SOURCE: RAHUL SINGH/ FOR MY TAKE / IDRW.ORG
Deception is an art in which the dragon seems to have acquired great mastery. The recent standoff seems to be a grim reminder of how two large trading nations can still come to loggerheads thanks to hegemonic attitude and unilateral belligerence. Troops both from India and China were caught in eyeball to eyeball confrontation at Galwan, Pangong Tso and Naku la with differing accounts coming in media and wait for official joint statement of disengagement on all stand off locations still on.
These are not merely frontier locations but highly strategic points where the PLA has made strategic incursions. Experts do differ in the assessment of how deep Chinese incursions are, but ,have certainly voiced concerns at the presence of Chinese troops there. Now, the obvious question must be why so concerned about this confrontation as perception of LAC both in the eastern and western sector differs and such acts keep on taking place. It is so because this time incursions did not take place based on difference in perceptions but in areas where the PLA has long believed it’s claims did not lie, especially the Galwan valley. This valley was witness to Indo China clashes during 1962 war. The way the PLA brought in heavy machinery and armament raised certain valid questions
- Why did China conduct an incursion?
- Why did it do it in these particular locations only?
- Has India’s response been adequate and it’s evaluation?
- The road to immunity: How will we tread it?
1)Why did China conduct an incursion:
a)The People’s Republic of China has a very strategic outlook and it will be naïve to say that it implements whatever comes to it’s mind. It will be important to note that all its moves are a highly sought after and calibrated exercise by the top leadership. China’s attitude vis a vis India has been of constantly testing her response related to nibbling of territory or expansion of influence in the neighborhood.
For example: The 1962 war was not a one go exercise of military might but a series of strategic and tactical maneuvers all designed to test not only the battle readiness but also the political resolve of India’s leadership. From the 1950s onwards it had kept an ambiguous profile while India put forth the face of an Internationalist foreign policy believer aiming at peace and development. Its blatant extension of control over Tibet was as much a result of Chinese expansionist policy as of our own strategic thought of securing a friendly neighbor by not looking to stoke a fight. We looked to make sure that we have a friendly neighbor that felt assured and secured on our northern borders. But, China saw it as an easy meat to grab things in a military fist fight, with a neighbor barely looking for a military contest and unaware of it’s testing motives.
b)So, with the benefit of hindsight including the incursions that have come to the fore since the BDCA(Border defence cooperation Agreement) of (1993, 96, 2005, 2012-13) are all but a series of resolve testing exercises aimed to keep the boundary issue very much alive in order to keep India strategically unsettled and unsure as it battles China’s proxy in the northwest.
c) The Cove 19 diversion: This point deserves to be not ignored at all given the fact that a global pandemic named Covid 19 has kept the world on a tight leash and resulted in tremendous loss and suffering. It is still to be seen whether the virus’s spread was a deliberate ploy or result of the very nature of an Iron handed state’s poor handling of the affairs and non-dissemination of the required fore-warning to the global community of an imminent health disaster. A number of countries have been convinced that the Chinese govt does have a lot of blame to take and questions to answer. China has been asked to be subjected to an international probe in this regard while the worst sufferer, The USA has openly called it the ‘Chinese virus’. It is all but obvious given the dubious circumstances, it becomes natural for a state like China to look for easy diversions(Remember the disastrous failure of ‘The great leap forward’ and flaring up of war with India). What could be better than the prospect of a military showdown with a peaceful democracy like India over which China does enjoy a tactical advantage of pretexts of boundary disputes? Results are for everyone to see. The world at large has been looking at both the countries as their troops stand locked in a tense showdown. Now go to the top of my article…Did I not say that the PLA is a master in the art of deception?
d) Cooling the Hong Kong kettle: The move by China to extend and strengthen it’s sway in Hong Kong has been met with outrage and heavy protests. The forceful response of China in Hong Kong has been a concern for their govt as it has been criticized world wide. Thinking from the CCCP leadership’s point of view, a major diversion becomes a natural recourse and who better than India with a no attack record since the ancient times.
e) The BRI: India has perhaps been the biggest critic of the BRI scheme and it is not without much substance. The Chinese infrastructure activity in PoK and Aksai Chin is a clear infringement of India’s territorial integrity and it is all but natural for India to not be on board with such a project whose very motives are shrouded in mystery. China might be looking for serious bargaining and concessions from India.
2)Why did China do it in the particular locations only: This question merits understanding the geographical layout as well as China’s perceived strategic agenda. The Chinese PLA has been seriously upgrading the infrastructure all along the LAC. This is not news. As early as the 1950s they had constructed all weather road in Aksai Chin to bolster their territorial claim. India has been a late starter owing to several factors but the last 10, 15 years have seen a frenzy of infrastructure building being undertaken by the BRO which not only includes building motorable roads but also activating ALG(Advanced Landing grounds) along the LAC. This is to address the gross asymmetry in the India’s border infrastructure vis a vis China. For a fact China has well laid railway lines to support rapid troops mobilization in Tibet.
