic enlargements of the notion of China among some of the hangers-on in the Qing emperor’s court. The important thing now is that we have been there for over a hundred years and that settles the issue.

Arunachal Pradesh has a very interesting population mix. Only less than 10% of its population is Tibetan. Indo-Mongoloid tribes account for 68% of the population. The rest are migrants from Nagaland and Assam. As far as religious affinities go Hindus are the biggest group with 37%, followed by 36% animists, 13% Buddhists. Recent census figures suggest a spurt in Christianity, possibly induced by pocketbook proselytizing. In all there are 21 major tribal groups and over 100 ethnically distinct sub-groupings, speaking over 50 distinct languages and dialects. The population of about a million is spread out over 17 towns and 3649 villages. With the exception of a few villages of Monpas who live north of the McMahon Line, it is an ethnically compact and contiguous area.

In fact in future boundary negotiations India could make a case for inclusion of the few Monpa villages left behind north of the McMahon Line? Many knowledgeable observers suggest that the area south of the Huangpo/Brahmaputra from the Pemako gorge till it enters the Subansiri division of Arunachal would be a logical boundary as the raging and hence un-fordable and unbridgeable river ensures hardly any Chinese administrative presence in the area.

It is true that historically India never had a direct border with Tibet till the British took Kumaon and Garhwal from Nepal in 1846 and extended its domain over Arunachal in 1886. On the other hand the formidable Himalayas were always culturally a part of India and formed a natural barrier against ingress from the north, whether Tibetan or Chinese. But times have moved and technology and mankind’s great engineering powers now make it possible for even the most hostile terrain to be subjugated. The Himalayas are no longer the barrier they once were. As China and India emerge as the world’s great economies and powers can India possibly allow China a strategic trans-Himalayan space just a few miles from the plains?

The view from the Chinese side about what exactly constitutes China is no less confused. Apparently like the British, the Manchu’s who ruled China from the 17th to the early 20th century had a policy of staking claim to the lands that lay ahead of their frontiers in order to provide themselves with military buffers. In a recent article in the China Review magazine, Professor Ge Jianxiong, Director of the Institute of Chinese Historical Geography at Fudan University in Shanghai writes: “to claim that Tibet has always been a part of China since the Tang dynasty; the fact that the Qinghai-Tibetan plateau subsequently became a part of the Chinese dynasties does not substantiate such a claim.” Ge also notes that prior to 1912 when the Republic of China was established the idea of China was not clearly conceptualized. Even during the late Qing period (Manchu) the term China would on occasion refer to the Qing state including all the territory that fell within the boundaries of the Qing Empire. At other times it would be taken to refer to only the eighteen interior provinces excluding Manchuria, Inner Mongolia, Tibet and Sinkiang.

Professor Ge further adds that the notions of “Greater China” were based entirely on the “one-sided views of Qing court records that were written for the courts self-aggrandizement.” Ge criticizes those who feel that the more they exaggerate the territory of historical China the more “patriotic” they are. In this context I would like to recall a recent conversation I had with the then Chinese Ambassador to India, Sun Yuxi. Ambassador Sun said that while he was soundly castigated in India for his unintended comment, he gained a major constituency in China. The mandarins in the Beijing would do well to take heed to Ge Jianxiong’s advice: “If China really wishes to rise peacefully and be on solid footing in the future, we must understand the sum of our history and learn from our experiences.” The same holds true for the babus in South Block and ‘the having writ move on’ media pundits. If we don’t then we know who will be laughing!

Image Credit: Tawang Monastery

February 1, 2021
Quad 2.0: Can it be a win-win for the four Democracies

China’s GDP expanded from USD 6 trillion in 2010 to USD 14.3 trillion in 2019. It has had exponential growth over the last three decades, with an average GDP growth rate of 9.23% from 1989 to 2020. Although the impact of the COVID pandemic pushed its GDP into decline and negative (-6.80%) in the first quarter of 2020, it has rebounded with a growth of 5% in the third quarter. It’s military spending, officially, is more than three times that of India, unofficially maybe five times or more. China has become one of the key players in the Indo-Pacific as a significant part of its economic activities depend on this region.

The Indo-Pacific has replaced the Trans-Atlantic as the epicentre of global politics. Its importance to the global order is multifarious. In economic terms, one half of the world’s commercial influx goes through the Indo-Pacific sea routes and the Indian Ocean carries two-thirds of global oil shipments. Besides, a few of the biggest military spenders are part of the region. China’s hostile actions and policies have agitated the US, Japan, Australia and India. A shared concern over the expansion of China’s political and military clout was fundamental to the revival of the Quadrilateral Security Dialogue (Quad 2.0), on the sidelines of the ASEAN summit in Manila, in 2017.

Quad is seen as cooperation between four large democracies that share the idea of an open and inclusive Indo-Pacific

There is growing speculation over what the re-emergence of the Quad means. On the one hand, it is seen as cooperation between four large democracies that share the idea of an open and inclusive Indo-Pacific; on the other, a strategic alliance towards keeping China’s assertive actions in check.

The Quad: Overcoming Intransigence

The Quad is a mechanism that enables a dialogue on regional security issues between the four countries. Its revival, this year, reflects an intersection of strategic interests: that of an open and inclusive Indo-Pacific and a rules-based international order. The Quad came together in November for the naval exercise – Exercise Malabar – in two phases, in the Bay of Bengal and the Arabian Sea. The exercise, in its 24^th edition, is the biggest so far and has sent significant strategic signalling to China.

