India & China: Govt. & Politics

After his recent visit to China, the Indian Prime Minister, Dr. Manmohan Singh had a message for the Indian industry: Try to learn from the Chinese industrialists. It was widely broadcast across all the Indian media. I do not know what he meant by that - Indian industry is as great or aspiring to be greater than the Chinese regarding quality, size, or any other parameter you might choose.

Why are great Indian industrialists buying and investing in foreign companies, and not investing in India? Why is FDI flowing into China at a much greater rate than into India? Wealth and investment goes where there is least governmental interference. This is the lesson our politicians are yet to learn.

In my opinion, it would be better if the Indian government learnt from the Chinese government regarding politics and economics. Particularly, the Indian Left, who is so glad about the PM’s visit to China, will do the nation a great good if it learns from the Chinese government’s economic principles. China has welcomed all sorts of capitalist investments, which the Indian Left still myopically opposes.

I thought the Indian PM is intelligent enough not to dish out a moral lecture to the Indian industry when his own government has failed to support the industry. Does he think intelligent Indians do not see the irony and hypocrisy in his speech?

Dubai: World’s Trade Center?

These images tell a story.

The Twin Towers, a symbol of US capitalistic superpower, have collapsed. The US is busy fighting the war against terror.

In the meanwhile, Burj Dubai, the tallest free standing structure in the world, just reached a soaring 574.5m (1,885 ft) with 154 completed stories. It is predicted to be the tallest man-made structure in the world, as well as the tallest building by any measure. It’s official web site is here. Note the ‘.com’ address of its URL, it’s not a cryptic ‘.ae’ address.

Here are some of the amazing developments in Dubai:

• Dubai’s revenues from oil and natural gas currently account for less than 3% of the emirate’s revenues.
• Dubai Mall aims to be the largest mall in the world when completed.
• Its port, Jebel Ali, constructed in the 1970s, has the largest man-made harbor in the world.
• The Burj al-Arab, a luxury hotel in Dubai, at 321 meters (1,053 ft), is the tallest building used exclusively as a hotel.
• Dubai World Central will have the Dubai World Central International Airport, the world’s largest passenger and cargo hub.
• It is a hub for service industries such as IT and finance. Dubai Internet City, combined with Dubai Media City includes IT firms such as EMC Corporation, Oracle Corporation, Microsoft, and IBM, and media organizations such as MBC, CNN, Reuters and AP.
• The World is a man-made archipelago of 300 islands in the shape of a world map currently being built off the coast of Dubai.
• Dubai Financial Market’s trading volume stood at about 400 billion shares worth US$ 95 billion. The DFM had a market capitalization of about US$ 87 billion.
• The Palm Islands in Dubai are the three largest artificial islands in the world.
• Dubai Healthcare City is scheduled to open by 2010 to promote medical tourism.
• Dubailand is an entertainment complex under development, to include mega-tracts of various kinds of attractions.
• The Dubai Waterfront is proposed to become the largest waterfront and largest man-made development in the world.

Is anyone observing the contrast? While the US is struggling to fight a war against terror, a country right in the middle east is stealthily rising economically - without relying on oil - in the global economy. The contrast is stark. The US has to realize and focus on its core strengths, if it wants to remain an economic superpower, and not be swayed to distraction with the war against terror.

Ratan Tata Speaks Out (123 Trilogy Part 2)

Please read an updated and expanded edition of this post at The Great Indian Mutiny.

Echoing the sentiments and thoughts expressed by K. Subrahmanyam as I’d written earlier about, it is now the turn of Ratan Tata to speak out about the significance of the Indo-US nuclear deal and what may be the implications if we back out. Again, in an interview with Karan Thapar, Tata says:

Calling the India-US civil nuclear deal “the best possible thing that has happened to India”, noted industrialist Ratan Tata has warned that political uncertainty caused by opposition to the pact could adversely impact the country’s growth.

“I’m very, very sorry that on various issues this is being beleaguered. I really believe that if it doesn’t happen the only people who would be happy and benefit by it not happening will be the people of Pakistan and the people of China.”