China for one does not like India’s infra push even a bit as battle hardened Indian Army’s only hindrance has been border infrastructure. As it gets better China seems to believe that it would be difficult for it to keep on nibbling on India’s territory. Thus, it has strategically moved it’s troops violating the LAC in Galwan valley, Pangong Tso finger areas and the eastern sector.
The locations have been carefully chosen. Sample this: The Daulat Beg Oldi air strip is a big asset and makes it possible for India to lift troops and supplies close to the border and keep Siachen supplied. Siachen as a matter of fact was successfully manned by the Indian Army in daring Operation Meghdoot. Thanks to the fortitude of the troops who fought there, and those who are still holding the fort strong and the then military and political leadership daring attitude, it is a constant pain in the ass of both China and Pakistan. It’s domination makes it possible for India to thwart any threatening link up with part of PoK ceded by Pakistan in the 1960s to China and Chinese occupied Indian territory of Aksai Chin. China’s incursion and occupation of dominating heights in Ladakh is a direct threat to Indian supply lines. The PLA intrusion in Indian side of finger areas of Pangong Tso lake is a clear indication of China’s sinister designs to snatch more strategic points from India in Ladakh, thereby, directly disrupting supplies to Chushul , Demchok and Depsang. Galwan valley had been accepted by China to be south of it’s claim line even in the aftermath of 1962 war. It is thus, very much deliberate that the PLA in a major turn of events has claimed that the whole Galwan valley belongs to it, during DGMO level talks aimed at de escalating the stand off.(Courtesy The Wire report https://thewire.in/security/in-talks-china-takes-hard-line-claims-all-of-galwan-valley-chunk-of-pangong-tso)
In classical military terms these points are so placed that any adversary’s control of them makes encirclement of Siachen and it’s consequent cutting off from Leh possible. These are not mere local level moves but a well thought of and coordinated pincer like assault.
In the eastern sector China’s repeated ranting on Arunachal Pradesh is well known. But, this time they have claimed Sikkim in it’s entirety and also displayed banners where a famous fist fight broke out between the two armies in may 2020. Now, how significant is this? According to me it is a kind of reset button that China has hit to pressurize India further. It is in gross violation of the official Chinese recognition of Sikkim as Indian territory in 2003 during official Indo China talks right at the Prime Minister’s level. Anybody thinking to the contrary is perhaps conveniently forgetting China’s pattern of raking up matters to pressurize adversary.
What should India make of all this? This , well, is no less than an alarm bell and has at its core the Chinese style of occupying land bit by bit believing that India won’t go for military hot pursuit. India must not harbor any pretensions about China’s hegemonic aims. Just think from China’s perspective: How good could it be to not only divert global attention from Covid 19 mess and simply occupy neighbour’s strategic positions and on the back of perceived military superiority simply nibble as much territory as possible and that too without a shot being fired. If that is not possible get India to back down on diplomatic, strategic and economic trade war front and get useful concessions in return for ‘mutual retreat’ . ‘Mutual retreat’ ! From where? From India’s own territory. How sinister can it really get? If it isn’t deception then tell me what could be?
3) Has India’s response been adequate and it’s evaluation: China’s hope to deprive India of strategic heights is pinned on only one thing and that is India would never resort to force and will be forced to negotiate. India, though, has lots of soul searching to do as to how the PLA could manage to infiltrate and take up positions in Galwan valley well inside Indian territory, it is to be noted that India had asserted that she won’t settle down for anything less than restoration of status quo as on April 1 2020. What is good is the fact that India has not been shy of bringing the SU 30s to the Pangong Tso and now mirroring the Chinese force level in all the standoff areas as China has brought in heavy weaponry. India’s response considering the adversary has been balanced as India has looked to resolve the issue through established protocols and mechanisms( remember BDCA). But,conflicting media reports do not paint a very conciliatory PLA. The Wire, even noted in one of it’s latest articles that the Chinese top brass has now started claiming the whole Galwan valley. On the other hand in the last week of may 2020 some news channels claimed that the dragon had withdrawn which as we know now are false and complete disengagement has not taken place and talks are underway.
It is to be noted that the Indian military is determined to not allow any further incursion by China and the leadership would like the stand off to get resolved as soon as possible. It must be understood how can such incidents be brought down and the PLA made to understand that India is no pushover. India deep down, must rewind and revisit the good assertive times and shed it’s image of a reluctant military power. The confidence with which the PLA transgressed this time might get repeated if India does not learn to recalibrate and become assertive and aggressive. A defensive posture vis a vis China could cost us heavily in future. Several experts might disagree with me, but, India has played this defensive game far too much for the comfort of her own interest especially since the 90s. We need to remember how a non nuclear India successfully thwarted the nuclear capable Chinese’ misadventure in Cho la incident of 1967 , a bloody nose that cost the PLA dearly in terms of confidence and prestige.
