The Rise of India

? Rahul Dutta | February 6, 2023 | 15th Issue

When the real history of India will be unearthed, it will be proved that, as in matters of religion, so in fine arts, India is the primal Guru of the whole world. ~?Swami Vivekananda

Introduction

The twentieth century will be remembered for both hope and despair.??The technologies developed in the early phase of the 20th century broke the shackles of slavery and the backbones of foreign colonies and culminated in the establishment of new republics. With the invention of the flying machine, the Wright Brothers realized every human dream to fly. The lust to be Alexander of the 20th century cost loss of?20 million?lives in the 1st world war and 40 million lives in the 2nd?world war. The White Brothers could not have imagined that their invention will be used to kill millions by dropping bombs from flying machines including the atomic bomb used in the 2nd?world war to decimate the towns of Nagasaki and Hiroshima. The 20th century will thus be remembered for the power of inventions and also for the importance of the peaceful use of technology.?

Monopoly became Hegemony

Humanity is the umbrella encompassing all human activities as a superset.??The markets are a sub-set of this bigger set. In the age of Artificial Intelligence (AI),?Robotics,?Blockchain?technology, and the next version of the revolutionary search tool?chatGPT, attempts are being made to?secure intellectual property in the name of technology-developed content?like computer programs or literary work. It is a deliberate attempt to extend ‘selfish’ human exclusivity on monopoly for machine creations. It is obvious that ownership in the IP monopoly ‘owner’ knowledge tools vests with humans only. This is a blatant example of both powers of monopoly and, desperation to extend the monopoly beyond human capacity using knowledge tools.?

More than five decades were expended in designing a multilateral system for international trade run by the?World Trade Organisation?(WTO). It is a basic principle of Political Science that in a democratic setup legislature, executive, judiciary, and press are the four independent pillars. The entire eco-system of international trade was woven with these basic principles fabric.?The glitter of money and lust for power has reduced the space among the pillars of democracy. It has not only reduced the area of democracy but also endangered the democracy structure collapse.

Monopoly was a necessary evil for competition in the WTO agreements. As the Sovereign legislates laws for running the affairs, the WTO Members, Sovereign States, debated, signed, and harmonized their national laws to make them compliant with the WTO agreements. The rules were meant to be followed by the business entities in consonance with international trade.?

China, not a WTO founder member, joined on December 11, 2001. According to theGuardian.com, since the era of Mao Chinese State firms have played a pivotal role in the economy, and the Communist Party has always maintained direct control over the State firms. It was China that brought Sovereign into business and changed the dynamics of international trade and commerce with its ambitions to dominate the world and establish its hegemony. The development of China as the manufacturing hub for the world led to its leaders aspiring for establishing an international hegemony. The outsourcing of manufacturing to China brought with it the latest technology and know-how, so far inaccessible to China. It helped China in quickly replicate her own Knowledge economy with the help of access to the new-age monopoly tools.?

The hidden agendas of the WTO Member States have made a mockery of all the hard intellectual work in establishing an international trade system the life breath for the survival of the global village. The role of??Sovereign States as members of WTO was to negotiate and agree to multilateral agreements and to harmonize the same with their domestic laws. The system was not meant for harboring Sovereign ulterior motives to establish any kind of control beyond their territories. The State’s role as an “international merchant” has certainly harmed international trade which to date is under the shadow of suspicion of competition destruction and establishing hegemony, using economic warfare tactics to decimate “the enemy”.

On the other hand, the transnational companies (TNC) grew exceptionally well and they used the best resources to swindle revenue through the tax havens in such a manner that their tax liability was a bare minimum in the territories from where they earned maximum revenue. This is leading to an unpleasant situation between the States and the TNCs as they reap rich revenue at the cost of the local traders and yield little tax for the States and harm the local traders. The competition between the TNCs and the small business is so one-sided that neo-colonialism appears to be apparent.

