The Peninsula Foundation

Tag: India

  • A Taxing Tale: Assessing the Impact of Six Years of GST

    A Taxing Tale: Assessing the Impact of Six Years of GST

    Goods and Services Tax (GST) stands at a critical juncture six years after its implementation. Despite promising enormous benefits, it has fallen short and led to a decline in economic growth, especially for the unorganised sector.

    Goods and Services Tax (GST) has completed six years since it was launched on the midnight of June 30, 2017. It was billed as India’s second freedom. In a repetition of the then Parliament’s midnight meeting on August 14, 1947, the Parliament met dramatically in 2017 to hear the Prime Minister announce the launch of GST.

    It was said that the fragmented Indian market would be unified into one and a parallel was drawn with 1947, when free India had come together as a union of states.

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  • The Asymmetric Indo-US Technology Agreement Points to India’s Weak R&D Culture

    The Asymmetric Indo-US Technology Agreement Points to India’s Weak R&D Culture

    Prime Minister Narendra Modi’s state visit to the USA resulted in four significant agreements and the visit is hailed as one of very important gains for India and Indo-US strategic partnership. The focus has been on defence industrial and technology partnership. Media and many strategic experts are seeing the agreements as major breakthroughs for technology transfers to India, reflecting a very superficial analysis and a lack of understanding of what really entails technology transfer. Professor Arun Kumar sees these agreements as a sign of India’s technological weakness and USA’s smart manoeuvring to leverage India for long-term defence and technology client. The visit has yielded major business gains for USA’s military industrial complex and the silicon valley. Post the euphoria of the visit, Arun Kumar says its time for India to carefully evaluate the relevant technology and strategic policy angles.

     

    The Indo-US joint statement issued a few days back says that the two governments will “facilitate greater technology sharing, co-development and co-production opportunities between the US and the Indian industry, government and academic institutions.” This has been hailed as the creation of a new technology bridge that will reshape relations between the two countries

    General Electric (GE) is offering to give 80% of the technology required for the F414 jet engine, which will be co-produced with Hindustan Aeronautics Limited (HAL). In 2012, when the negotiations had started, GE had offered India 58%. India needs this engine for the Light Combat Aircraft Mark 2 (LCA Mk2) jets.

    The Indian Air Force has been using LCA Mk1A but is not particularly happy with it. It asked for improvements in it. Kaveri, the indigenous engine for the LCA under development since 1986, has not been successful. The engine development has failed to reach the first flight.

    So, India has been using the F404 engine in the LCA Mk1, which is 40 years old. The F414 is also a 30-year-old vintage engine. GE is said to be offering 12 key technologies required in modern jet engine manufacturing which India has not been able to master over the last 40 years. The US has moved on to more powerful fighter jet engines with newer technologies, like the Pratt & Whitney F135 and GE XA100.

    India is being allowed into the US-led critical mineral club. It will acquire the highly rated MQ-9B high-altitude long-endurance unmanned aerial vehicles. Micron Technologies will set up a semiconductor assembly and test facility in Gujarat by 2024, where it is hoped that the chips will eventually be manufactured. The investment deal of $2.75 billion is sweetened with the Union government giving 50% and Gujarat contributing 20%. India is also being allowed into the US-led critical mineral club.

    There will be cooperation in space exploration and India will join the US-led Artemis Accords. ISRO and NASA will collaborate and an Indian astronaut will be sent to the International Space Station. INDUS-X will be launched for joint innovation in defence technologies. Global universities will be enabled to set up campuses in each other’s countries, whatever it may imply for atmanirbharta.

    What does it amount to?

    The list is impressive. But, is it not one-sided, with India getting technologies it has not been able to develop by itself.

    Though the latest technology is not being given by the US, what is offered is superior to what India currently has. So, it is not just optics. But the real test will be how much India’s technological capability will get upgraded.

    Discussing the New Economic Policies launched in 1991, the diplomat got riled at my complaining that the US was offering us potato chips and fizz drinks but not high technology, and shouted, “Technology is a house we have built and we will never let you enter it.”

    What is being offered is a far cry from what one senior US diplomat had told me at a dinner in 1992. Discussing the New Economic Policies launched in 1991, the diplomat got riled at my complaining that the US was offering us potato chips and fizz drinks but not high technology, and shouted, “Technology is a house we have built and we will never let you enter it.”