Again, echoing what I’d earlier written about how FDI will be impacted:

Tata also felt that the deal not going through would also impact the inflows of foreign direct investment. “I think it could, because I think there would be repercussions and there would be reactions.”

He’s one of India’s foremost industrialists who’s actually trying to invest capital into West Bengal. What does he think of the Left?

Tata also felt that the time had come for the Left parties to rethink their age-old strategies, given the influence they have over economic policy, reforms in labor laws and foreign investment as well as overall growth.

“Today we have to reinvent ourselves constantly. Religions reinvent themselves, the Soviet Union reinvented itself, China reinvented itself economically. The time has come when we need to re-look at ideologies, re-look at past legacy and ask ourselves is that relevant today.”

I think more and more influential Indians should speak out publicly about this issue. Industrialists, Bollywood, artists, litterateurs, historians, anyone whose voice will be heard by the Indian public.

I’m completely with Ravi Srinivasan of the Hindustan Times on this issue:

Amidst all the sound and fury of the ‘debate’ over the Indo-US nuclear deal, one section of opinion has been conspicuous by its silence: India Inc.

Which is a great pity, because corporate India has the ability and the resources to not only engage constructively in the discussion, but bring some much needed rationality and gravitas to the current babel of ideological opportunism and jingoistic posturing which is passing for ‘debate’ on this critical issue. As the principal financiers of both the political process and individual players, they also have the necessary leverage. Which they are not using.

The Left is planning a nationwide protest campaign on the streets against the nuclear deal. The people who’re going to protest are obviously going to be pawns in their political gangs, who do not understand the issue at all. It is only if famous and popular Indian personalities speak out, will the Left’s protest be neutralized.

You have to admit how clever China is! Do you want to destroy a country’s economic ambitions? Do you fear the international repercussions if you openly wage a war? Have you wondered why there is no communist Left in Pakistan, a country China heavily invests in? Welcome to the as-yet-undiscovered method of waging war: communism. Simply fund and inspire a communist group in your enemy nation, and then sit back, relax, and glee!

Photo Credit: BBC/AFP

Technorati Tags: india, america, US, indo-us nuclear deal, china, politics, world affairs, energy

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Rising 1-2-3 or Falling 3-2-1? (123 Trilogy Part 1)

Update: Please read a revised and expanded edition of this post at The Great Indian Mutiny.

Exactly 60 years after independence, India stands on a precipice. If it is ready to open its arms and join the world powers, it can soar into the sky. If it acts afraid, and bows to China, it will plunge to the depths of its isolationist socialist past.

Why the Left’s Opposition?

China. There was a time when the CPI(M) blatantly stuck posters all over Kolkata stating “China’s Chairman is our Chairman!”. Many experts, like B. Raman, have conceded that “The Left’s campaign against India’s relations with the US reflects more China’s concerns and interests than those of India.”

While the Left is posturing as the supreme nationalist, Jaideep Mazumdar offers a startling summary of what they’ve really achieved and the mistakes they’ve made in the last 30 years of their governance in West Bengal:

• Banned English from high schools, colleges, and even universities -as ‘imperialist’
• Banished Computers, as they were a ‘capitalist and exploitative’ ploy
• Banished Businesses and Industry - “Tata, Birla, Go Back!”
• Promoted militant Trade Unionism
• Shunned Global Institutions - World Bank, IMF, ADB were devils
• Which is the 2nd largest city in West Bengal after Kolkata? Stumped? Because of Urban Neglect.

All the above mistakes are now being reversed without being acknowledged. These are your righteous ideologues who’re out to protect you from imperialist Uncle Sam. So, why is China behind them? Because:

While the Indo-US deal includes supply of fuel and India’s right to reprocess spent fuel, the agreement with China does not. China has had to accept bilateral inspections by US inspectors while there’s no such clause in the Indo-US deal. USA’s nuclear deal with China is linked to various external factors like China’s relations with Pakistan, its behavior in Tibet and its non-proliferation record. The Indo-US deal has no such linkages, nor does it provide any role to external agencies to oversee the separation between civilian and military reactors in India, unlike the US-China deal that forced China to allow Australia to attest its separation plan.