Oh India kindly remember, it was your wit and courage that brought about the integration of Sikkim in 1975 in the face of Chinese threats of aggression. Thou shalt remember the 1987 Sumdorong Chu episode , whence, Gen Sundarji with the IAF’s heavy lift MI 26 led the rapid mobilization of the Indian army and forced China to desert the place. It not only enabled India to make the PLA respect our army but also reset ties with our Govt as the then PM Rajiv Gandhi heralded the era of restoration of contacts with the PRC on very equal terms. So, I believe India must be vocal about its ability to stand up to any bullying. We must make it categorically clear to China the consequences any nibbling of Indian territory will have. India is a nuclear power and the reluctance to showcase that has surely emboldened adversaries into believing that India will keep on holding to peace no matter what and will be cowed down by threats of two fronts and superior conventional numbers.
Thus, India must embolden it’s stance and do convey to China in no uncertain terms that India is far more devastating force than Vietnam and is a responsible yet extremely capable nuclear power determined to deploy any weapon in it’s arsenal. This is going to not only freeze the PLA’s drive for incursions but also serve as the right warning. If the PLA indeed does not seek to restore the status quo as on date specified by India we must not discard our options for hot pursuit.
In her diplomatic parleys and deepening cooperation in military terms with troika(USA, JAPAN,AUSTRALIA) in the QUAD, India has received stinging rebukes from the Chinese media and foreign ministry. They seem to be asking India to stay away from this and that nation. I will humbly request the diplomats of the PRC to kindly go through their archives, history and govt policies and then draft a better statement. Since, the very foundation of Communist China, the nation that had backed them right at the beginning had been none other than India. Not only did Indians like Dr Kotnis volunteer to help people in China but our govt parleyed for the cause of development of Chinese people and their recognition. But, China’s payback has been really uncalled for be it the 1962 war, the pawning of Indian territory by Pakistan to China in 1963, China’s support to an aggressor like Pakistan in 1965 and 71 and several other instances after that.
The Chinese foreign ministry has conveniently forgotten that India did not endorse 2 China policy and did not support any aggression on China adopting principle of peaceful co existence and resolution by dialogue. In the late 90s India along with Russia looked to strengthen pan Asia cooperation through RIC, leaving far behind the bitter experiences of 1962, China belied the spirit shown by India by continuously supporting Pakistan. China needs to do introspection. Any sensible mind can vouch for a fact that India is a country that is the least interested in a war. It has always been looking to ramp up cooperation with China notwithstanding anything. One can only imagine what could have been accomplished had China chosen a friendly India over a rogue Pakistan. The growth both the countries would have enjoyed would have added to the world GDP immensely and would have promoted the welfare of the mankind. BRICS and RIC can really achieve much more they currently have if China leaves the past to past and moved on the way India has. The two Asian giants have nothing to gain from a conflict and the painstaking progress the two countries have achieved would be dented severely if an armed conflict does take place. The only country responsible for such fool hardiness would be the one thinking that it should be the sole power in Asia whereas India’s friendly policy makes mutual progress very much a reality. The quest for supremacy by China is going to end up benefiting only third country that stands to gain by the destruction of these two economic giants. Alas, it is such a pity that China has not been able to see this as a matter of fact.
But, let me show you what china did instead. It time and again disputed India’s sovereign territories like Arunachal, parts of Uttarakhand, Jammu and Kashmir and Sikkim. India has not issued Nathi visas to Uighurs or Tibetans while China openly pursued this policy with indian citizens of Ladakh. The occupation and militarization of coco islands started way before anybody in India even talked about string of pearls. Building a string of military bases around India to choke it’s navy, extending debt trap strategy to it’s immediate neighbours are somethings that had happened way before there was any concept of the QUAD. The blatant disregard to india’s security concerns in the wake of Islamic terror and propping up neighbouring nations to step up anti India rhetoric, not to forget support to insurgency in india’s north east are all grave provocations. The recent developments and claims by Nepal on Indian territory are just a small example of how Chinese leadership has sought to needle India.
They have lost the moral right to question India’s strategic push towards engaging more with the QUAD. It is more a result of China’s poor choice of policy, constant bullying of India and complete dis regard to India’s concern with regards to terrorism sponsored by Pakistan than India’s conscious change of policy. India has vied for stronger links with China and appreciated China’s economic rise by looking to partner in it not by stifling it by any means. The best example is the way we opened our market for China and the trade that hovered in millions in the 90s has crossed over to the magic figure of over a 100 billion dollars not in the very distant past. It is noteworthy that this trade remains highly skewed in favour of China. India and China have cooperated in AIIB and NDB and their combined constructive approach through BRICS can simply mean so much to the concept of south-south cooperation. Alas, China is not realizing what it is costing itself and India by it’s belligerence. Now, the time has come to take tougher strategic calls. India will inevitably have to deepen cooperation with Russia, Japan ,The QUAD and also resort to tit for tat approach on diplomatic matters concerning our territorial integrity vis a vis China. All this must be done with one thing in mind that Chinese expansionist designs are for real and given it’s market might and other factors India might well have to stand up for herself.