    Everyone present there was stunned, but that was the reality.

    The issue is, does making a product in India mean a transfer of technology to Indians? Will it enable India to develop the next level of technology?

    India has assembled and produced MiG-21 jets since the 1960s and Su-30MKI jets since the 1990s. But most critical parts of the Su-30 come from Russia. India set up the Mishra Dhatu Nigam in 1973 to produce the critical alloys needed and production started in 1982, but self-sufficiency in critical alloys has not been achieved.

    So, production using borrowed technology does not mean absorption and development of the technology. Technology development requires ‘know-how’ and ‘know-why’.

    When an item is produced, we can see how it is produced and then copy that. But we also need to know how it is being done and importantly, why something is being done in a certain way. Advanced technology owners don’t share this knowledge with others.

    Technology is a moving frontier

    There are three levels of technology at any given point in time – high, intermediate, and low.

    The high technology of yesterday becomes the intermediate technology of today and the low technology of tomorrow. So, if India now produces what the advanced countries produced in the 1950s, it produces the low-technology products of today (say, coal and bicycles).

    If India produces what was produced in the advanced countries in the 1980s (say, cars and colour TV), it produces the intermediate technology products of today. It is not to say that some high technology is not used in low and intermediate-technology production.

    The high technologies of today are aerospace, nanotechnology, AI, microchips and so on. India is lagging behind in these technologies, like in producing passenger aircraft, sending people into space, making microchips, quantum computing, and so on.

    The advanced countries do not part with these technologies. The World Trade Organisation, with its provisions for TRIPS and TRIMS (Trade-Related Aspects of Intellectual Property Rights and Trade-Related Investment Measures), consolidated the hold of advanced countries on intermediate and low technologies that can be acquired by paying royalties. But high technology is closely held and not shared.

    Advancements in technology

    So, how can nations that lag behind in technology catch up with advanced nations? The Nobel laureate Kenneth Arrow pointed to ‘learning by doing’ – the idea that in the process of production, one learns.

    So, the use of a product does not automatically lead to the capacity to produce it, unless the technology is absorbed and developed. That requires R&D.

    Schumpeter suggested that technology moves through stages of invention, innovation and adaptation. So, the use of a product does not automatically lead to the capacity to produce it, unless the technology is absorbed and developed. That requires R&D.

    Flying the latest Airbus A321neo does not mean we can produce it. Hundreds of MiG-21 and Su-30 have been produced in India. But we have not been able to produce fighter jet engines, and India’s Kaveri engine is not yet successful. We routinely use laptops and mobile phones, and they are also assembled in India, but it does not mean that we can produce microchips or hard disks.

    Enormous resources are required to do R&D for advanced technologies and to produce them at an industrial scale. It requires a whole environment which is often missing in developing countries and certainly in India.

    Enormous resources are required to do R&D for advanced technologies and to produce them at an industrial scale. It requires a whole environment which is often missing in developing countries and certainly in India.

    Production at an experimental level can take place. In 1973, I produced epitaxial thin films for my graduate work. But producing them at an industrial scale is a different ballgame. Experts have been brought from the US, but that has not helped since high technology is now largely a collective endeavour.

    For more complex technologies, say, aerospace or complex software, there is ‘learning by using’. When an aircraft crashes or malware infects software, it is the producer who learns from the failure, not the user. Again, the R&D environment is important.

    In brief, using a product does not mean we can produce it. Further, producing some items does not mean that we can develop them further. Both require R&D capabilities, which thrive in a culture of research. That is why developing countries suffer from the ‘disadvantage of a late start’.

    A need for a focus on research and development

    R&D culture thrives when innovation is encouraged. Government policies are crucial since they determine whether the free flow of ideas is enabled or not. Also of crucial importance is whether thought leaders or sycophants are appointed to lead institutions, whether criticism is welcomed or suppressed, and whether the government changes its policies often under pressure from vested interests.

    Unstable policies increase the risk of doing research, thereby undermining it and dissuading the industry. The result is the repeated import of technology.

    The software policy of 1987, by opening the sector up to international firms, undermined whatever little research was being carried out then and turned most companies in the field into importers of foreign products, and later into manpower suppliers. Some of these companies became highly profitable, but have they produced any world-class software that is used in daily life?