For a detailed analysis of the differences between China’s and India’s 123 agreements with the US, see this article in the IE.

What if India Backs Out of the Deal

Yesterday, Karan Thapar talked with K. Subrahmanyam on India Tonight (CNBC TV18). The summary and conclusions of the discussion were as follows. There would be the following consequences if India backs out of the deal now.

International Diplomacy

India will lose its credibility so badly on the world stage, that our ties with countries such as France, Germany, Russia, UK, Japan, and Australia will be affected. From trade to WTO negotiations to immigration — all aspects of diplomacy will find us in difficult positions with little to bargain for. We may be able to do little if a Haneef kind of case happens again, and we sure can expect tightening of immigration restrictions against India.

Economic Growth

Forget 9% growth ambitions. There will be no FDI. Lack of political stability will pull out all those billions of dollars that have been pouring in the last few years. India’s isolation will have enormous economic impact.

Energy

The potential of nuclear power to supply up to 15% of our energy needs is a significant one. It can ameliorate our energy crisis substantially. By remaining in technological isolation, we will never be able to satisfy our energy requirements. This in turn, means an economic impact as well.

Strategic National Security

If this nuclear deal does not go through, India will permanently accept China as the ruling supremo in the Asian region. The deal is the backbone of a broader strategic alliance not just with the US, but with Japan, Australia, and Russia as well. The planned joint naval exercises in the Bay of Bengal are just one of the many that we will conduct with a host of other nations in the future - if we stick to the deal. Those who do not understand the strategic necessity of such a closer cooperation should familiarize themselves with the Chinese String of Pearls strategy. India will need to learn to bow before China and accept more sophisticated Pakistani infiltration in Kashmir. Today, claims that Arunachal Pradesh belongs to China are being made publicly. Imagine what can happen tomorrow, when no one in the world is going to listen to what India has to say.

Pessimism or Gravitas?

The above are not An Unquiet Mind’s opinions or conclusions. Do you think they are overly pessimistic or intentionally sensationalist? K. Subrahmanyam is not known to be either - he is India’s foremost strategic thinker, referred to as the ‘doyen of India’s strategic foreign affairs experts’. Both Vajpayee and Manmohan Singh’s governments have placed utmost trust in him. He had placed the Indo-US Joint Statement of 2005 as one of the “Five Decisions that Changed India“. Also see “The Legend that is K. Subrahmanyam“.

Such a man does not make statements lightly or sensationalize issues. We are standing on a precipice. If the Indo-US nuclear cooperation doesn’t go through, expect more brain drain, rather than the reverse. This is critically important for the future of India. We cannot afford it to be left to the Left and be left behind.

Technorati Tags: india, america, US, indo-us nuclear deal, china, politics, world affairs, energy

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High Cost Locust Alert!

While India may be an attractive low-cost outsourcing destination, it is also an attractive destination for locusts!

The UN’s Food and Agricultural Organization has warned of a locust threat in India and Pakistan:

Recent heavy rainfall in Pakistan and western India has created ‘unusually favorable breeding conditions’ for locusts until October along both sides of the Indo-Pakistan border and in coastal areas of western Pakistan, the Rome-based organization said today in an e-mailed press release.

This potentially dangerous situation should be closely monitored in both countries, the FAO said.

Desert locusts, migratory grasshoppers that often travel in vast swarms at speeds of up to 150 kilometers a day, can eat their own weight in food per day, according to the FAO. A small part of an average swarm is capable of eating as much food a day as approximately 2,500 people and can destroy vast amounts of farm land.

India and Pakistan are organizing field teams, equipment and resources to fight the swarms in the Indian states of Rajasthan and Gujarat as well as in adjacent areas of the Cholistan and Tharparkar deserts in Pakistan, the FAO said.