The Quad should be considered less as a formal alliance and more as a mechanism built on existing bilateral and trilateral partnerships between the four countries. It first emerged as a cooperative response to the 2004 tsunami, when the four navies were involved in providing humanitarian and disaster relief. Despite strong support from Japan and the US to formalise the group, it disbanded with Australia and India backing out in 2007, due to concerns about China’s reaction to the grouping. This gave rise to multilateral partnerships among the four countries.

Between the four democracies, there are three trilateral and six bilateral partnerships. Trilaterally, Japan, India and Australia first came together in 2015 to discuss shared concerns over maritime security in the Indo-Pacific Region and freedom of navigation in the South China Sea. More recently, the three countries agreed to develop a supply chain resilience program for the Indo-Pacific Region amid growing recognition of their excessive, economic reliance on China.

Bilaterally, the US and India signed the Basic Exchange and Cooperation Agreement (BECA) on October 27 that gives India access to American geospatial intelligence that will be useful for precision guidance of its missiles. Further, India-Australia ties have strengthened over the last few years with their initial 2+2 dialogue in 2017 and with Australian participation in India’s Milan exercise in 2018, focusing on interoperability between navies in the region.

China and the Quad

Over the years, the Indo-Pacific has emerged as a region of strategic importance. As China expands into the region, its actions have created tensions with the Quad members.

Sino-Indian relations: India-China relations have touched rock-bottom since the clashes on the LAC in Ladakh. China’s intrusions and violations along the LAC have been backed up by significant massing of PLA forces, for the first time in 40 years. India’s strong actions at the LAC and subsequent sanctions and banning of Chinese IT applications have signalled that India is not shy of escalating its response. China’s actions are seen as part of its coercive strategy to India’s refusal to back China on BRI, and its vehement opposition to CPEC. It sees India’s closeness to the USA and its coordination in the Quad as a threat to China’s strategic interests.

China’s increasing influence in the Indian Ocean Region (IOR) has raised India’s concerns. It has always been wary of ties between Beijing and Islamabad, which intensified with the launch of the China-Pakistan Economic Corridor (CPEC) in 2013. The Chinese-operated Gwadar port off the Arabian Sea in Pakistan, which can be used by the Chinese navy to establish a submarine presence in the region, did not rest well with India. Such a port would also help China with its ‘Malacca Dilemma’. Other ports of such concern are Hambantota in Sri Lanka and Kyaukphyu in Myanmar. Though China claims these ports are of economic significance, these are also militarily strategic ports that give it an advantage in the IOR.

In light of these issues, a revived and active Quad will benefit India’s strategic interests. The partnership could affect China in two ways. First, China would face increased competition in the IOR from India that now works with strong allies. Second, with the recent imposition of the technology ban, China stands to lose a large market for its products.

Japan-China relations: Over the past few years, the situation in the South China Sea (SCS) has worsened with China’s land reclamation activities and militarisation of islands. Japan sees the South China Sea as key to its security because of its crucial sea lanes vital to its trade and economic health. It is also wary of China’s ability to influence the energy supply chains, which East Asia is dependent on, and the PLA’s movement in the Indo-Pacific region that could affect regional security.

Despite its renewed trade with China and the recent signing of the RCEP, increased tensions in the SCS has forced Japan to support revival of the Quad. China’s increased naval and air activities in the South China Sea makes the Quad and its possible expansion into Quad Plus even more relevant for Japan.

China-Australia relations: Australia backed out of the Quad in 2007 primarily because it was concerned about how China would view it, and the possible impact it might have on their bilateral trade. By 2017, China became Australia’s top export destination, and this trend has continued through 2019, pushing Australia into a dangerous economic dependency with China. Further, Australia’s 2016 White Paper called out China for its coercive behaviour in the Indo-Pacific, identifying the South China Sea and the Southern Pacific as vital strategic regions.

Australia’s economic dependence on China is high and this is unlikely to change despite the strong statements from prime minister Morrison. Australia’s strong stand against China is also seen as emanating from American pressure. Australia actively supports Quad as it sees an increasingly powerful China working to change the world order. Australia is also a member of the newly signed RCEP, the new economic grouping that will be dominated by China. While Australia has hedged its economic interests by signing the RCEP, its strategic and security priorities are linked to the Quad.

China-US relations: China’s rising military power is now seen as a threat to American power and the liberal world order. Since 2011, American strategies and policies have focussed more on the Indo-Pacific. This shift in focus has strengthened its ties with Japan, Australia and India. Tensions between the US and China have increased since then and the 2018 trade war not only aggravated their relations but also kept the rest of the world on an edge.

With a strong Quad partnership, the US expects to regain and strengthen its influence in the Indo-Pacific. For China already hit hard by the US trade war, more setbacks will accentuate the problems. Moreover, with a more focused Quad led by the US, China’s efforts to project its power and influence in the Indo-Pacific region will come under pressure.

Conclusion

A few aspects about the Quad remain unclear. First, its intent is still uncertain because the respective countries have to evaluate their relations with China if they want to make the bloc official. Second, if it were to be official, to what extent would it serve the interests of the member countries? Third, is the Quad a concert of democracies to contain China? Last, will it coordinate with other members in the Indo-Pacific region, that is will Quad translate into Quad Plus?

China’s actions have managed to bring the four countries closer. China, however, has scored a success when the RCEP (Regional Comprehensive Economic Partnership), the world’s largest plurilateral trade agreement was signed on November 15^th. Both Japan and Australia are members of the RCEP. Many see this as a setback for India and America, and an important building block in a new world order, in which China calls the shots all over Asia. It puts in doubt the viability of SCRI (Supply Chain Resilience Initiative), an effort by Quad members to create an alternative to Chinese domination of supply chains.