    Expenditure on R&D is an indication of the priority accorded to it. India spends a lowly 0.75% of its GDP on R&D. Neither the government nor the private sector prioritises it. Businesses find it easier to manipulate policies using cronyism. Those who are close to the rulers do not need to innovate, while others know that they will lose out. So, neither focus on R&D.

    Innovation also depends on the availability of associated technologies – it creates an environment. An example is Silicon Valley, which has been at the forefront of innovation. It has also happened around universities where a lot of research capabilities have developed and synergy between business and academia becomes possible.

    This requires both parties to be attuned to research. In India, around some of the best-known universities like Delhi University, Allahabad University and Jawaharlal Nehru University, coaching institutions have mushroomed and not innovative businesses. None of these institutions are producing any great research, nor do businesses require research if they can import technology.

    A feudal setup

    Technology is an idea. In India, most authority figures don’t like being questioned. For instance, bright students asking questions are seen as troublemakers in most schools. The emphasis is largely on completing coursework for examinations. Learning is by rote, with most students unable to absorb the material taught.

    So, most examinations have standard questions requiring reproduction of what is taught in the class, rather than application of what is learned. My students at JNU pleaded against open-book exams. Our class of physics in 1967 had toppers from various higher secondary boards. We chose physics over IIT. We rebelled against such teaching and initiated reform, but ultimately most of us left physics – a huge loss to the subject.

    Advances in knowledge require critiquing its existing state – that is, by challenging the orthodoxy and status quo. So, the creative independent thinkers who generate socially relevant knowledge also challenge the authorities at their institutions and get characterised as troublemakers. The authorities largely curb autonomy within the institution and that curtails innovativeness.

    In brief, dissent – which is the essence of knowledge generation – is treated as a malaise to be eliminated. These are the manifestations of a feudal and hierarchical society which limits the advancement of ideas. Another crucial aspect of generating ideas is learning to accept failure. The Michelson–Morley experiment was successful in proving that there is no aether only after hundreds of failed experiments.

    Conclusion

    The willingness of the US to provide India with some technology without expecting reciprocity is gratifying. Such magnanimity has not been shown earlier and it is obviously for political (strategic) reasons. The asymmetry underlines our inability to develop technology on our own. The US is not giving India cutting-edge technologies that could make us a Vishwaguru.

    India needs to address its weakness in R&D. As in the past, co-producing a jet engine, flying drones or packaging and testing chips will not get us to the next level of technology, and we will remain dependent on imports later on.

    This can be corrected only through a fundamental change in our R&D culture that would enable technology absorption and development. That would require granting autonomy to academia and getting out of the feudal mindset that presently undermines scientific temper and hobbles our system of education.

     

    This article was published earlier in thewire.in

    Feature Image Credit: thestatesman.com

     

  • Consequences of the Manipur Conflagration

    Consequences of the Manipur Conflagration

    By any measure, the situation is bleak and what makes it even worse is the fact that thousands of weapons have been looted from police armouries…

    In the summer of 64 AD, nearly 2000 years ago, Rome, more or less, was completely razed to the ground in a fire that lasted six days. The hapless citizens, in utter frustration, turned on their much-despised Emperor, Nero. He was a patron of the arts, fond of music, with a talent for playing the Cithara or Kithára, an ancient Greek string instrument, not unlike our very own Sitar. Clearly that old and well-known adage “Nero played the fiddle while Rome burned”, was grossly unfair to him, not least, because the fiddle was only invented 1500 years later.

    In a manner of speaking, one cannot avoid but feel that our political establishment has, in many ways, ended up playing the proverbial fiddle as Manipur burns, as the only matters they seemingly have time for, are elections and inaugurations. And burning it is, though one would get a distinctly different impression, if our wonderful mainstream media is to be taken at face value. Fortunately, it seems that after nearly a month of unmitigated violence, they have finally been shamed into at least mentioning violence and Manipur together, though their coverage remains scanty and cursory, to say the least.

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  • Rs 2,000 Banknotes and the Mysteries of This Mini-Demonetisation

    Rs 2,000 Banknotes and the Mysteries of This Mini-Demonetisation

    None of the arguments that the RBI has given to justify the move are valid.

