China’s Quest for Innovation and Technological Advancement
Dear Reader,
Welcome to Takshashila Dispatch. In this edition, we cover our work on how China’s managed to become an innovation powerhouse, lessons from the Foxconn-Vedanta joint venture in semiconductors falling apart, geoeconomics of semiconductor supply chains, the role of metals in the global chips competition, and how Indian foreign policy must account for political turbulence amongst the diaspora.
China’s Quest for Innovation and Technological Advancement
Do common explanations such as forced technology transfer, industrial espionage, theft, or state capitalism explain entirely how China has become one of the global innovation powerhouses?
In the latest Takshashila SlideDoc on China’s Quest for Innovation and Technological Advancement, Saurabh Todi and Pranay Kotasthane argue that there are multiple foundational factors and policy instruments that propelled China to innovate:
Several foundational factors such as strengthening its basic health and education metrics, along with 'Creative Insecurity' due to geopolitical competition with the US have facilitated improvements in China's innovation capacity. Furthermore, China's unique political and bureaucratic structure allows it to implement a top-down approach to policymaking. Through what has been described as "Selective Authoritarian Mobilisation and Innovation Model," China has often sought to promote research and development through this top-down approach. This ranges from direct state intervention, buying machinery from abroad, facilitating easy access to finance, promoting foreign direct investment and even industrial espionage. These policy tools have had varied levels of success.
Indian Semiconductor Ambitions & Foxconn-Vedanta Break-up
In the context of Foxconn’s decision to pull out of the joint venture with Vedanta to build a semiconductor fab in India, Pranay Kotasthane offers a framework to think about the issue and argues that while the government is not at fault, there are things it could have done better:
Firstly, none of the fab proposals have been able to find good technology partners. One reason might be that several countries are pursuing these companies, given East Asia's uncertain geopolitical environment. It's now a seller's market. Foundry companies are shopping across countries for incentives. In such a scenario, India has two options: escalate its industrial policy game or stay out of the game until the market corrects after a few months.
My sense is that the government can do a lot by improving its trade, tax, and business environments to help tip the cost-benefit calculations of companies in India's favour. For example, the lack of policy consistency and high import tariffs explain why Taiwanese companies haven't shown interest in the assembly and fab stages yet.
A second point for the government to consider is concentrating efforts on a fab and letting go of other competing priorities, such as display fabs. I never understood the industrial policy case for a display fab in India. Displays are not strategic. There are quite a few substitutes for Chinese display makers. Let's get chipmaking right first.
Siliconpolitik on All Things Policy
We had a couple of All Things Policy episodes last week on aspects of Siliconpolitk.
Prof. Douglas Fuller, the author of 'Paper Tigers, Hidden Dragons', spoke to Satya S Sahu on the geopolitics and economics shaping semiconductor global value chains:
Aadil Brar spoke to Bharat Sharma on the role of metals in the global chip war and its implications for India’s semiconductor ambitions:
Turbulence in Indian Diaspora Politics
While the Indian diaspora has grown in numbers, the number of national leaders of Indian origin has also increased: Rishi Sunak, Kamala Harris, Harjit Sajjan, Antonio Costa, and Leo Varadkar being some of them. The political turbulence among the diaspora over issues such as Kashmiri and Khalistani separatism, caste discrimination abroad, and human rights at home has also gone up.
What implications does this have for Indian foreign policy? Nitin Pai writes in the Mint:
Indian leaders should take extra care not to conflate Indian origin with loyalty to India, or religious or ethnic sectarianism. An important reason Indian immigrants have done well in politics, culture and business overseas is that they have always been—and been seen—as bona fide members of the local political community, with no divided or extra-territorial loyalties. Ethnic Indians have served as heads of state, commanded military forces and occupied sensitive positions in security establishments in several countries. As the number of Indian-origin leaders, civil servants and corporate executives rises, they should not be under pressure for their dealings with India as unspoken loyalty tests. Essentially, Indian leaders—and especially the media—would do well to treat Rishi Sunak, Kamala Harris, Harjit Sajjan, Antonio Costa and Leo Varadkar as they would if they had happened to be of any other ethnicity.
Alumni Meet-ups
Sowmya Nandan met with some of our alumni based in Singapore last week. Stay tuned at Kalpa for updates on future alumni meet-ups.
Applications for September GCPP Cohort are Now Open
Here is a sneak peek into student presentations on sectoral analysis by the ongoing Graduate Certificate in Public Policy (GCPP) programme on subjects like the housing market, space sector, and road safety:
Are you interested in joining a cohort of curious and like-minded budding policy wonks? The applications for the next cohort of GCPP are now open.
That’s all from us this week. Take care.