The Road to immunity: This stand-off set off a flurry of activity in the domestic circles of India and has led to renewed calls for a new way to acquire immunity. Noted innovator Sonam Wangchuk, Honourable Prime Minister Shri Narendra Modi have all said in one voice that it is time to go ‘Vocal for Local’.
This is appreciable in the very spirit of it and reminds me of the determined effort that India set on after independence in 1947. The govt of India not only invested heavily in making industrialization possible but also welcomed support from several countries in this regard. Joint projects, and tech transfer came from various countries especially the former Soviet Union came in very handy and within 4 decades of India’s independence, India had a fair industrial base while being able to produce a number of industrial goods locally. The PSUs like BHEL,NTPC,ONGC IAAI, NAA now AAI,HAL,ISRO,DRDO various govt research establishments, cooperative movements(milk),green revolution(Govt labs and farmer cooperation) and consumer goods by our desi pvt players made it possible for a country, which inherited a destroyed country from the British, make a determined march to progress. It faced imperial threats in 48, 61, 62,65,71,sanctions of 1974 and 1998 but on the back of robust domestic base and help from friendly countries fought off all such difficult times. It was easy to spot a desi product back then.
What is the case now? When I talk about road to immunity, what does it really span? It includes a whole gamut of areas right from consumer goods to high tech defence technologies.
Immunity in defence sector can be acquired by understanding the very nature of China’s conviction and from where does it stem.
Addressing the core cause: Defence Imbalance: So much so for international or other aspects ,but how do we really discern as to why China is able to go for this brand of bullying? Answers are available in history. How did Pakistan believe it could invade India and get whatever it wished for in 1965? Yes, some of you are already getting what I mean to say. China’s rapid modernization of military in the name of ‘Peaceful Rise of China’ and asymmetry it has managed to achieve which can suitably call military imbalance is the root cause of it’s bullying tactics or the main basis over which such acts are done. A look at the difference between the defence budgets of the two countries is sufficient to answer the question. China is spending more than 3 times of India’s expenditure on defence and now it is not the big importer it used to be. It’s Navy has expanded rapidly with over 60-80 submarines. PLAAF has adopted a more attacking doctrine than it’s previous one of airspace denial and defence and put more advanced force multipliers in it’s arsenal including fifth gen J20. PLA’s aggressive infrastructure push for the past few decades has made this imbalance all the more glaring. What adds to their muscle is the Chinese penchant for localization of weapons. Here, we must appreciate and learn from China that always scouting for imports is not the right strategy. Govt of India must utilize this crisis to set things in order once and for all. The R and D budget for DRDO, HAL govt shipyards must be enhanced. If required we must hire global experts and strengthen collaboration with IITS, IISc,IIMs to bring in more raw talent on competitive pay. People so often say oh why public firms , they are not delivering. I would like them to delve deep into project timelines and the costs at which a lot of them have been developed and compare them to any alternative western platform.(Research timelines are bound to be long) Integrated guided missile development programme is a roaring success story, INS Arihant, submarines and warships from Mazgaon docks,GRSE’s record breaking efforts and timely deliveries of anti-submarine crafts to the Navy , HAL’s Dhruv, Rudra, LCH platforms,HAL Tejas are all real time examples of fortitude and success. They must be encouraged and built upon. Why do I say so? It is because this is what has helped Russia and China become immune to arm-twisting tactics. China’s robust defence manufacturing base ensures that it won’t have to scout for spares in the long run. I will go a step further and look to appeal for more budgetary support to the DPSUs, more competition driven incentives, more joint PPP model manufacturing and joint development with friendly countries like Russia and Israel(Brahmos and SAMs are great examples). Till we beef up our numbers with desi tech and re calibrate our posture from reactive to proactive and aggressive these instances are bound to happen. China might withdraw today but, it is no guarantee it won’t come back again. The international reaction was not so heartening for India as The USA called for mediation rather than an open support with logistics. Recently one of their noted personalities also commented on religious freedom in India. India, thus, must understand that it is very important that strategic autonomy is preserved and we draw courage from our own positive stands in 1967, 87 and Doklam while preparing any contingency plan. One cannot just bully a nuclear India. This assertion is the sooner the better for India’s security. China as per latest media reports has not completely disengaged. India has to assert it’s military strength whilst bolstering it up with domestic weaponry because imports must come to a stop one day and no amount of trade can guarantee us security.
