It is by being an indispensible part of the eco-system that will ensure India has both access to technology and, to some extent, the ability to control access to technology.
This is from my Marathi column in Sakal that appears every month.
Over the past couple of years microchips have become an important item on the geopolitical agenda of the world’s big powers. Today most of the world’s semiconductors are produced in Taiwan, Korea, Japan and China. But the United States and Europe have announced billions of dollars of incentives to attract chip manufacturers back to their countries. Including the announcements in the latest Budget the Indian government will spend Rs 1 lakh crore for the domestic manufacture of advanced semiconductors.
Let us examine this matter by digging deeper. We should begin by thanking Donald Trump. He has many failings. But he not only recognised the fact that China had been taking the United States for a ride since 1979, but he acted very decisively to try and put an end to it. The trade war between the two countries started before the outbreak of Covid-19, and it has only intensified in the past two years. Technology is one of the most important fronts where this war is being fought today.
Indeed, technology is a key ingredient of geopolitical power in the Information Age. A country can become powerful when it has access to advanced technologies that drive the global economy or confer military advantages. Power also comes from controlling access to such technologies, through the ability to decide who gets it and who doesn’t. That is the fundamental reason why Washington is systematically cutting Chinese companies from accessing the most advanced semiconductors. It is also why Western countries are spending billions of dollars to bring back the chip manufacturing plants that have taken root in Taiwan and other East Asian countries due to economic forces.
So how does a country get access to technology? A simple and straightforward answer is “by indigenously inventing the technology”. If a country doesn’t give us some technology, we should make it ourself. Well, it’s not that simple. Like flowering plants in a closed room, science does not develop well in isolation. While it may have been possible in some areas in the past, it is nearly impossible in the Information Age. The latest version of a microchip arises in an eco-system of thousands of companies around the world, which are in turn connected to eco-systems of thousands of other technologies. Even if China spends billions of dollars to substitute US chips, it will take more than a decade to catch up. In that time, the US can move ahead.
So being connected to the global technology eco-system is critical for a nation’s advancement. Our political and economic agenda must keep this in mind: India must remain deeply connected to the global technological mainstreams.
Now another way to access technology is to steal it from those who have. Although China is rightly blamed for industrial espionage today, it is merely doing what all other great powers have done in the past. In the 20th century, the Soviet Union stole nuclear technology from the United States. In the 19th century, the United States benefited from leaching technology from the Germans and British. And in earlier centuries the Europeans stole technologies from China. The difference today is that we have international norms on intellectual property and the Chinese are increasingly getting caught. Remember though that international relations are amoral (niti nirpeksh) and international norms and laws don’t stop the powerful from doing what they please. So this game will continue for a while.
The trade & technology war between the US and China is both an opportunity and a threat.
The opportunity is clear enough. But why is it a threat? There is a risk that India will lose access to technological investments and markets either intentionally or unintentionally. Intentionally, for instance, if US and European governments insist on “onshoring” their hardware, software and data, India can lose out as companies move their facilities and employees to Western countries. Unintentionally, if global supply chains evolve in a manner where India is left out. It is thus important for India to actively shape global economic patterns that ensure we remain connected. I have argued that New Delhi should create “bubbles of trust” among the Quad countries where high technology trade can flourish unhindered.
This does not mean cutting off our links to China and Russia. On the contrary, our approach should be to use economic ties with the non-Western powers to develop our indigenous capabilities. It’s not easy, but it can be attempted. There should be no compromise on national security, but there are many areas where cooperation is mutually beneficial.
So yes, the Indian government’s vision to make chips in India is important. Even more important is to craft our foreign and economic policies that ensure that the world’s technology eco-systems continue to flourish. And ensure that our engineers and entrepreneurs are deeply enmeshed in it. Let us not forget that even if India does not have chip factories in our country, Indians are involved in making the all the world’s most advanced chips. It is by being an indispensible part of the eco-system that will ensure India has both access to technology and, to some extent, the ability to control access to technology.
There are many more Sakal columns here
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