The nature of China’s challenge to the global order and the Indo-Pacific is geoeconomics in design, as evidenced by its Belt and Road Initiative and its recent success in RCEP. The Quad will need to go beyond security cooperation.

While security and military cooperation will help in checking China’s aggressive approach, it must be recognised that this alone will be an incomplete strategy. The nature of China’s challenge to the global order and the Indo-Pacific is geoeconomics in design, as evidenced by its Belt and Road Initiative and its recent success in RCEP. The Quad will need to go beyond security cooperation.

The conclusion of RCEP maybe China’s gain, but it is important to recognise the fact that ASEAN is the main driver of RCEP. In attempting to balance China, ASEAN and Japan have kept the door open for India to re-join the RCEP. It is possible that the US, under the Biden presidency, may revive the TPP (now proposed by Japan as CATPP, Comprehensive and Progressive Agreement on Trans-Pacific Partnership), which could balance the RCEP. The Quad, in this context, will continue to be very relevant for peace and security in the Indo-Pacific.

December 23, 2020
A third aircraft carrier for India: Budget versus necessity

Category: Defence Policy, Military Power & Modernisation

Title: A Third Aircraft Carrier for India: Budget vs necessity

Author: M Matheswaran 02.06.2020

The Indian military is undergoing what may be its most significant reorganisation since India’s independence, with considerable implications for its future strategic posture. One important issue that has been brought to the fore is the role of the Indian Navy as a regional power projection force built around three aircraft carriers. The government’s decision on this issue will have significant implications for the region.

Read More

October 13, 2020

InsurTech In India

It is not an unknown to anyone that the third, or Digital, Revolution, and the Fourth- The Technological Revolution has transformed the world order and the way daily activities are conducted. From a linear to an exponential growth rate of the revolutions, all the sectors- minor and major have seen unprecedented changes. The financial sector, though slow and cautious, is not an exception to these transformations.

FinTech, or Financial Technology is the integration of technology into the offering of financial service to improve and automate their delivery and usage. Regular activities like online transfer of money to purchase of equity through an online platform come under the umbrella of Fintech. The Global Fintech Market has been valued at $127.66 bn by 2018 and was estimated (before COVID) to grow at 24.7% per annum. India is the 3^rd largest fintech centre with FinTech investments of nearly $3.7 bn.

Financial systems globally have incorporated certain level of digitalization and have experienced growth. One of the major markets that were perceived to have huge potential for Fintech investments is Insurance. Reducing vulnerability to financial loss, mobilization of funds and capital formation, and funding of infrastructural (or long term) projects had made the Insurance sector attractive for both demand-side and supply side parties for centuries, essentially making it a necessary financial instrument. Given this, the insurance penetration in the world is still quite low, and this industry is perceived as ripe for disruption and innovation by the FinTech Start-Ups.

Insurtech, coined in 2010, is a combination of insurance and Fintech i.e. exploiting the wave of the digital revolution to improve insurance provision, innovation, and cost reduction. Insurtech employs artificial intelligence for customization of insurance products, simplification of pricing and underwriting for the products, cost reduction through disintermediation and automation, easy and quick settlement of claims and provide a platform for innovation. For example, claim settlement in motor insurance could be automized and made digital intensive, by uploading photographs of the accident and relevant documents to verify the claim, and online processing and approval of the claim. Blockchain technology would be of critical here for collaboration and common sharing of data and transactions with other insurance players, to avoid fraud by customer( for example, repetitive claims). Use of technology would also enable extending of services to those previously left out of the system.

Why InsurTech?

Say for example, in health insurance, an insurer would obtain only point-in-time data (through medical tests) about the policyholder which is not completely sufficient to make accurate risk assessment and underwriting. Once the customer is on-boarded, there is no effective way an insurer could know or keep track of the risk entailed in activities of the agent. That is the problem of moral hazard[1] which is a most relevant in case of motor insurance (at the individual level) or marine insurance (at the institutional level). InsurTech extract information from repositories like Big Data, BlockChain[2][3] or information records of Technology-driven devices (IoT devices like wearables and trackers) to maintain a regular stream of data that enables them to price the risk better and provide appropriate incentives to customers’ to reduce their risk exposure.

For example, Pedometers to count steps walked in a day, fitness devices that capture heartbeat, oxygen intake, blood pressure etc, or even information recorded by smartphones (sometimes linked to the wearables) is used as input data that helps insurers to gain better insights(to a limited extent) into the behavioural pattern of the policyholder. This is additional information available to the tech-driven InsurTechs that gives them an edge over the conventional insurance companies in assessing the risk more accurately. The analysis could be utilized to motivate customers to maintain good health by providing incentives like health-score based reduction in premium or other tangible benefits like discounts on health products, free subscriptions etc.

There are several types of innovations[4] that fall within the scope of InsurTech—Digital platforms, Internet of Things (IoT), Big Data Comparators, Robo Adviser, Machine Learning, Artificial Intelligence, Blockchain, P2P (peer to peer), Usage-based and so on. India, being one of the largest smartphone users could take advantage of the Existing mobile and digital penetration to extend the outreach of insurance products (life, health, pension schemes) into untapped segments in the country- like youth and low-income customers.

Risk assessment, underwriting and Fraud detection is done by the analysis of the accumulated data using Artificial intelligence and Machine Learning techniques. Artificial intelligence (AI) refers to the simulation of human intelligence in machines that are programmed to think like humans and mimic their actions. Machine Learning (ML), [5]a subset of Artificial Intelligence, is the science and engineering of making machines ‘learn’ by finding patterns in data in an automated manner, using sophisticated methods and algorithms.