The Economic Response: People’s movement and other aspects
Indian citizens have tried to contribute their bid by uninstalling Chinese Apps most notably Tik Tok. A number of users did uninstall Chinese apps from mobiles. How much is it going to really help? Let us try to understand. People have put in alternatives to opt for, saying let us go for this and let us go for that. But, spotting an Indian brand has become so difficult now. The small start ups have been feeling the heat and have seen being taken over by the foreign players with varying degree of stakes Flipkart, Paytm, Zomato, and the list goes on. Chinese investments are coming through different channels and it is becoming difficult to collate and give an exact figure. But, their impact is tremendous having implications in the long term. In software domain apps like tik tok, Share It have taken our markets by storm. Now the condition is such that you name a firm and you find varying degree of Chinese investments in there. Oyo , BYJUS, Paytm…so how far can we sustain this uninstalling? It is an interesting question because unless our firms come out with quick replacements it seems to offer no respite. I am not saying there are no replacements(Jio has offered some alternatives but, more shall be required)
Hardware is the real deal. India’s consumer electronics market is perhaps one of the fastest growing ones in the whole world and why not. With such a young population and drive for digital penetration it is all the more natural. Set top boxes, remotes, TV , washing machines, ACs, computer hard ware, laptop, mobiles ohh what not features in the consumables list. A lot of it is either made in China or sourced from there with varying degrees of localization. Even any Indian brand that you buy, one cannot ignore the fact that the very foundation of those products lies in the wafers made in China, Taiwan or the USA. Do you really believe that any move to simply take on China when it is looking to arm twist India on the frontiers succeed just by uninstalling a few apps. It will not really mean much unless we are able to address the root causes which are:
a)Inadequacy of PCB design and fabrication infrastructure: The successive govts of India since the beginning of new economic policy have brought in a liberalized regime to encourage the development of adequate infrastructure in manufacturing of integrated circuit chips in India. Has it borne fruit? Well, not as much as India would have liked it to. For a fact, Silicon chip manufacturing and other electronic goods makes a whopping 12 -13% of the GDP of China. Let me make it more interesting. India’s imports of electronic goods have gone up to such an extent that now ‘electronic goods and components’ are vying for the number 2 slot on the import list with gold and if the current rot is not stemmed in , it might well surpass gold and petroleum depriving India of the hard earned forex.
Govt of India has given a slew of relaxations including negligible duties on the import of goods for manufacturing electronic goods in India and 100% FDI in the sector. A lot of activity has been seen in the recent years with Samsung coming in to set up a plant in Noida, Foxconn led facilities for local manufacturing for Oppo and Xiaomi phones. Skill India, Stand Up India and partnership with high tech giants have all been initiated but still the road seems to be long and target far from sight.
b) Absence of Indian alternatives: This is perhaps what needs a really good look. Any call for combatting something cannot be fulfilled till one really offers a good alternative to the local consumers. Is the exporting country dumping the goods or is it because it has come up with something which not only offers a price advantage but a feature rich product as well? Simply appealing to patriotic senses of the people can take you just a few miles. We will need to see how to combat the price and feature advantage so that our consumers get a better product. I am advocating to rewarding our people with quality products so that we can compete and win. I don’t know how many of us remember but as early as 2014 ,Micromax, the Indian phone brand had taken out all competitors to nearly beat Samsung to the top position. How was that achieved? It was cost and sheer package that a slew of new phones like the canvas series It is a real pity that same momentum could not be sustained though it is trying to re brand through YU phones and diversify through consumer electronics which is smart but, still, people in India do need good indian alternatives in phones too. India is for sure welcoming make in India and trying to woo best of brands to establish plants in India. This needs to be welcomed. A report tabled in Rajya Sabha has correctly pointed out that situation in terms of handsets is improving. But, our own companies need to stay in there and fight the competition.
c) Trade barriers for Indian firms in China: The lopsided bilateral trade means that China is having a trade deficit of over 50 billion dollars excluding Hong Kong. China has repeatedly said in various forums that it will offer India a better deal but, little progress has been made. Spheres of Indian dominance find highly barrier ridden access to China. Indian Pharma companies, Software giants, BPOs find it difficult due to Chinese trade policies. Such restrictions, given the open arms extended by India to almost all Chinese goods is not in the spirit of Reciprocity and mind you that is a principle of trade which WTO adheres to. Moreover, China has given preferential treatment to it’s own firms as corroborated by Indian forms during an interaction with Shri Piyush Goyal on RCEP. This does not make trade very fair and India is at a big disadvantage.