The Wars for Technology

War is perpetual. A war is triggered when reasons fail. War shames humanity when the ‘interest’ of the leaders develops beyond jurisdiction.. and, war terrifies when failed leaders try to use it as a convenient diversionary tactic for their leadership failure. Modern war is no more a military-to-military fight. It may not be required to breach the defense formations at the political borders to accomplish the ‘interests’. Even the invaded country may not know of being invaded. This is the age of disguise! The erstwhile wars were fought for land and natural resources. However, the knowledge economy considers technology as the most valuable resource. The monopoly over technology holds the promise to be able to establish superpower hegemony.

The future technologies are going to be ruled by the more sophisticated electronics. High level decision making will depend on their equally developed computing power especially with the concept of quantum computing. The manufacturing of the futuristic electronics will heavily depend on rare earth metals. According to a?Report, China holds 70% of the rare-earth reserves. A?Yahoo Finance Report?says that the high investment intensive semi-conductor (IC-circuits) industry is concentrated in a few countries like the US (46%), South Korea (21%), Japan and EU hold (9%) each for the first three positions. In the year 2021 the global semiconductor sales was US$555 billions. With US$ 194.2 billion market size, China, is the largest semiconductors market. The US as the producer and China as the consumer hold the leaderships in semiconductor market. According to the?Semiconductor Industry Association, the US is the semiconductor producing leader, the maximum rare earth minerals are owned by China. The US strength lies in technology development using one fifth of its revenue on it the highest for any industry.?

The?Market Watch?web reports that China has imposed export restrictions and duties to restrict the exports in the rare earth metals and minerals in 2014. The?Wall Street Journal reports?Chinese export restrictions were contrary to the WTO provisions and therefore China lost the case at the WTO. In October 2022, the US has prohibited high end semiconductor as products, and its associated technology and software export to China. The quantum computing in sync with the next generation electronics holds a lot of promise for the progress of mankind. It is ironic that the fight to be the most powerful country between China and the US is going to cripple the progress of many peaceful sectors, like health. Ironically, ‘common’ people across the nationalities think likewise for peace and harmony. The rise of Chinese ambitions to be the superpower do not get reflected in the following words of Chinese Noble Laureate?Mo Yan?(Noble Prize for Literature 2012):

Treating people with kindness and sincerity are the principles by which I engage in interpersonal relationships. In my youth I hated evil with a passion and yearned to die fighting evildoers; but as I grew older and gained a greater understanding of human beings, my attitude gradually softened. I am getting to know myself better all the time, and am gaining a more thorough understanding of others.

The war with oneself is the only war that should sustain. Rest are impedance to the progress of mankind and abuses inflicted on Nature.

The Rise of the World Guru

Nothing is needed to substantiate the fact that wars consume resources whereas peace nourishes resources. The sustenance of world’s largest population on less than 3% land of the world with diversity in every aspect of life is nothing but a miracle. It is also a miracle that Indian history is full of invasions and all kinds of destruction and losses but it never attempted to take revenge. Its philosophy was focussed in doing??constructive work so much so that India earned prosperity and glory again and again.

It was the systematic uprooting of entrepreneurship that helped the British rule the Indian subcontinent for three centuries. Post winning political independence, 1991 economic crisis was a wakeup call for India. It was a conducive environment of connecting with the world through trade. It signed the WTO agreement as a founder member and started working to realign herself between ‘..Where knowledge is free..’ and ‘…even goodwill is priced’?ethos. Decades of conditioning of the mindset of only working for others for livelihood was difficult to break. It had sunk into the mindset of the Indian civilization. The liberation from this mindset or slavery of ‘job’ finally liberated India in the true sense. Freedom dances in the existence of the availability and accessibility of resources for realising ones’ dreams.?

The rise of India as the third largest economy is the re-emergence of India to reclaim her rightful place in the global economy. To be rich is a basic human right. Today from a teenager to a eighty plus years old in India holds a dream to be an entrepreneur, and works hard to realise the dream. The dream limited to the agriculture fields and government job has expanded infinitely.