So how does Insurtech aspire to be the face of the insurance market?

With the digital revolution and rapid increase in the use of mobile phones, insurtech sees an opportunity to reach out to its customers in a fast and convenient way. Data resources like Big data and SaaS, about the customers collected from multiple sources could be employed to draw better inference from raw data and target the pool of potential customers. Unlike traditional insurance, Artificial Intelligence (AI) and Machine Learning(ML) could be used to develop chat bots and multiply interaction between agent and customer for assessing and customize the products in line with their needs. New Technologies (like Robotic process automation) could be used to reduce human intervention and automate the mundane activities like underwriting the contracts, claim settlement and also reducing operational costs. Moreover, AI and ML enable fraud detection from the pattern of activities of the customer. Unlike established insurers, insurtech have the flexibility to steer clear of legacy products and provide tailor-made products for the customers according to their needs and demand.

Incumbents, or the established insurers, are viewing this as an opportunity and catalyst of innovation rather than a threat to their market penetration and customer acquisition. Collaboration of incumbents with the nascent start ups is a win-win situation, with the integration of best of both the worlds- the established infrastructure and market share of incumbents and innovative products, niche targeting and better pricing by employing AI and ML algorithms of the Insurtech.

Insurtech in the World

US homes nearly half of the InsurTech start-ups, followed by UK and India, and is an avenue for 63% of the insurtech investments.

Source: InsurTech 2020 , Research Insights by Imaginea

Some of the innovative on-demand insurance products launched by Insurtech around the world include-

MANGO: a Mexican- retirement and life insurance intermediary, for obtaining life insurance in minutes without excessive paperwork and confusing coverages.
Go Girl: women-only drivers insurance. It involves lower premiums for good drivers, free courtesy car repairs and an inbuilt accident and theft insurance. Complete transaction is conducted online.
VisitorCoverage: a travel medical insurance for only non-US citizens. It also provides insurance for public emergency health screening including Covid-19 and other tests.
Fizzy: an mobile insurance for delays in flights for 2hours or more
Dapp: Etherisc, a Munich Based insurance platform , offers a crop insurance, providing an instant payout of insurance in case of flood or drought.
AgUnity and Etherisc, a austalian start up to provide insurance covers directly to farmers to reduce the last mile challenges in providing insurance to customers who need it.

InsurTech in India

Currently, there are 24 life insurance and 39 non- life insurance companies in India (incumbents). In spite of that, India with a population of 121 billion has less that 4% (3.7% to GDP) of insurance penetration and a lapsation rate (unpaid premium for >6 months) as high as 20% compared to 15-20% in other Asian countries. As of 2017, at least 75% or 988 million Indians do not have life cover and 56% of population do not have any significant health coverage (out of 44%, 26% are covered by Rashtriya Swasthya Bima Yojana and only 8% by insurers).

Incidentally, Indian insurance industry for a long time has relied on one-size-fits-all insurance products in the market, but now the dynamics of the insurance market are changing. Innovative products like usage-based insurance, micro insurance and on-demand insurance are flooding the Indian market. The large section of uninsured population is a candy store of opportunities for competent start ups that are in search of potential markets.

Usage based insurance: insurance products with low premium, paid periodically based on usage like pay-per-mile auto insurance; individual habits-based life insurance.
Need – based insurance: based on specific needs of the customer like theft insurance when away from home, theft insurance for valuables in the rented house. IRCTC travel insurance – in collaboration with ICICI Lombard, Royal Sundaram and Shriram general. Paytm launches a e-wallet insurance, refunding money stolen or accessed unauthorized.
Sachet-size insurance: provision of products like insurance against dengue (dengue insurance) to accident and life insurance, at a low premium rates is the agenda of this insurance. Toffee Insurance – gurgoan based insurance start up, offers insurance against cycle theft and mosquito related diseases for a premium starting from Rs 20.

[innovative ideas like Tinder-Date-Gone-Bad insurance to cover for restaurant bills and gift expenses are all our millennials and Gen X need to mobilize some cash for insurance].

These are the some of the innovative products tailor-made for its customers according to their needs and economy. The primary incentive behind these innovations is to create an environment where customers are introduced to the benefits of insurance, who would ultimately vouch for the long-term insurances.

Paytm which has users mostly in Tier II and Tier III cities has partnered with insurers to provide insurance services like premium payment and policy renewal and has launched PayTm Insurance in early 2020, tying up with leading insurance firms in india. Amazon and Flipkart have collaborated with ACKO and AEGON LIFE respectively to provide Point-of-Sale insurance(for example, insurance on electronics). Ola provides commutation insurance for the rides at Rs 1. IRDA and the incumbents have viewed this disruption as an opportunity to improve penetration and provision of service. Collaboration with incumbents would also reduce barriers to trade for the emerging start ups and would provide financial support for more innovations. IRDA granted licenses to AKCO, DIGIT INSURANCE, COCO by DHFL and reliance health insurance to work as “neo-insurers”; a sandbox was established for the initial testing of new innovations before launching them into the market; guidelines and regulations were laid down for the functioning of insurtech, under the supervision of IRDA.

Though at nascent stage, Insurtech has already attracted $3 billion investments worldwide. India has attracted nearly $183 million investments, as of 2019.

Source: Predictions, BusinessToday.in

Source: Predictions

IRDAI on Insurtech

IRDA is the Insurance Regulatory and Development Authority of India. The demand for linking wearables to product designing by the insurers prompted the setting up of a working group to look into the new innovations and wearables. The main purpose/aim of working committee was to make recommendations for supervisory and regulatory frameworks for InsurTech.