How to tackle it on the Economic Front:
1)Learn from the competitor: China has learnt quite well from it’s experiences and embarked on it’s development journey that has seen unprecedented growth. At it’s core lie China’s skilled people , export oriented model , talent , pvt sector and very robust state owned firms. China has developed it’s own versions right from the very basics to high tech stuff. It is has constantly beefed up it’s prowess by encouraging both the public and the pvt sector. Chinese public sector has made a name for itself and are right at the top of their game. Chinese SOE or State owned enterprises have become major gateways for China to self-sufficiency and global prestige. Numbers might tell you more and in a better way. The fortune’s Global 500 is a prestigious list and inclusion in it is a testimony to the international prestige of a firm. As of 2019,Chinese companies have closed in the gap on the USA and have 119 companies in the list compared to the USA’s 121. ‘The Fortune’ gave first rank to China by including 10 Taiwanese companies in addition to the above figures. The biggest takeaway is the fact that 82 of them were state owned enterprises thus, pointing to the success of making SOEs robust and an engine of growth along with a competitive private sector. MG or Morris Garage is a prominent brand owned by a Chinese State Owned company( my readers be like: OH man! What is china not making?). Precisely my point. If they can , why should we not? Many experts have conveniently ignored the point that India too is a good model of mixed economy and it’s public sector’s growth will be an additional force multiplier not a competition killer given the leverage it will lend to the Govt of India in giving mission Swadeshi(Indigenization) a boost as these Miniratnas, Navratnas and Maharatnas have shored up India’s economy by being able to sustain good consumer demand. Since the sixth pay commission they have successfully turned the tide and also recruited exciting new talent through highly competitive procedure and a better pay structure. It is no secret that a talented work force that is well paid can do wonders and India’s PSUs are not short of it these days.
Indian banks may be having a tough time but not acknowledging the role of PSBs will be like not realizing what China has managed to achieve through them. Our autonomous, empowered PSUs and PSBs with a well-paid and talented staff ,in synergy with the pvt sector is something which could help India turntables in its quest for #vocal for local. Autonomous PSBs would not only excel in priority sector lending but also reduce NPAs tremendously by investing in more worthy projects.
Sample this: China’s big oil majors like Sinopec and China national petroleum have served their cause quite well. Chinese state owned banks like Industrial and commercial bank of China have been harbingers of growth (over a 163 billion dollars revenue as per 2014 Fortune data) which dwarfs India’s SBI’s current by almost 3-5 times. China’s banks are it’s financial muscles.
Moving to solution of point a) Government is inviting foreign majors and Indian cos to set up manufacturing facilities for PCB, chips and other electronic components. Several proposals were received in the past as well. But, notable activity that should have really made it big for India has not happened. It is indeed a concern because localization will still remain a distant dream and a mere idea till we master the very core of electronics and that is the wafer. The moot point is can India afford to wait till a big pvt player comes and sets up something here? What if that does not materialize on the scale we sincerely hope it to? Our Govts have been very much welcoming for the prospect but, does waiting any longer holds that much good given the costs and the strategic points involved?
I reckon that now is the time for Govt to wait no longer and start with an indigenous effort and let pvt investment come when it does. It is time we involve companies that have done such stuff a long time back. To remind the readers, Bharat Electronics Limited (BEL), a Swadeshi(Indigenous) PSU has had the distinction of producing not only vacuum tubes but also Germanium semiconductors. It is the right time for us to not limit the potential of DRDO and BEL to only defence but take it to the masses and build indigenous base in India to manufacture for the booming domestic market. We can then, given our cost competitiveness ,compete by using different models available. The capital intensive nature of the job and the intricacies involved call for greater state intervention to kick start this activity in India and prevent the excessive dependence on imports for these basic things. Till then whatever you buy, it will still not fulfill the prime objective of localization.
The Supercomputer Saga: An effort to savor: Many might have forgotten how India was denied Super computers in 1987 by the Yanks. It was speculated that Indians could never develop a super computer on their own. It was at that time that the govt decided to go for the kill (established CDAC) and not wait. We trusted our scientists of CDAC and provided the meager resources that we had at our disposal, produced world’s second most sophisticated Super computer as early as 1990( in a mere 3 years ). Thus, we need to remember what we can achieve, just like Lord Hanuman and get our mojo back by investing sufficient resources in terms of money, political and intellectual will power. Govt of India does need a lot of revenue to go for infrastructure push and a robust state intervention by starting desi wafer manufacturing will be the path to salvation as we might end up saving several billion dollars on wafer imports.
2) Addressing the Lack of Indian alternatives: Indian entrepreneurs must step up the gas and think not in terms of mere profits but staying in there once they make it big. The way Flipkart and snapdeal saga has panned , carries important lessons for India. The Chinese investments into Indian startups have now made it even difficult for people to make a definite choice. What compounds it is the lack of competing brands which are either not cost competitive or as feature laden as the imported one. The govt of India has done good to spot the danger and has restricted suspicious take overs which could be strategically harmful for the startup culture.
We must remember how Hindustan motors faded despite having the fanfare that Ambassador had. This is something our pvt sector must learn. Micromax is another example of what Indian innovation could achieve. It’s advertisements have faded from the television it seems. Intex is one rare name still surviving the odds, but has sadly started lagging behind in the smartphone business. As the #vocal for local trend gained , Micromax and Intex presence with competing product chain in mobiles was sorely missed notwithstanding the good diversification they have done in their product profile in consumer electronics segment. It will be better to offer our customers the best by changing with times. The good old UPTRON TV was a masterpiece by a Govt (complete swadeshi )company and people swore by it’s excellent quality(myself included) as those were the times our firms took guarantee of their products. It is looking to make a comeback. This is what I am talking about. It is never too late to revisit and re energise our efforts and vision. How fascinating it would be to be able to buy an Indian product be it UPTRON, Videocon ,INTEX or a made in India LG or Samsung with a made by India integrated circuit and wafer and a higher degree of localization than is possible right now.
