India, the U.S., and a Diplomatic Moonshot
Dear Reader,
Welcome to Takshashila Dispatch. In this edition, having previously advocated for the move, we bring out our detailed views on India’s decision to join the U.S.-led Artemis Accords.
We also cover our work on China’s perspectives on the outcomes of Modi’s state visit to the U.S., the state of U.S.-China relations, China’s moves in Central Asia, a SWOT analysis of India’s biotechnology ecosystem, tackling brain drain from India, the role of tariffs in subverting our electronics manufacturing and a deep-dive into the Central Bureau of Investigation.
India, the U.S., and a Diplomatic Moonshot
On the heels of Indian PM Narendra Modi’s state visit to the U.S., India has signed the Artemis Accords, which allows the country to participate in the U.S.-led lunar mission called the Artemis programme.
In a special edition of the Technopolitik, Aditya Ramanathan offers a quick summary of the Artemis Accords, India’s initial hesitations about joining the effort, what factors led to India shifting its stance, and what lies ahead:
India’s acceptance of Artemis is a significant outcome of an extraordinary state visit to the US by Prime Minister Narendra Modi that has already seen multiple deals on high-technology and defence cooperation.
News of the signature will undoubtedly surprise or dismay some in India. But neither of those reactions are warranted. The obstacles that once came in the way of Delhi’s approval of Artemis have been steadily giving way. Also, merely signing on to the accords (which are non-binding) does not automatically mean India will be cooperating with the US’ lunar exploration programme or that it cannot collaborate with other states.
In an Explained feature in today’s The Hindu, Aditya further digs into the implications of India signing the Artemis Accords and what it means for future lunar governance:
India was also likely concerned that the Artemis Accords were an informal set of guidelines or norms rather than a legally-binding instrument. India has historically preferred formal law over informal guidelines because it believes laws foster better compliance among adherents regardless of their relative power in the international system.
On the other hand, India fears that norms set by great powers are designed to maximise their own freedom of action while constraining less powerful states like India. That India now accepts Artemis norms set by the U.S. suggests a subtle shift in its diplomatic practice.
The dramatic developments of the last three years have also made it clear that divisions between the U.S. and China are too deep for them to agree on a complex new international law. Until ties between the two great powers improve, they are unlikely to negotiate fruitfully on a new lunar law.
For more on our assessment and recommendations about the India & U.S. relationship, check out this issue brief on growing the defence and trade partnership and this issue paper on the Artemis Accords.
Other than the Artemis Accords, Modi’s visit to the U.S. witnessed the announcement of a range of partnerships across defence, manufacturing, semiconductors, technology, and telecommunications.
How does China view recent developments in India-U.S. ties?
In a special edition of Tracking People’s Daily, Manoj Kewalramani unpacks what Chinese analysts have to say about the outcomes of the visit. Analysing Chinese media and analytical writings, Manoj observed that
The primary narrative in all of these articles is about emphasising differences between India and US. As much as the pieces are indicative of Beijing’s anxieties, the articles also tend to paint India-US ties as more a matter of convenience owing to current geopolitical currents and a momentary convergence of interests. Regardless, there is a sense of concern that the deepening India-US relationship will result in multiple complications for China.
A convergence of interests is very different from shared interests. This comes across rather strongly in all the pieces. A common argument is that while the US is seeking to draw India into its orbit to contain China, India is engaging with the US to further its own rise. This, these analysts argue, indicates that sooner rather than later, frictions will emerge and even potentially grow intense.
Some of the articles highlight that despite all the agreements inked during the visit, there are likely to be significant structural and practical challenges when it comes to implementing them.
Successful Blinken Visit To China Does Not Mean All’s Well
Just before Modi’s U.S. visit, U.S. Secretary of State Antony Blinken paid a visit to China where the countries attempted to address their differences with dialogue. In an interview for StratNewsGlobal, Manoj Kewalramani discussed the meaning of this visit, the irreconcilable differences between the U.S. and China today, and why it can be advantageous for India if it makes the right moves:
India’s Biotechnology Ecosystem: A SWOT Analysis
In Takshashila’s latest discussion document, Shambhavi Naik conducts a SWOT analysis of India’s biotechnology ecosystem and offers three recommendations for boosting the biotechnology sector – increase funding, enhance skill capacity, and boost international cooperation.
The Brain Drain Conundrum
Brain drain or the emigration outside of India by highly skilled people of the workforce has been a part of Indian public discourse for decades now. In an opinion for The Times of India, Pranay Kotasthane offers ideas on what the Indian state could do, while respecting people’s choice of movement and settlement:
Now, assume you are a fly on the wall in a government meeting discussing ways to channelise the energies of the 36% IITians who have chosen to migrate abroad. What alternatives are likely to come up? Depending on the time horizon of impact, there are two categories of solutions.