“What should be the Regulator’s role in encouraging innovation”[6]

IRDA working committee has recognized that customers’ needs have evolved over time which cannot be fulfilled by traditional insurance alone. IRDA subsequently acknowledged that use of technology will, not only aid in new innovations and better service provision, but also helps insurers assess risk better, develop new business models, processes and products, through the use of data collected through various devices (for example: IoT[7] devices in the automobile to assess policyholders’ driving behaviour, which are recorded as data points). Insurers are embracing innovations with focus on data analytics, and sophisticated data models that help the identify, understand and quantify risk.
Nevertheless, IRDA also acknowledged that this data capture poses several threats and challenges to the insurer and the customer. IRDA recognized the need for a regulator to understand the fast moving innovations in the sector, and develop proper knowledge and skills that foster Insurtech, simultaneously protecting the customers’ interests. In its report, it has made some recommendations regarding supervisory and regulatory framework with respect to InsurTech – Risk assessment, risk Improvement, product design and product pricing.

For a better insight into the status quo of InsurTech worldwide, IRDA working committee looked into the variety of measures insurance regulatory bodies in other countries have observed.

Financial Conduct Authority (UK): FCA has taken initiative to look out for upcoming start ups and understand their potential problems, alongside with providing direct support (advisory support and clearing regulatory ambiguities); it has established a sandbox for pilot testing of new products on live customers on a small scale.
BaFin, Germany: it has adopted a technologically neutral position, i.e no special treatment is accorded to InsurTech owing to their innovative nature. Regulations to the insurers are strictly based on the functions performed by them.
Mexico: Regulators felt it is too early for developing separate regulations for Insurtech and they would be supervised under the existing regulations.

Notable observations

“From purchasing a policy to raising a claim, the process is time consuming, resource driven, and paper intensive. Technology can address these concerns and make the customer experience very smooth and hassle free.”

“Digital technology could extend the reach coverage into largely untapped areas such as lower income segments, by reducing costs and allowing businesses to engage with customers in more compelling and relevant ways”

“The use of technology has an impact on product design and the efficiency of inclusive insurance delivery.”

“The consent of the customer to share data is a must for participation in such products.”

“Insurers may be allowed to capture data as per their product requirements, but within the scope of insurance and underwriting need.”

“The provider shall capture and give the insurance companies only the specified information, and the privacy of data arrangement will be directly between the insured and the provider.”

“Insurers shall develop robust internal monitoring mechanisms to ensure that data leakages do not take place as this data could be misused for monetary benefits (e.g., sending promotional offers to customer based on his location etc.).”

“The products can evolve and be tested in a sandbox environment before fully going live and a transition strategy should be proposed for when the proposed product exits the sandbox environment.”

Working Committee insisted on maintaining transparency and follow protocol for data collection, data usage and data sharing with third parties. It suggested that there is a need for portability/ sharing of data between the insurers. They could employ block chain technology unto this purpose.

IRDA permits the insurers to offer discounts or offers to the customer based on the data collected. Premium and other benefits like discounts or subsidized or free health services could be determined by the performance, progress, and consistency in individual’s (say health) score arrived at by analysing data obtained from single or multiple sources.

Data Mining and Security

Data collection could be done through proprietary or third party services. However,

Consent and customer access: The insurer should provide the details of the data collected to the customer and he should have access to this data (on a portal etc). There should be complete transparency about the data collected (should be as per/after his consent) and the benefits bestowed.
Usage: The usage of data should be as per the notice given to the customers. Regulations have to provide appropriate safeguards against data misuse
Disclosure: Insurer should not share the data with any third party, except for analytical services, provided they(analytical firms) satisfy the framework laid down.
BlockChain: BlockChain is an effective way to ensure transparency and security (encrypted records-blocks which are resistant to modification of data) which makes them ideal for recording of events and transactions. This is an ideal platform to ensure security and sharing to data among insurers.

Concerns

It is important to maintain a right balance between protection of policyholders’ interest and promoting innovation.
There is a chance that some segment of populated may be rendered commercially uninsurable. Risk granulation might worsen the affordability and exclusion of certain sections in the society.
Innovations might disrupt the traditional risk pooling mechanism of the incumbents
Technology might disrupt the conventional business models of the insurers. There is a possibility of minimized engagement (integration) between insurers and customers.
Data insecurity is a prominent challenge.
Overreliance on technology could be a threat.
Supervisors ought to develop adequate technical resources, knowledge and skills to make sure there are no lapses.

Recommendations

Insurers should perform a cost-benefit analysis, because the cost is ultimately borne by policyholders
(As mentioned) Product pricing and premium reviews, incentives to customers can be based on data collected through devices.
Such products must be tested in the sandbox before launch in the market.
Provision for adding wearbles data pricing for existing products. Details of usage of wearble devices should be a part of product filing.

Interview

InsurTech is still newbie. I found it more appropriate to interview few analysts who have hands on experience in the insurance market and have worked, supervised or studied about InsurTech and InsurTech start ups.

I have interviewed 4 analysts

Dr Sahil: A medical graduate(Cancer Biology) who ventured into Insurance sector. He is a experienced professional with an in-depth knowledge of healthcare and Insurance industry. Had the opportunity to be a part of 4 startups Currently working as a Director in a new and upcoming zen space of Insurtech- Meta InsurTech.