We have had a habit of reacting to adverse situation and then coming out triumphing out of it. Be it ISRO’s journey to be a space power, CDAC’s record breaking first super computer,Cdot and Indian pvt sector’s IT revolution, Indigenous GPS, Indigenous cryogenic engine, Maruti Suzuki’s (Formerly govt Maruti Udyog Limited in collaboration with Suzuki) success and exports, TATA’s world’s safest affordable cars in the market , green revolution..you just name it and we are right there. Thus, this crisis is a major opportunity or we must make an opportunity out of it.
3)Calling Out China on Trade barriers for Indian firms: India needs to make it clear to China that unequal trade is no more acceptable. India has done well to not give in to the pressures mounted by China to join the RCEP, which would have been a sure disaster considering the huge trade imbalance advantage that China already enjoys with India. It is to be noted that India’s strength in exports lies in pharma, agro based goods, IT services and outsourcing business and all these sectors face a very unfavourable situation that dents their ability to operate freely.
The difficulty in getting business visas, clearances and a number of disadvantages that Indian firms encounter is sure enough to act as a big deterrent given the fact that Chinese firms have been given better ease of doing business in India.
This affection from now on at least must not be a one way street. India will have to do a strategic rethink as India is indeed a big market for China and in my opinion it will not want to lose it. We got to negotiate a better trade deal or use the Chinese methods to even out.
The menace of dumping of steel from China has hit domestic steel industry hard and India needs to be wary and pro-actively counter all this. This must not be allowed to become the normal. We have a solemn duty to protect our hard created manufacturing base and cannot let it get blown away in the name of trade while big countries take up a protectionist stance to save themselves (US- China trade war)
4)The Swadeshi push, PSUs,PSBs and PPP: Even as recently as second week of June 2020 PM Shri Narendra Modi stressed on the need to manufacture as much as possible in India to reduce import bills it has come to my mind that now is the time for our country to take a renewed enthusiasm is furthering the research capabilities of PSUs and bolstering their presence in strategic sectors. Elimination of dependency on one country should not be allowed to become dependency on any other for this might have strategic implications. It seems to be the right time to remember how PSUs have pioneered the original Swavlamban and Atmanirbharta(Self Dependency). One must not forget the gross demand that is fuelled by a talent retained in India, selected through a tough competitive process with decent salaries and robust auditing firms which are not only a good source of dividends but also assets and a fjord against strategic arm twisting. It was this ‘PSUs and PSB jugalbandi(partnership)’ that effectively stopped the demand slump in India and India successfully navigated the global recession of 2008. State presence in core sectors of strategic nature has done a world of good to several economies. China, Russia might sound to be clichéd to many but I won’t rest on only these two countries for my side of analysis. It would make much more sense to go to the highest form of achievement attainable in the global hierarchy. The Nordic Countries especially Norway and Sweden, Singapore and even the French have not let go of their SOEs and have excellent HDI given the robust presence of state. They have made sure that their SOEs are world class and ensure a great degree of strategic autonomy for their respective countries. These success stories are a quick rebuttal to the often put forward logic that only pvt firms foster growth.
India has a mixed structure and these heavy waters can’t be navigated without the presence of a robust and strong public sector(which is swadeshi(indigenous) to the core) and finding ways and heart to offer good venture capital to our unicorns and suitable laws to avoid their decimation through take overs. How bad it could be if India’s communication sector keeps on getting dominated by Chinese equipment or even our security based network is based on foreign equipment, one can only imagine as data is power in today’s world. The Wikileaks , data security and storage controversies are too real to be ignored and if done so will be at our own peril. Telecom is strategic today and mere regulatory presence might not offer solace to the security concerns a country like India faces. Retaining PSUs in such a sector is going to be critical for India if we are to develop 5 g tech and equipment(very important ) in India. Cost escalation will be offset by the data security we can ensure. PPP models can be brought in for civilian applications and ensure our pvt sector too has a good say with strict auditing norms to ensure accountability of both.
A damning report by parliamentary standing committee on commerce , headed by Shrimoni Akali Dal MP, Shri Naresh Gujral,deserves special mention here. The report titled ‘IMPACT OF CHINESE GOODS ON INDIAN INDUSTRY’ was tabled in the Rajya Sabha and called for protection to be given to domestic industry due to the onslaught of Chinese goods or unfair, illegitimate trade practices of any country in Indian market.
This text is courtesy business-standard.com(https://www.business-standard.com/article/economy-policy/psus-and-state-govts-buying-chinese-goods-despite-make-in-india-parl-panel-118072601510_1.html)
The committee said Chinese products are certified and registered quite easily and faster by India’s Bureau of Indian Standards (BIS), while Indian products exported to China suffer delays and high fee for getting certified and registered. “The committee deprecates this situation. It finds it unfortunate that in the name of ease of doing business, we are more than willing to give market access to Chinese goods, which is destroying our manufacturing, while China is smartly protecting its industry from Indian competition,” the committee said. It recommended that the BIS must also reciprocate in the same manner.