FAO desert specialists regularly train officers of India’s Locust Warning Organization in Rajasthan. The training involves:

• Estimating locust numbers
• Using GPS to identify location and help control operations
• Marking infected areas
• Detect breeding areas

For a real world example of such a training session, check this diary.

India and China in the Offshoring Race

Interesting paradoxical news on this front today.

Around a month back, Forrester research came out with a report titled “China’s Diminishing Offshore Role“.

“When Forrester first looked at China’s offshore and global delivery model (GDM) role nearly two years ago, the country was widely viewed as the key challenger to India for offshore supremacy. However, our latest research shows that to date the market has not taken off as expected. While there continues to be demand from Japan and multinationals with operations in China, the offshore business from the US and Europe has been slow to materialize.”

SiliconIndia reported: “As language, attrition and intellectual property (IP) protection continue to haunt the multinationals, the myth associated with China as key challenger to India for offshore supremacy is diminishing gradually.”

(Also see this blog post for an interesting take on the Forrester research.)

Citing the above report, the Business Standard today declared “China outsourcing sector no match for India”:

• In 2006, Chinese IT services market reached $7.7 billion, with a growth rate of 17.8 per cent
• In FY 2006-07, IT exports from India reached $31.4 billion, with a growth rate of 33 per cent
• Demand for IT outsourcing from India is around 4 times that of China
• China does not have any significant cost advantage, note analysts
• China’s headcount with regard to outsourcing was less than one-tenth that of Indian firms
• US & European markets, which have highest share (75%) of the world’s total market and the highest growth rate (60%), account for a smaller pie (40%) of China’s market. Japan and Korea are China’s largest customers.

Probably oblivious of these reports, IDC predicted the exact opposite:

IDC’s Global Delivery Index (GDI) Predicts China Overtaking India by 2011

IDC has developed a new Global Delivery Index (GDI), which compares 35 cities in the Asia/Pacific as potential offshore delivery centers, based on a comprehensive set of criteria such as cost of labor, cost of rent, language skills and turnover rate. In its inaugural findings, Indian cities are highly ranked, while Chinese cities are on the rise and closely nipping at India’s heels.

The IDC study also forecasts how these top 10 cities rankings might change in 2011. The GDI reports take into consideration future plans of cities such as future infrastructure plans and efforts taken to lay a firm foundation for attracting investments. IDC forecasts that Chinese cities will overtake Indian cities by 2011 due to massive investments made ( e.g. infrastructure, English language, Internet connections, technical skills, etc) which are favorable towards offshoring.

And this is now all over the news after CNET picked it up.

The IDC methodology is still behind curtains. For e.g. we do not know:

• Which criteria were used to select the 35 cities
• Whether Tier II and III cities in India were considered
• Whether current export revenue figures were considered (not mentioned in press release)

So, till we get a better understanding of the IDC approach, there’s no point in comparing or contrasting these two contradictory research reports. I personally believe the Chinese competition is good for India. It will keep our industry and our government on their toes!

e-Literacy or Obliteracy

India’s Kerala state government is counting on open-source software to boost its IT literacy rate.

“Kerala has always been a leader in literacy, and now we want to make Kerala a leader in e-literacy,” said Kerala Chief Minister V. S. Achutanandan. “We believe that free and open-source software is an essential component in our drive to democratize information technology and bring its benefits to all sections of society.”

While this effort is laudable, on the other hand, the Kerala government took a left turn on retail.

The Indian Express reports:

The Left Democratic Front (LDF) government in Kerala is all set to bring in a law to ban corporate retailers, both Indian and MNCs, in the state.

This would be the first attempt of its kind in the country. Divakaran said the Left in Kerala doesn’t intend to draw the line for big retailers at peddling food grains, as Buddhadeb Bhattacharjee did for Bengal a few days ago. It will be a blanket ban and, according to the minister, the new legislation will more than make up for “the lack of teeth” in the Central Essential Commodities Act.