Position, Three to Two

When the aim is to reclaim the due position maintained for centuries till the arrival of the industrial age, there is only one place, the top. Knowledge economy holds the key to help India to become the largest economy in the world. The road from the third position to the first is a bumpy one. In 2021, India ranked 17th?in the top exporting countries. The top exporter, China, is a global manufacturing hub. The Chinese business model may not suit many countries including India. So, India aspirations are incomparable with China. We are comparing Indian economic growth surge with the US.?

The exports and imports play a very vital role in gross domestic product (GDP) and current account (measure of flow of goods and services) status for meeting the balance of payment prospective. The basic equation for calculating the GDP is as following:

GDP = Consumption + Investment + Government Purchase + Exports -Imports

Since the international transactions take place in the most acceptable currencies of the developed countries, the status of the local currency exchange rate vis-à-vis the foreign currencies used in the international trade play a vital role in deciding the balance of payment position. The equation underlines the importance of export for the economy of a country.

In the merchandise exports, the market size in 2021 was?$ 22,328.088 billion. With?$395.425 billion?exports,?India holds only 1.77% share in the world. The top economy US exported goods worth?$ 1,754.300 billionrealising 7.86% share in the world merchandise trade and holds the second position in the top exporting countries after China.?

In merchandise trade, the second position requires 4.44 times revenue earned for the third position that India recently achieved. The latest data is yet to come, we are comparing with the 2019 and 2021 data.?

When the aim is to reclaim due position, and not to dethrone anyone, there is only one place i.e. at the top. India aspires to be the largest economy. To sustain the world biggest population, it is logical to win the due pie in the global prosperity.

The comparison between the US and India merchandise data statistics reveals that there is a stagnation in the growth of merchandise trade.?

The world economic growth is less than 3%, whereas Indian economy is growing at more than 6% rate. The export data depicts a country’s foreign exchange earning capacity. The stagnating merchandise trade would be further hampered due to??climate change. A majority of the Indian population still survives on agriculture. Its sustenance and growth is very important on many counts, like availability of grains for all at affordable price, food security from the national perspective, and above-all means for survival for millions of landless, small and, marginal farmers. Since decades the agriculture sector is waiting for a revolution to place India as the global human energy supplier.?

By Heart, Indian

On the other hand, presence of the world’s youngest population in the times of Knowledge economy is a big plus point . Engineering, medicine, finance, commerce kinds of all knowledge driven sectors have tested and proven the brilliance of Indian human resource across the world.?

The aspirations of the youth are shifting from getting hired by a transnational giant corporation in a developed world to a career or life where a higher happiness quotient??of doing your own thing . The young generation finds more reasons to be home with parents and family by working locally while struggling with chasing one’s own dreams. It has made Indian economy landscape rosy. The ease of doing business to Government support for start-ups and opening of new opportunities in the defence manufacturing to Integrated Circuits are providing more reasons to act local. The Indian diaspora is bringing home immigrants with rich experience to make their contribution in making India stronger, prosperous, and is commanding more respect from the world.?

In the trade in commercial services arena, the world trade was of $?27,812,983 million?dollars. The shares of India and the US were?$642,327 million (2.31%)?and?$ 2,533,243 million (9.11%)?respectively. It means at least?3.94?times the present export revenue generation capacity is needed to achieve the top position. The difference in??commercial services exports is less steep than the merchandise goods exports. The capacity to grow commercial services exports are immense for India. In?the year 2021, 3.66 million children were born in the US?whereas,?1.5 million secured their degrees only in engineering in India. The top exporter China is nowhere in the list of top eight countries trading in services. India holds 5th?position in the list. The services sector holds the promise for attaining the top economy position for India. Since productivity gains are primarily driven by technological interventions, the IP embedded technology interventions in both merchandise and commercial services are going to boost the export revenue figures further.