The panel said the government should learn from the US and the EU in being more proactive in taking trade defence measures, as provided by the World Trade Organization, and impose trade restrictions on import of such Chinese goods that have caused erosion of manufacturing capacity.
It further noted how India is getting overwhelmed by Chinese solar panels and their use of toxic materials in their manufacturing. An article in rediff further noted the loss of 2,00,000 jobs due to Chinese domination of Indian market not on the basis of fair competition but based on the dumping of goods in India. So, is India going to remain vulnerable to the outside arm twisting even in it’s glorious and commendable progress in solar energy? Well, capabilities are being developed in house. It is time for BHEL to be encouraged and brought in a big way as it is making great stride in solar PV research and development. It’s SPV portfolio has already clocked 1 GW and in collaboration has backed 800 crore rupees order in collaboration from NTPC and Gujrat State Electricity Corporation Limited. It is our own BHEL that is manufacturing indigenous solar cells and solar modules. In addition to that space grade solar panels are being developed at it’s division in Bangalore. This can give a glimpse into diversification and exploratory drive of techies at BHEL.
India has a huge import burden due to almost 100 percent of LI ion batteries being imported from China,USA,Japan,etc.Given our huge electronic battery driven demands it is imperative that we do secure our future with not only stable lithium supply but also mass manufacturing capabilities. ISRO has achieved path breaking success in affordable LI ion batteries tech and it will be key to govt’s ambitious emission reducing electric mobility plan. This breakthrough will end up saving billions of dollars in import bills. Of course, we cannot afford to remain strategically behind in securing energy sources for future. ISRO has gone a step further given out the technology to both the public and pvt sector to make sure it’s mass productions happens quickly. Our experiences in oil deficiency must stay at the back of our minds. This makes it amply clear how State owned enterprises need more budgetary support and with the talent pool at their disposal our colleges, universities as well as research labs can churn out affordable solutions. I have close to my home witnessed affordable hand sanitizers being made by one of my friends(Shri Siddharth Sharma and his team) in a short time, right at the very moment the nation required it during corona crisis (courtesy IIT Roorkee). Also notable is the ESDM (Electronic system design and manufacturing)potential in India(huge demand) which is being aggressively encouraged by Govt of India. This is not only cost effective unlike wafer fabrication but also suited to Indian conditions of medium investments and higher returns.
Conclusion: It is time we again make local products trendy. It is time we look back and remember how our parents just loved made in India shoes from Agra and Kanpur, the Aligarh locks and get our small businesses going. It is time our consumers enjoy Voltas, Videocon, Micromax as well as made in India whirlpool, LG and old UPTRON. We need to look back at the amazing journey of development that India has made.
Indian Public sector has pioneered the drive for swadeshi and they are critical for India’s strategic autonomy in key areas like defence, energy, railways ,communications, supercomputing and are a much needed asset to compete against China’s impressive hold on wafer manufacturing. The Nordic models, the giant strides made by Chinese , Russian and Singapore SOEs are the stories which are landmark for a mixed economy like ours. Let us strengthen our Public sector Banks and insurance entities as they will keep our country strong and economy on the right path. Let us have the pride in our unicorns back by providing them better options and preventing their surreptitious and hostile takeovers. Let our DMRCs(successful model of an efficient public mobility system) ,IRCONs, WAPCOSs,L and Ts,AAI, ICF(Train 18), TATAs, Reliances etc help in extending India’s spirit of ‘Vasudhev Kutumbkam'( World is one family) by becoming players in bringing more development to Africa unlike the Chinese debt trap strategy. The boycott strategy without developing alternatives won’t yield the desired result. The push now has to be more from the top and consumers get more visible and credible indigenous choice not complex ones(Indian firms laden with Chinese capital). Govt must ensure that the Chinese are paid in the same coin and government contracts at least do not get sourced to the Chinese by any means. Govt initiative will be the key as we welcome investment and movement of manufacturing facilities from different parts to India with open arms but India does not have a long waiting time to act. If any critical sector does not see required pvt participation(wafer manufacturing) PSUs should be brought in to make it big for the country and mission vocal for local needs their encouragement to propel msmes’ growth and prosperity and kick start the lagging economy.Time for more autonomy for Public sector enterprises and banks to stand up to global and domestic challenges and stand up to Chinese might. Let us make it trendy again to sport made in India stuff, to be part of desi pvt firms, of MNCs bringing in tech to India as well as the PSUS and PSBS for their growth along with the private sector is India’s real ticket to strategic immunity. Again, I am hopeful that the way India bolstered its defences and achieved stunning results post 1962, this standoff leaves us more strategically and economically autonomous than we are as on date, as peace can’t prevail till your strength makes adversary’s misadventures futile.
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