“We don’t want to tell MNCs from Indian corporates, both are bad for the state. We don’t want to go for a conditional or limited ban because we really don’t want them here at all,” Divakaran said.

The legislation has the backing of the state’s powerful traders lobby, the Vyapari Vyavasayi Ekopana Samithy, whose protest shutdown was a complete success.

With such protectionist measures, erecting insurmountable barriers to free trade, Kerala’s consumers are sure to be left behind in India’s retail revolution.

Patenting Artificial Life

The first patent application for an artificial living organism has recently been filed. Don’t believe me?

From the Economist:

YOU have to hand it to Craig Venter, he is not someone who thinks small. The latest adventure of the man who was the first to sequence the genome of a living organism (three weeks after his grant request to do so was rejected on the grounds it was impossible), the first to publish the genome of an identifiable human being (himself) and the first to conceive the idea of sequencing the genome of an entire ecosystem (and to enjoy a nice cruise across the Pacific Ocean in his yacht while he did so) is curiously reminiscent of the incident that made him a controversial figure in the first place. That was when, 16 years ago, he attempted to patent parts of several hundred genes—the first time anyone had tried to take out a patent on more than one gene at a time.

This time, he is proposing to patent not merely a few genes, but life itself. Not all of life, of course. At least, not yet. Rather, he has applied for a patent on the synthetic bacterium that he and his colleagues Clyde Hutchison and Hamilton Smith have been working on for the past few years.

The patent application itself was filed without fanfare some eight months ago. But it was only at the end of May that the slowly grinding bureaucracy of America’s patent office got round to publishing it. The central claim is to what Dr Venter calls the “minimal bacterial genome”. This is a list of the 381 genes he thinks are needed to keep an organism alive. The list has been assembled by taking the organism he first sequenced, Mycoplasma genitalium, and knocking out each of its 470 genes to see which ones it can manage without.

The theory—and the claim made by the patent—is that by synthesising a string of DNA that has all 381 of these genes, and then putting it inside a “ghost cell” consisting of a cell membrane, along with the bits and pieces of molecular machinery that are needed to read genes and translate them into proteins, an artificial organism will have been created.

As can be expected, this development not without its fair share of controversy:

As Pat Mooney put it, “For the first time, God has competition.” No doubt Dr Venter, hardly famous as a shrinking violet, will be amused by the comparison.
…
Nevertheless, ETC is hoping to provoke a debate. And to give people a name to hang on to in that debate it suggests nicknaming Mycoplasma laboratorium, as the application calls the putative invention, as “Synthia”. The organisation hopes this name will stick in the popular consciousness in the way that Ian Wilmutt’s cloned sheep Dolly did. Indeed, it is rather a good name. Given the affection that Dolly attracted once the shock of her existence had been absorbed, perhaps Dr Venter - himself no slouch at publicity - will adopt it.

Basket of Crabs: Socialist Economy

Received this in an email forward, and it’s quite enlightening!

Reminded me of the basket of crab theory: if you have a basket full of live crabs, you don’t need to cover the lid! You know why?

Well, the one crab that tries to climb up the wall of the basket is pulled down by the rest of the crabs!

Isn’t this representative of a socialist economy? The more you make money, the more everybody else is going to pull you down. So let’s all of us keep living in the basket…?

It is said that the Indian economy for decades has been reeling under this phenomenon, but things may be
changing, hopefully for the better!

Capitalist Eloquence

Nirmalya Kumar, Professor of Marketing at London Business School, and a renowed marketing guru:

“Q: Do you think the growth of retailers — like Reliance, etc — and the advent of biggies like Wal-Mart could kill the small grocer or kirana shop in India? A: It’s very simple: no competitor can kill another competitor. A competitor gets killed only when the customers stop visiting him. Because of India’s socialist and communist structure, we think companies kill each other. Actually, it is the consumers who choose which companies to go to. No big retailer can kill the kirana shops. Their fate rests with the consumers.”Read the full interview on Rediff. There was also an online chat with him few days back, if you’re really interested in the Indian retail scenario.