The comparative graph between the merchandise exports and commercial services exports from India further underlines growth of Indian economy through the commercial services:

The stagnation in the merchandise exports and slow growth in the commercial services provides the requisite space for growth in both exports and economy. Although the merchandise exports are sluggish, the changes like introduction to commercial farming through?the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farms Services Act, 2020?are going to bring in the requisite reforms. Law provides a system to be used by the people; it is as good as intelligently the people who use it.

The shift from selling the crop to selling the crop post value addition in itself holds income enhancement opportunities. The pressure on agrarian land is so high that agriculture sector position is like the one faced by the milk producers in western Gujarat 1940s, where middleman cartel were exploiting milkmen. To get rid of the middlemen, the milkmen formed a milk cooperative of their own. The eight decades later, the milk cooperative of milkmen of Gujarat,?Amul,?is a shining example of cooperative power ideal for replication in other rural economy segments. The agriculture produce value addition through adjacent food processing units owned by the farmers cooperatives can reduce the pressure on agrarian land to feed a large population. The cooperative model can solve the problem of standing crops burning in fields due to bumper crop leading to the crash of the crop prices below the production cost. Long back the US invented?forward contract?to meet the demand supply challenge in the agriculture sector. The wonderful derivate tool, forward contract, is still to be introduced in India. The sincere efforts in reforming the agriculture sector holds the potential of transforming the lives of millions of small and marginal farmers and thus transform the Indian rural economy. Still more than half of the Indian population sustains on the agriculture sector. The?$436 billion?Indian agriculture sector?in itself is sufficient to take India to the positions of farmer of the?world?and?the topmost economy. The cash flow crisis and crop storage facility shortage at the farmers end makes them rush to the market for distress selling of crops. The agriculture sector reforms can strengthen the rural economy of India empowering the people at the grassroots. India can learn and adopt a lot from Israel for boosting the agriculture sector. In sum total, the value addition, higher productive efficiency, IP embedded value addition kinds of factors may help in breaking the stagnation in merchandise exports from India.

Embedding Goods & Services with Intellectual Property

The?7.1%?of the global commercial services exports comes from royalties, licensing fee, and assignment of IP rights. As the first picture depicts, the developed world is developed because of valuing and commercially exploiting intellectual property.

Despite being a strong knowledge economy contributor, India performed badly in exporting IP embedded products. The?Government data for the year 2021-22?states that the commercial services exports set a record of?$254.4 billion?and merchandise export crossed?$ 400 billion?for the first time. The overall export reached the figure?$676.2 billion. However, the charges for IP services exports was only?$632 million?whereas the payment for the same was?$6525 million. Thus more than ten times debit to the credit for the IP services exports charges resulted in??overall IP services exports deficit of?$5893 million.?

The?0.25%?contribution of charges for IP services exports in commercial services export is insignificant against the global standard of 7.1%. It underlines the scope for??growth in exports. The present Indian exports can be classified as a stereotype third world country selling a bag full of potatoes equivalent to the cost of producing one kilogram branded potato chips. It is like the Indian exporters are playing Golf with rules of Cricket. The agriculture sector, the life line for half of the world largest population, earned merely?$10 billion?in exports form?$436 billion?worth produce. This amounts to 2.29% export contribution from agriculture production value. This percentage is close to the Indian share in the international trade. It highlights the underutilization of the agriculture sector in exports. The similarity between the agriculture contribution in export and the Indian share in the international exports indicates that way to the next higher position, 3rd?to 2nd, goes through agriculture sector.

Neither agriculture nor food processing (value added to the agriculture produce) figure in the top ten export contributing sectors which are as follows:

1.?????Engineering Goods;

2.?????Petroleum Products;

3.?????Gems and Jewellery;

4.?????Organic and Inorganic Chemicals;

5.?????Drugs and Pharmaceuticals;

6.?????Electronic Goods;

7.?????Cotton yarn/fabrics and handloom;

8.?????Readymade garments;

9.?????Marine Products;

10.?Plastic and Linoleum.