Over the long term, there is no alternative to good-quality research universities. As industrialist Naushad Forbes writes, we need to do this not because the research from universities will produce great products or start-ups but primarily so that competent researchers aren’t pushed out of India.
Over the short term, there aren’t any good options on the table to prevent the out-migration of talent. Instead, the government could make it attractive for emigrants and their companies to return to India.
PLI Schemes Need to be Backed by Trade Policy
While the range of PLI schemes announced by the Government of India is being hotly debated, in an article for the Mint, Satya S Sahu argues that inefficient trade policies are hurting India’s manufacturing sector more today:
India wants to emulate China, Taiwan and Vietnam by improving domestic infrastructure and logistics alongside providing tax breaks and financial incentives for ICT manufacturing. However, there is no effort to emulate their liberalized trade policies. Over the decades, the three countries combined a low- or zero-tariff regime enabled by the World Trade Organization’s (WTO) Information Technology Agreement (ITA-1) and a litany of free trade agreements, alongside foreign investment, research and development, and industrial policy reforms.
The resultant ecosystem attracted companies—Intel, AMD and Qualcomm, to name a few—looking to set up different parts of their supply-chain operations.
India’s trade policy, on the other hand, is marked by a tendency to raise tariffs, particularly since 2015, as the moving parts of Aatmanirbhar Bharat gained momentum. Initiatives such as the Phased Manufacturing Programme for smartphones gradually increased import duties on components. Basic Customs Duty on components such as display assemblies and camera modules rose to 22% by 2020-21 from nil in 2015. Additionally, ad hoc tariff hikes are inconsistent with India’s obligations under the ITA-1, as the WTO has recently ruled in a dispute filed by the EU, Japan and Taiwan.
Supercharging India’s Electronics Manufacturing
In an article for MoneyControl, Anupam Manur and Pranay Kotasthane argue that India must not waste time engaging in tariff battles under the Information Technology Agreement and look to leverage lower tariffs for manufacturing electronics:
Second, if India wants to be a manufacturing and exporting powerhouse, it cannot do so by protecting “champions” from “undue pressures” of competition, as we did before 1991. The electronics industry heavily relies on the frictionless flows of goods, capital, and human resources across borders.
Aatmanirbharta in the electronics sector is a myth, as competitive exports require cheap imports. By disregarding the ITA, products manufactured in India will not be able to compete in the international market. Even industrial policy and targeted subsidies are ineffective due to high import tariffs.
An analysis by the industry body of phone manufacturers shows that higher import tariffs have meant that a large portion of the money companies receive under PLI gets re-routed to pay these tariffs, ultimately making production cost-prohibitive. This is why companies such as Apple have been seeking duty exemptions for some electronic components. Tariffs are also a major sticking point in the India-Taiwan Free Trade Agreement. A unilateral reduction in tariffs by following ITA is thus in India’s interest.
Decoding the Central Bureau of Investigation (CBI)
The CBI is the premier investigation agency of the Government of India and sits at the confluence of law enforcement, politics, and the rule of law.
In this week’s episode of Police Chowki, Javeed Ahmad (former IPS & Joint Director, CBI) speaks to Shrikrishna Upadhyaya about the role and function of the CBI, the contentious issues around the misuse of CBI to target political opponents, the conflict of CBI with the federal structure of India, its constitutionality or the lack of it, why the public servants in India are scared of the 3Cs: CBI, CVC and CAG and more.
China & the Geopolitics of Central Asia
China’s security and economic cooperation with Central Asian countries has been deepening over the decades. In May this year, Chinese President Xi Jinping announced a new blueprint for ties with the five Central Asian countries. In an episode of All Things Policy, Manoj Kewalramani speaks to Temur Umarov from the Carnegie Russia Eurasia Center to understand the shifting sands of geopolitics in Central Asia.
Bengaluru International Centre Event | Nitopadesha Book Discussion
Nitin Pai, director and co-founder of Takshashila Institution, will be in conversation with author Roopa Pai on the ideas of the duties, morality, and practice of citizenship from the Nitopadesha. The scope of the conversation will cover how citizens can achieve happiness, well-being, and prosperity for themselves and future generations by properly exercising their power as ordinary citizens. Unlike the Arthashastra and the Panchatantra, which are texts meant for rulers & princes, the stories from the Nitopadesha are meant for citizens of all ages.
That’s all from this week. Take care!