Aparajit Bhattacharya: Senior-level Insurance professional experienced as Business Head of public and private companies. He is also a seasoned executive with an in-depth understanding of emerging technologies and their commercial applications, also having international business expertise, having conducted business in South Asia, Nigeria. Motivated self-starter who earned multiple sales achievement awards during the early career, as well as sustained recognition for Co-Founded Start-Up- Insure First.

Rahul Mathur: He has completed his Master’s degree from the University of Warwick. He worked as a Insurance Product Manager at Laka Insurance focused on product development, strategy and research. Presently, he is based in London working as a consulting analyst for a Start-up lead at the London chapter of Accenture’s FinTech Innovation Lab. He is also an Ambassador for Asia Insurtech Podcast, Asia’s first podcast dedicated to InsurTech and innovation in insurance featuring entrepreneurs, thought leaders and investors.

Neerav: Senior-level insurance professional.

Where does insurTech stand today in India?

Dr.Sahil: InsurTech is basically employing AI and ML methods, and other technological tools, that reduce human intervention and processing time and increases efficiency in the insurance sector processes. InsurTech can help in early and easy, simplified purchase, processing and settlement of claims. According to me, we haven’t really reached that stage yet. Currently, we are in a behavioural changing phase, through digitalization of insurance Claims processing is still paper intensive (physical documents). The farthest we have gone so far is the approval of sandbox for testing products. But we are still behind in R&D and new products are yet to come out.

Aparajit: InsurTech is a mix of insurance and technology. Though AI seems like a catchy concept, it hasn’t entered insurance globally. Presently, InsurTech is majorly dominated by Cloud-Based API. In the coming decade, more insurtech start ups and intermediaries will subscribe to using blockchain to automate activities more than AI.

Neerav: InsuTech is mainly AI driven ecosystem that aids in reducing human intervention, cost and time, and improves accuracy. It cannot be regarded as a separate field. It has touched all areas in insurance so far, from risk analysis to price determination. But we are certainly slower than some countries like Singapore which have been using more advanced technologies.

Rahul: More incumbents are willing to engage with Start ups to do business for example- partnerships with Riskcovry for distribution via APIs. Situations have changed for the insurance industry. Digit has scaled to $313M GWP for FY20 via commercial lines business. Private players are laying an active role in insurance. InsurTech has penetrated almost all areas in insurance including risk analysis, and price determination.

What has been the Biggest success of InsurTech so far? What more could be done?

Dr.Sahil: Sandbox is a appaudable success. New products are entering markets right now. But country needs to be more adaptable. As a premium- driven economy, we are attracted to cheaper premium products, which defeats the purpose of insurance. Awareness is still a big challenges in India.

Aparajit: One of the major successes is digital customer onboarding ( and acquisition) . Social media and search engines are creating awareness. Specially after covid, awareness about insurance (mostly health) has increased. InsurTech also created a excellent API culture for customer acquisition.

Secondly, Sandbox is a commendable breakthrough, indicating that regulator is working on creating a conducive environment for growth of insurtechs. IRDA is also promoting e-commerce sales in Insurance. In Additional, various business-to-business start ups that work on administration, customer onboarding have also developed. These are some appreciable successes so far.

Neerav: Insurers in India have become more adaptive to change and are more open to suggestions, new technologies and actively building internal infrastructure. They are looking for ultimate outcome.

Rahul: Biggest success of InsurTech so far is lowering operational cost resulting in lower premiums (e.g.how). Secondly, B2B2C (business to business to customer) distribution via new affinity channels like e-commerce and payments apps entering into insurance (Patym premium payment). Incumbents have realized the need for change and “innovation”. As more InsurTechs enter the space, incumbents are becoming increasingly comfortable working alongside Technology companies (they are starting to appoint “Heads of Innovation” and create standalone teams for new affinity)

What do you think are the niche areas that InsurTech could cater to?

Dr.Sahil: There are numerous opputunities for InsurTech. There are numerous pools of customers that need to be insured. So the questionhere shifs to what should be done by the insurtechs to tap into these pools. To achieve these oppurtunities, Increased interaction between insurers, early processing and common data repository are 3 component areas that needs work on initially. For example, in case of health insurance, digital recording of medical report results, prescriptions and OPD slips saves huge amount of processing time (even for third party administrator) for the customer. Moreover, creating a central repository of relevant data, accessible to all insurers, would avoid be beneficial.

Aparajit: India is one of the fastest growing insurance markets in the world. Yet,it has less than 4% penetration. InsurTech is an necessary means of reaching out to less insured tier II and tier III cities, which entails high capital costs if done in the traditional way. Secondly, unorganized sector workers are more likely uninsured for most part. Insurtech could bridge this gap through digital customer onboarding, virtual distribution of policies, e- kyc etc Digital Customer acquisition, identity verification (through e- Aadhaar), quick accessing of product details as per customer needs etc could be done without the need for physical infrastructure. Thus, API driven InsurTech would be the key to solve the low penetration problem in India.

Neerav : there are two types of distributors- retail and corporate. Corporate have broadly foussed on launching Apps say, a wellness app for pharmacy buying and telecalls. Gradually, it will be expanding to other customers (retails). The main focus would be on customers in tier II cities and rural areas, rather than in metrocities.

Rahul: InsurTech has prospective future in Drone insurance. The upcoming use for electrical vehicles opens up doors for new product- electrical vehicles insurance. InsurTech also has huge scope in Micro insurance and insurance in sharing economy.

Personal Data Security is one of the biggest challenges India is facing. How are the new Start ups assuring the customer data safety?

Dr.Sahil: InsurTech is all about data. And Tech doesn’t happen overnight. It has various layers that need to be designed before a robust technology takes form.