    In a sudden though not unexpected move, currency notes of denomination Rs 2,000 are being withdrawn from circulation. This is announced via a notification released by the Reserve Bank of India and not the government (as at the time of demonetisation). These notes are not being withdrawn from circulation, but actually, they will stop circulating right away given that they will have to be deposited in a bank or exchanged for lower denomination notes.

    So, no one will accept these notes in transactions which is as good as being withdrawn from circulation. This will create confusion in the public for a while.

    Further, as transactions face problems, especially for small businesses – producers and traders – the economy will be impacted.

    Arguments Given

    The RBI press release gives the logic of the move.

    First, the objective of introducing these notes at the time of demonetisation was met as smaller denomination notes became available in larger numbers. It is argued that the availability of these smaller notes is adequate.

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  • Squaring the Circle

    Squaring the Circle

    John Paul Rathbone, writing in the Financial Times, on the United Kingdom’s efforts to transform its military amid public spending constraints and growing strategic challenges, puts it extremely well when he wonders as to how its military will “square the circle of being everything, everywhere, all at once.” 

    This, however, is not just a problem that afflicts the UK or its European and NATO Allies, but the rest of the international community as well. The impact of the Russo-Ukrainian Conflict, in what increasingly appears to be an unwinnable war, is restricted not only to the geo-political or and national security spheres but also calls for a clear understanding of how future conflicts will play out and what kind of a military capability is essential if that country is to remain relevant in the changing global order.

    In our context, the challenges are far more complex and greater as we face two hostile neighbours, both nuclear armed, and unwilling to give any quarter. Indeed, it is quite ironic that while China poses the greater threat to our aspirations, ambitions and future prosperity, it is the dysfunctional and dystopian Pakistan, that threatens us with Armageddon, looking to take us down with it, as it seems intent on committing hara-kiri. 

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  • Caste Census: India’s Affirmative Action Policy is Based on 90+ Years Old Data

    Caste Census: India’s Affirmative Action Policy is Based on 90+ Years Old Data

    “The data that we have for all castes as well as the Other Backward Classes is from the 1931 census. The population of the OBCs at that time was about 52 percent of the total population of India”.

    Congress president Mallikarjun Kharge is the latest to join the band of politicians and activists advocating caste census. However, the Bharatiya Janata Party-led central government has so far stonewalled all pleas and comes across as definitely averse to the idea. Before we delve into the ostensible reasons for the reluctance, a quick look at the genesis and history of the census in India.

    The census exercise was launched by the colonial government for various stated (and unstated) reasons in the realm of social engineering for their strategy of governance during the second half of the nineteenth century.

    Sociologist Michael Mann in his book South Asia’s Modern History avowed that the census exercise was more telling of the administrative needs of the British than of the social reality for the people of British India.

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  • Towards a Conversation Across Civilisations

    Towards a Conversation Across Civilisations

    Alongside the BRICS, the construction of regional trade and development projects in Africa, Asia, and Latin America that are not controlled by the Western states or Western-dominated institutions – including the Shanghai Cooperation Organisation (2001) the Belt and Road Initiative (2013), the Community of Latin American and Caribbean States (2011), and the Regional Comprehensive Economic Partnership (2022) – heralds the emergence of a new international economic order.

     

    It has become increasingly difficult to engage in reasonable discussions about the state of the world amid rising international tensions. The present environment of global instability and conflict has emerged over the course of the past fifteen years driven by, on the one hand, the growing weakness of the principal North Atlantic states, led by the United States – which we call the West – and, on the other, the increasing assertion of large developing countries, exemplified by the BRICS (Brazil, Russia, India, China, and South Africa). This group of states, along with several others, have built the material conditions for their own development agendas, including for the next generation of technology, a sector that had previously been the monopoly of Western states and firms through the World Trade Organisation’s intellectual property rights regime. Alongside the BRICS, the construction of regional trade and development projects in Africa, Asia, and Latin America that are not controlled by the Western states or Western-dominated institutions – including the Shanghai Cooperation Organisation (2001) the Belt and Road Initiative (2013), the Community of Latin American and Caribbean States (2011), and the Regional Comprehensive Economic Partnership (2022) – heralds the emergence of a new international economic order.

