Indian Defence Review

CPEC – A Challenge to India with Multiple Deficiencies/Dependencies

For the first time in its post-Independence history, India confronts prima facie a granite diplomatic wall of CPEC threatening its vital interests.  Indian policy maker’s need to, unmistakably discern the fundamental problem, i.e. India’s economic weakness vis-à-vis China’s economic strength with over $ 2- billion supported ‘China Brand’ all over Globe, though that clout is tainted with a ‘communist’ hue. Secondly, India is dependant militarily on external help. Pakistan’s case is far worse. India is mired in multiple dependencies and needs to learn how China and Japan wriggled out of them after WWII end.

The WWII ended with Japan and Germany literally shattered. But Germany had a highly strong science/technology know-how built over centuries that India does not have, courtesy to colonial rule. Japan built its know-how base with extra post WWII technological assimilation through imitation and copying (from West), and China followed Japan by sheer copying alone. It is only after reaching a certain minimum quality standard level through imitation and copying did Japan and later China turn innovative. Today Japan is the leading nation in innovative consumer electronics.

Chinese dependency is marginal compared to India’s. Japan’s dependency problem is substantial as it has no raw material. But they have money, which India does not. So Japan began band spreading its dependency on raw material via purchases in several countries around Globe at whatever price it could get including global on-shore buy-out of companies.. In India it bought out Mumbai’s leading generic pharma manufacturer (Reddy Laboratories).  China tows the same line all over with its new-earned hard money importing raw materials and exporting/re-exporting in finished goods sparing their own home reserves.

Abe’s Delhi visits the last few years and meetings with Modi, based on realists strategic requirement in that Japan by agreement with India ensured a guaranteed flow of rare-earths (RE’s – extremely crucial for heavy industries, consumer and defence electronic products) the day after China put a temporary ban on its RE-sales to Japan to politically pressure Tokyo on islands’ dispute and the release of a Chinese captain captured in Japanese waters  and to put a stop to arrogant Japanese War Shrine visit rituals. Japan lost no time to sign deals with India, Australia, Malaysia and CIS (Commonwealth of Independent States nations for supply of Rare Earth (RE) minerals. The Times of India (09/12/2010) recorded, a subsidiary of Toyota Motor Corp, the Toyota Tsusho Corp, planned to build an India-based RE processing plant as part of that strategy. When the ban came and Japan in retaliation threatened to pull out its electronic production in China entirely, China gave in. RE-sales restarted. India sells out its RE’s without getting in return any substantial, genuine, vertically-integrated Japanese microelectronics know-how (from crystal growth to ASICs – Application Specific Integrated Circuits). It is grotesque that India with RE reserves of 3.1 million tonnes (mts) only, should lose out its RE’s against China’s 36 mts reserves, America’s 13 mts and CIS (Commonwealth of Independent States) with 19 mts.  REs’ procurement by advanced nations is a hidden, non-vocalised top priority. Ex-President Obama unleashed a crash programme of cash distribution for all green-field start-ups in RE’s in the U.S. after China plugged in a temporary ban.

China’s big strength is, it produces 95 to 97 per cent of world RE’s (official Chinese govt. Statements & Wikipedia estimate). It bought out RE mines in Mongolia, Chile and even in Canada, lithium mining in Afghanistan and all types of raw materials’ mines for extracting special rare metals all over Globe. Unfortunately, India took a long nap while China burnt its mid-night oil toiling silently and diligently to amass this bounty. Even though China lost its face at WTO in 2015 on its RE- conservation policy defending RE-export restrictions, including the appeal, China wielded this weapon so successfully that one insider, Mark Strauss, wrote (11/03/2014(http://io9.gizmodo.com/how-chinas-rare-earth-weapon-went-from-boom-to-bust-1653638596),“Couple the rare earth story with China’s behavior on other fronts — the state subsidies that help firms gain key contracts, the pressure on foreign companies to move production to China and, above all, that exchange-rate policy — and what you have is a portrait of a rogue economic superpower, unwilling to play by the rules. And the question is what the rest of us are going to do about it.”

Survival Muscle via Innovation

India needs a totally new approach, because India all alone cannot compete with China for obvious reasons. India does not have the volume of resources China has at state level, its huge forex (world’s largest – $3.2 trillion) and its infrastructure. China today thinks and acts from a position of hardware strength. But Indian private companies can help minimise India’s dependencies. Sadly though, a lot of them are paisa-greedy monster turn coats sans far-reaching national interest vision, nor a nationalistic ethics(as in pre-Independence times) but vibrant today in China and Japan, nor do these companies possess advanced state-of-the art microelectronics know how to appreciate the immense strategic importance of this field to the economic health of a post-War independent nation. One has to learn from Japan which built this key infrastructure by buying out technologies from West in the 60’ and 70’s at a heavy cost with state support only to rule the world today as an unchallengeable past-master of the game.

India’s Achilles heel of titanic infrastructure deficit, rampant caste-based prejudices and corruption have principally weakened and incapacitated the nation’s fast economic growth potential. Meritocracy seems a strange word for India’s sloppy-sleepy bureaucracy.  With its human resources’ and raw material abundance India can grow at much faster rates. It is a sociological fact that corruption has taken deep roots in India, no matter which government rules.  At the technological level India’s ‘software elitism’ cannot match the innovation sophistication of Western counterparts, or that of a Russian company Kaspersky. In micro-electronics hardware India is far behind even a small nation like Israel. Unless India works its way out to the top bracket in advanced microelectronics through massive investments and in other innovations in many substantial fields like what Japan did and does, and this will take decades, India will remain a permanent slave of its aggressors, and never be “truly independent”.  One cheering news, however, is that digitization has made some headway in India.

Advances in Space and Nuclear sciences and coolie-software market penetration alone will not lift the country out of its poverty to draw international respect. There is no control either by the government on a runaway population explosion (not limiting to 2-children per family) that eats away all progress made hitherto, unlike China, although now China plans to re-adjust to a 2-children family. It is sheer bunk to argue, what many official sources revel in citing ad nauseam, such and such big percentage of population is under 25 or 30 in India when a good lot of them are unqualified and unfit for qualified, high-end, high-tech and qualified industrial labour markets due to lack of access to education and technical training, or if when qualified, no job recruiters to absorb them. How long can we unashamedly fool ourselves with empty phrases and beliefs? Only two Indian institutions are listed in world’s best 100 universities. It is time for authentic hard work in innovation from top to bottom line; innovation alone can kick up the economy and Indians are potentially capable of that. It is in their genes. It has to start at primary school level. Borrow educational standards from outside India where you can get in raising benchmark science standards and comprehension quality.

To use Obama’s words, ‘We can”, but we do not! That’s the genuine reality and the reason why we are being kicked around despite our bigness and potential. Blaming colonialism and citing past glory are not going to change anything a bit. Vain pride has no takers in this world of hard-core ground realities. We need to beat China in microelectronics hardware. That will give us a fundamental basis to turn out tope defence products too.  That can only come from learning, copying (not imitating!) and innovating. Only then will we see Russia turn 180 degree towards us, parting company with China in this field. It is time too we seek intense cooperation with Israel in nano-tech and III-V technologies, because Israel would be more willing to transfer know-how, unlike Japan.