Functionality or purpose of the innovation
Independence in the working
The Load taking capacity
Security measures

Younger population currently prefers hassle free processing through digital platform, hence data security is not the first thing on mind. This is surely a big challenge, but this is a task for a later stage. Moreover, In India, Most insurtechs are intermediaries and the essential processes like underwriting, policy issue, claim settlement are done at the insurers’ end. So in ideal situations, insurers should be responsible for Data security. Alternatively, Government, a more informed member, should take responsibility to ensure data security and measures in case of a data leak where parties involved are punished.

Aparajit: InsurTechs abide by the data safety protocols, system audits reports and security protocols mandated by IRDA. Mostly all the Servers are located in india, which reduces risk to considerable extent. However, data threat is very much of a real problem and IRDA will come up with new measures in due course of time to tackle this effectively.

Neerav : Big companies are mainly following European data security standards and

Guidelines and hence are legally insulated. But in practical sense, there are still gaps. Risk prevails. Challenges are there but we will figure out more ways. Infact, this isone of the many reasons, incumbents are hesitant to invest in newbies.

Rahul: Typically, start-ups are built on AWS[8] or MS Azure or GCP(cloud based platforms) which comes with in-built security features that incumbents who use on-premise services would not have access to. Moreover, Incumbents tend to be more vulnerable since they are the targets of cyber criminals owing to the size of their operations. Typically, leading InsurTech companies with increasing investments (Series A/B) have a full-service cyber security team (but this varies by company).

How can we increase the awareness about Insurance in India?

Dr.Sahil: Agents, more often than not, focus on appraisal and incentives. Similarly, customers are concerned with cheaper premium with more benefits. Improving customer welfare is hardly talked about. This is a consequence of lack of awareness. Insurer should focus on post sales engagement. Inception of a chat bot or common call centre, agnostic touch point not represented by any one company could be a innovative start.

Aparajit: Social media and search engines playing a major role in creating awareness- like insurance specific pages on facebook, Linkedin. API culture of InsuTech also actively creates awareness. For the benefit of customers, simplification and bullet pointing the terms and conditions in policy underwriting is a suggestion.

Neerav: Most effective way is ‘word of mouth’. Customers will do away with agents, only if they see a better alternative in new technology. Though Advertising is effective promotion, it has a limited impact. Lack of awareness has negatively impacted customers’ welfare for a long time.

In my opinion, one of the implications of digital insurance is lesser personal contact and more digital interaction between the agents and the customers. Do you think this could transform into challenge in any context?

Dr.Sahil: As mentioned before, Agent is certainly more concerned about his benefits. Post sale of product, subsequent contact with agent will be for claim processing and settlement or maturity. thus, evidently, it is more profitable to be more interactive with the insurer. Most queries by the clients are not complex or tech related (like clauses of a claim) and could be answered by Chatbots. Chatbots infact make his process more efficient- make it phygital- physical person plus digital model. Many Insurers like policy bazaar, HDFC have already employed this technology. Is time agents also adapt to this change.

Aparajit: Unlike popular belief, digitalization can infact improve the productivity of Agent if taken advantage of. Typically, an Agent could contact 2-3 clients per day, given the distance and time factor. Digital arrangement is cost effective in the sense that it reduces transaction costs and travelling time, increases agent productivity and outreach. Tier II and III cities are becoming with active on online platforms and are looking for online modes of communication. Voice and video could become the new mode of communication, the new normal.

Neerav: Not really. This was a problem of past. On the contrary, InsurTech could make huge difference in Tier II and III cities which are highly dependent on agents. InsurTech would promote awareness, and provide more transparent information and advice unlike an agent. Agents could still be a source of contact forsecond opinion, but InsurTech could replace agents at primary level.

Rahul: It is difficult to say certainly. For more established agents/brokers who own large books, they might just return to business as usual The younger generation of agents & brokers might accept the support that digital platform provides (lower commissions but higher volume) since they are less embedded in the “old ways”. It is also important to consider that customers at different points in their life would want different levels of service ranging from digital to Face-to-Face.

IRDA has been welcoming to the changes in the sector. Do you think there is more to be done?

Dr.Sahil: IRDA has done a great job so far in welcoming InsurTech into the country and establishing the sandbox. But It has to move beyond the role of a regulator and expand its capabilities in technology and insurtech.

Aparajit: Yes, there is a lot of scope for IRDA as a regulator. But the pace has been set, which is a progressive step. Finance ministry and IRDA could promote digitalization and modrenization in LIC.

Neerav: No. IRDA has been very supportive and cautious. As long as the product quality meets the standards, IRDA would approve and promote the product and the firm. Although, may be Public sector firms in the economy could be given a nudge by the government and IRDA.

Rahul: Sandbox is a good starting point and Standardization of clauses, exclusions and claim settlements in Health is a welcome move. However, there is a Lack of clarity on policy wordings and interpretation which makes it harder for brokers/customers to compare products on features beyond price. In addition, there is a need for Centrally pooled underwriting capacity for innovation. This is a global problem where any start-up or platform which requires “product innovation” in insurance has to chase multiple carriers. Similar to how the IRDA used to operate the Third-Party motor pool, it should consider operating an innovation pool for capacity (application system like Sandbox)

Covid 19 is the biggest pandemic any country has faced so far. Yet, it is believed that Covid could in fact accelerate digitalization. Do you believe that? Do you think this holds true for India? What will be its short term and long term impacts?

Dr.Sahil: Covid has succeded in driving a behavioural change in the customers. People have become more adaptive to digitalization of processes. This could be a long lasting effect. Yet, this seems to a very limited group, expansion of which depends on the InsurTechs now. However, In my opinion, InsurTech per se is covid independent.