    Since the world financial crisis of 2007–08, the United States and its North Atlantic allies have become acutely aware that their hegemonic status in the world has deteriorated. This decline is the consequence of three key forms of overreach: first, military overreach through both enormous military expenditure and warfare; second, financial overreach caused by the rampant waste of social wealth into the unproductive financial sector along with the widespread imposition of sanctions, dollar hegemony, and control of international financial mechanisms (such as SWIFT); and, third, economic overreach, due to the investment and tax strike of a minuscule section of the world’s population, who are solely fixated on filling their already immense private coffers. This overreach has led to the fragility of the Western states, which are less able to exercise their authority around the world. In reaction to their own weakness and the new developments in the Global South, the United States has led its allies in launching a comprehensive pressure campaign against what it considers to be its ‘near peer rivals’, namely China and Russia. This hostile foreign policy, which includes a trade war, unilateral sanctions, aggressive diplomacy, and military operations, is now commonly known as the New Cold War.

    In Western societies today, any effort to promote a balanced and reasonable conversation about China and Russia, or indeed about the leading states in the developing world, is relentlessly attacked by state, corporate, and media institutions as disinformation, propaganda, and foreign interference.

    In addition to these tangible measures, information warfare is a key element of the New Cold War. In Western societies today, any effort to promote a balanced and reasonable conversation about China and Russia, or indeed about the leading states in the developing world, is relentlessly attacked by state, corporate, and media institutions as disinformation, propaganda, and foreign interference. Even established facts, let alone alternative perspectives, are treated as matters of dispute. Consequently, it has become virtually impossible to engage in constructive discussions about the changing world order, the new trade and development regimes, or the urgent matters which require global cooperation such as climate change, poverty, and inequality, without being dismissed. In this context, dialogue between intellectuals in countries such as China with their counterparts in the West has broken down. Similarly, dialogue between intellectuals in countries of the Global South and China has also been hampered by the New Cold War, which has strained the already weak communication channels within the developing world. As a result, the conceptual landscape, terms of reference, and key debates that are taking place within China are almost entirely unknown outside of the country, which makes the holding of rational cross-country discussions very difficult.

    The New Cold War has led to an enormous spike in Sinophobia and anti-Asian racism in the Western states, frequently egged on by political leaders. The rise in Sinophobia has deepened the lack of genuine engagement by Western intellectuals with contemporary Chinese perspectives, discussions, and debates; and due to the immense power of Western information flows around the world, these dismissive attitudes have also grown in many developing countries. Although there are increasing numbers of international students in China, these students tend to study technical subjects and generally do not focus on or participate in the broader political discussions within and about China.

    This diversity of thought is not reflected in external understandings or representations of China – even in the scholarly literature – which instead largely reproduces the postures of the New Cold War.

    In the current global climate of conflict and division, it is essential to develop lines of communication and encourage exchange between China, the West, and the developing world. The range of political thinking and discourse within China is immense, stretching from a variety of Marxist approaches to the ardent advocacy of neoliberalism, from deep historical examinations of Chinese civilisation to the deep wells of patriotic thought that have grown in the recent period. Far from static, these intellectual trends have evolved over time and interact with each other. A rich variety of Marxist thinking, from Maoism to creative Marxism, has emerged in China; although these trends all focus on socialist theories, history, and experiments, each trend has developed a distinct school of thought with its own internal discourse as well as debates with other traditions. Meanwhile, the landscape of patriotic thinking is far more eclectic, with some tendencies overlapping with Marxist trends, which is understandable given the connections between Marxism and national liberation; whereas others are closer to offering culturalist explanations for China’s developmental advances. This diversity of thought is not reflected in external understandings or representations of China – even in the scholarly literature – which instead largely reproduces the postures of the New Cold War.

     

    This article was published earlier in thetricontinental.org

  • India and Myanmar: Two Years after the Coup

    India and Myanmar: Two Years after the Coup

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    Relegated to the sidelines with the ongoing Ukraine war and other crises like Taiwan, Myanmar has resurfaced in world headlines. In a recent dispatch, Associated Press (AP) reported that on 11 April 2023 ‘a fighter jet dropped bombs directly onto a crowd of people who were gathering at 8 am for the opening of a local office of the country’s opposition movement outside Pazigyi village in Sagaing region’s Kanbalu township….’ 1 . Subsequent information indicates that the number of dead including women and children is over 170. If so, this is the deadliest aerial attack carried out by the Myanmar military on its own people in the bloody aftermath of the military coup two years ago.