The top ten contributors also constitute generic products, products without??branding made against export orders, raw material like essential oils, marine products like, fish, shrimp & prawns, yarn, and handloom. No IP means zero assurance on consistency of quality, missing the source of origin for repeated orders and loosing goodwill, question mark on quality of the goods; thereby losing on credibility and loss of revenue and valuable goodwill. The loss on credibility and quality is a great revenue loss in continuum. The IP inclusive exports fetch the premium price and automatically inflate the export revenue. Below the global level 7.1% share of charges for the usage of IP is to be taken seriously. Had it been 7.1% in place of mere 0.25%, the charges for the use of IP would have fetched at least $17.95 billion in place of $632 million.?

The policy level interventions in India are in coherence with Indian strength and Knowledge economy centric. Indian strength lies in the world class technical human resource and Knowledge economy is actually?Techonomy. Post-independence the first time opening of the defence manufacturing for the private sector is the beginning of self-reliance in defence preparedness. The defence manufacturing is the industry where space is only for vertical inventions and closely guarded monopolies.?

The power to overpower others is proportional to the revenue generation power. The eco-system of the semiconductor industry got distorted with the coercion of geo-politics into the semiconductor industry. The entire electronics and computing industry depend of the semiconductor industry. The green flag for the ambitious?Semiconductor Mission?with the investment of?$9.5 billion?started in the year 2022. The?first five proposals with the investment of?$20.5 billion?were already through before the end of the year 2022. India aspire to become the global hub for electronics manufacturing, semiconductor R&D, designing and manufacturing. Indeed, the high investment industries would be IP focused industries resulting in better export revenue through IP embedded products and services.

The US leadership as the second largest economy. The success of the US lies in its respect and practice to innovation. The US invested whopping?$708 billion?in 2020 in research and development (R&D). The produce of R&D are tech savvy products and services monopolised with IP. This is the reason the US holds interest in IP enforcement across the world to command monopoly for its exported products and services. The section 301 of?the Omnibus Trade and Competitiveness Act of 1988?(post amendment to the?US Trade Act, 1974) mandates?the US Trade Representative Office?to?report on the adequacy and effectiveness of U.S. trading partners’ protection and enforcement of intellectual property (IP) rights. The USTA releases ‘Special 301 Report’ on yearly basis that is a review of the global state of IP protection and enforcement. The?2022 Special 301 Report?classifies seven countries including China, India and Russia into the ‘Priority Watch List’. The Priority Watch List countries are regarded having insufficient IP protection or enforcement or actions that otherwise limited market access for persons relying on IP protection. The extraterritorial care of constitutionally granted IP rights are the hallmark of the US trade across the globe. On this count, the rest of world is far behind. Since the legislative process is a slow process and requires both influence and diplomatic reach to secure and enforce IP rights across the globe, the position of the US in near future is not challengeable. The US earned 14.11% of the Commercial Services exports revenue in 2019 from charges for the use IP that is double to the global IP charges at 7.1%. It also underlines the US control over the world for winning premier revenue much more than any country. This position is quite secure.

The position of India in R&D spending,?less than one percent of GDP, is very poor. The contribution of the government is more than fifty-percent in the small R&D investment kitty. The government is meant to govern not to conduct business. This wise saying of governance hits to withdraw the R&D spending from public money and should thrust on industry spending on R&D. To be the top economy, the journey to the next two remaining ladders is quite steep. India needs to realign her domestic industry R&D and IP centric and needs to work harder on reforms to ensure an efficient IP eco system for IP rights practice and enforcement. Further, India needs to develop sui generis diplomatic system to ensure securing Indian monopoly rights getting respect in the international trade. The journey to reclaim the due share in the international trade for India is full with challenges. India,?Arise! Awake!! Stop not till the goal is reached!!!

All differences in this world are of degree, and not of kind, because oneness is the secret of everything. ~Swami Vivekanand