Aparajit:

Traditionally, There are 4 distribition channels for insurance- bancassurance, agency, direct sales and brokers and corporate agents. Prior to Covid, agency and bancassurance owned major market share and digital platforms have less than 5% contribution. But currently, with bancassurance and agency which are not technologically prepared, are shut and digital platforms have taken their place. Policy bazaar’s business has increased by 30% due to their digital front which is certainly going to sustain even when bancasssurance and agents revive. Thus, in this way, InsurTech will be efficient, removing manual and menial (repetitive) works. Some jobs would become obsolete, and those employees could be used for other human intensive activities. Though motor and travel insurance companies have expected short term losses, these can be recovered as the industry revives. Insurtech was initially met with scepticism. Adopting digitalization was considered “optional”. Covid has certain ways exposed the inefficiencies in the industry. It is now a question of how fast industry can adopt technology for the long term benefit.

Neerav: Covid infact has a multifold effect on the industry. It could change the business is done by the insurers. Gradually, a virtual work culture may develop, where client meetings are held digitally. This is entail large cost benefits. Smaller cities and towns are moving towards digital payments and service, which has become a necessity now. It also achieving a gradual behavioural change and adaptation to technology. Insurance industry will see a change

Rahul: Some B2B InsurTechs (like policybazaar.com, Metamophsys) have seen several inquiries come in and sales cycles shorten. Executives understood the limitations of not having digital capabilities to administer policies, renewals and claims remotely, and incumbents are inclining rapidly towards digital operations. This effect is bound to remain for a long period. Moreover, Awareness of the importance of health insurance is likely to remain. Health Insurance was one of the few segments to maintain positive YoY growth in April and May 2020)

Presently, nearly 60- 65% of population in India is young. They would form a major share of insurance demand in the forthcoming years and InsurTech and incumbents should be prepared for this. Demand for Renters policies and gadget protection policies will increase rapidly. Health Insurance also holds more oppurtunities for innovation and disruption. A more customer centric approach will pave the way for InsurTech.

Evidently, Insurtech needs to happen as it is an effective way to create awareness among customers, for them to look beyond return on investment or fear. Insurance is a precaution against an eventuality and should be considered a long term investment.

Appendix

List of InsurTechs in India

India: InsureTech Acitivity (Sorted by Type and then Alphabetical Order)
Name	Type	Description	Founded in	Location
Konsult	Enabler	Mobile app offering health consultations with potential insurance leads	2015	Delhi
SatSure	Enabler	Crop damage assessment service	2015	Bangalore
Trak N Tell	Enabler	A leading telematics solution provider	2009	Delhi
BharatSaves	Enabler	Online insurace shopping by Google	N/A	Bangalore
Xceedance	Enabler	Insurance analytics and consulting to P&C carriers	2013	Bangalore
Senseforth	Enabler	Conversational AI – has developed SPOK, an email bot HDFC Life Insurance	2012	Bangalore
Ask Arvi	Enabler	Health Insurance Assistant / Conversational AI	2017	Mumbai
Girnar Software	Intermediary	IT company offering mobile and web solutions. Operators of CarDekho.com car buying portal	2007	Jaipur
Demyto	Intermediary	A portal for car services with the ability to request an insurance quote	2015	Pune
EasyPolicy	Intermediary	Life and P&C insurance comparison site	2011	Noida
Wishfin	Intermediary	Insurance and finance marketplace, formerly known as Deal4Loans	2015	Delhi
Pickme India	Intermediary	Gadget insurance	2011	Mumbai
YuMiGo	Intermediary	Travel insurance aggregator	2015	Delhi
Turtlemint	Intermediary	Insurance aggregator with online quotes and form assist	2015	Mumbai
RenewBuy	Intermediary	Car insurance aggreagtor	2015	Noida
Coverfox	Intermediary	Insurance aggregator with online quotes and form assist	2013	Mumbai
ETInsure	Intermediary	Insurance aggregator with online quotes and form assist	2016	Delhi
121Policy	Intermediary	Insurance aggregator with online quotes and form assist	2016	Kolkata
GIBL	Intermediary	Insurance aggregator with online quotes	2013	Kolkata
GramCover	Intermediary	An insurance marketplace for the rural sector.	2016	Delhi
PolicyMantra	Intermediary	Insurance aggregator with online quotes and form assist	2010	Mumbai
PolicyBazaar	Intermediary	Insurance aggregator with online quotes and form assist	2008	Gurgaon
CarDekho	Intermediary	Car search portal that also provides online car insurance quotes (Subsidiary of Girnar)	2016	Gurgaon
PolicyBoss	Intermediary	Online insurance aggregator	2003	Mumbai
Acko General Insurance	Primary	India’s first online insurance company	2017	Mumbai

References

[1] Moral Hazard is the case where the insured assumes more risk, since the burden of the loss is borne by someone else( insurer)

[2] Blockchain or distributed registry technology is a digital ledger that stores active transaction data without intermediate control by using a consensus system to validate transactions. Blockchain operates on a principle of transparency for fixed record keeping.

[3] InsurTech -Working Group Findings & Recommendations (IRDA)

[4] InsurTech -Working Group Findings & Recommendations (IRDA)

[5] InsurTech -Working Group Findings & Recommendations (IRDA)

[6] InsurTech -Working Group Findings & Recommendations (IRDA)

[7] Internet of Things

[8] Amazon Web Services

This is a working paper. Comments are welcome and can be forwarded to aqf19surya@mse.ac.in

October 12, 2020

Tag: India

source: Washington university

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