    With various Ethnic Armed Organisations (EAOs) and Peoples’ Defence Forces (PDFs) battling the Tatmadaw, martial law has been declared in 47 townships in Myanmar, cutting across states and regions. 2 More than 154,000 people have been displaced in the first two months of 2023, with total numbers of Internally Displaced People (IDPs) since the military takeover now at 1.3 million. Heavy fighting rages in Kachin State, the South East and North West of the country, 3 and overall 3000 civilian deaths since February 2021 are estimated 4 . Targeted assassination of military appointed government officials continues, the latest victim being the deputy director-general of the Union Election Commission who was shot dead on 22 April this year 5 . In 2022, up to 30,000 civilian infrastructures, including schools are reported to have been destroyed during military operations 6 . This situation has compelled the Tatmadaw to again postpone elections earlier scheduled for August 2023. The state of emergency has been extended.

    Important Developments Post February 2021

    The above statistics provide a telling perspective of the current violence in Myanmar. Yet there are other noteworthy developments in the country post the February 2021 coup. First of these is the increasing relevance of the opposition National Unity Government (NUG) around which civilian support appears to have coalesced.

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    Featured Image Credits: CNBC Indonesia

  • India and the New Geopolitical Churnings

    India and the New Geopolitical Churnings

    In an interdependent world, India must manage both its internal pressures and external challenges with vision, a sense of balance and determination. The coming years project immense promise for India in diverse fields of human endeavour. Let’s capitalize on our innate strengths and an inclusive vision for all in our great nation and be a beacon for humanity.

    “Ukraine today may be East Asia tomorrow.”

    — Japanese PM Fumio Kishida at the 2022 Shangri La Dialogue

    Historically speaking, there usually remains an uneasy consistency in the geopolitical world order as the strategic interests of nations are not given easy alterability. Nevertheless, the traumatic geopolitical churning witnessed by the world in the last three years has no parallels since the end of World War II in 1945. Even by conservative standards, the overall impact on the world—political, economic, social and diplomatic— has been unmistakably tectonic.

    As all nations, including the major powers, endeavour to absorb the cataclysmic effects of the events of the last three years, the early months of 2023 also display a susceptibility for this adverse impact continuing in relations between nations and severe economic and health challenges remaining to the fore threatening the overall worsening of the established global order. It brooks no elaboration to state that the current and likely continuing geopolitical differences in the world community will drive geo-economic warfare and vastly augment the risk of multi-domain conflicts. By any standards, the future in geopolitical churns across the globe remains steeped in uncertainty!

    Recent Traumatic Events And Geopolitical Churnings

    The end of 2019 witnessed a global catastrophe with the outbreak of Covid19 pandemic also known as the coronavirus pandemic. Originating from the Chinese city of Wuhan, it could not be contained there and quickly spread to other Asian nations and in a few months from early 2020, virtually engulfed the entire globe. Reportedly, till date, this virus has affected 676 million cases causing over 6.88 million deaths. According to the WHO, this virus still exists in many parts of the globe in some form or the other. This Black Swan event affected the global economy, politics, health, ecology and environment besides adversely affecting many other aspects of life as never before. The globe is still reeling under the adverse impact of this virus.

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  • Citizenship Renouncers are the New Colonials. Call them ‘Desi’ Colonials

    Citizenship Renouncers are the New Colonials. Call them ‘Desi’ Colonials

    These are the ones who have enjoyed the best of everything in the country – highly subsidised education all through their schooling and college years, high-grade training in the top institutions, and might have gone abroad with State support and scholarships

    Irrespective of what all colonialism does, or does not, the most devastating thing that happens to a colonised country is that its resources are depleted to the extent that it borders on plunder. India, indisputably, happens to be one of the classic cases of having bled to a high degree due to the avarice of the British. The kind of exploitation that occurred in India has been multi-dimensional and multi-hued, wherein the colonisers filled their coffers to please and enrich their royalty, king, queen and the crown.

    During colonialism, and even after the independence of the former colonies, a different kind of exploitative process was in place whereby chunks of humans from the colonies were ‘recruited’ at low wages for underclass jobs in the ammunition factories, textile mills, railways and road transport, in the mother country of the colonials, not to talk of the other forms of ‘recruitment’ as slaves and indenture labour for other colonies.

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