China might get ahead of even the US

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China might get ahead of even the US

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• The rise of China: The powerful rise of China in past 20 years is primarily due to its huge investments in S&T (science and technology). That is the core of its developmental and military strategy. While India spends $50 b (2017 PPP) on S&T, China spent $500 b (2.2% of GDP). It may soon cross even US's levels of $549 b. Annual growth rate of China's spend is 17%, compared to 4.3% of US's.
• What Xi says: As per President Xi Jinping, "technology is China's core combat capability". S&T is feeding China's growth, military, and geopolitics, making it more dangerous with each year. The year 2020 saw the worst military face of it.
• The world scene: Nations do recognise that the more one spends on technology, the more powerful one tends to be. The most powerful nations actually are huge S&T R&D spenders. India's spend has gone from 0.85% in 2011 to 0.62% in 2015, and no figures are available after this. So India is dependent on many imports in defence, ICT, aircraft etc. But imports never make a nation truly secure; local competencies do. Those are missing, and the desire to have them is missing too.
• India's industrial policy: There are many positive steps to speed up economic recovery. But the industrial policy lacks a strong R&D focus, which is the key to success. Good that India avoided joining the RCEP, as it got some extra time to gear up, but this time has to be used to build tech resilience via the right R&D focus. The US too has now a bipartisan agreement on more R&D, due to the visible China threat.
• What went wrong in India: Sadly, the civil and defence bureaucracies undermined many reforms. Imports were favoured instead of local competencies, foreign OEMs and Big-4 kept getting contracts, foreign firms got support under the USOF (universal service obligation fund), domestic high tech firms got second-grade treatment, PSUs became front for imports, etc.
• The poor Indian firms: Since most get no orders, they are leaving (have left) India and went abroad. High tech mfg. shrunk by 14% from 2011 to 2015. The call for Atmanirbharta is being violated.
• What should be done:

1. Govt's procurement reforms be implemented on ground, and domestic procurement will give at least a 25% boost to economy
2. Build transparent tender processes for focus areas, and make top R&D based companies eligible for priority procurement, tax incentives etc.
3. Get a NCFC model (no-cost-full-commitment) for select projects to give a lifeline to Indian firms that have high-tech IPR ownership
4. Give direct R&D grants to firms, like the Americans or Israelis do. Move beyond just academic institutions, and go for commercialisation
5. Give same incentives to private sector as are available to the DRDO and academic institutions

• Time for an Indian DARPA: The country needs an Indian version of US's Defence Advanced Research Projects Agency (DARPA) which does R&D for US military. Govt. must have a strategic partnership with local private firms. The complex and opaque DPP (Defence Procurement Policy) must be simplified. The import lobbies must be checked.
• The truth: Fact is that China has till date not really built a truly disruptive local technology. It's only the US that has done it, be it aircrafts, computers, semiconductors, Internet etc. Today, China is implementing its top-down "science state", parasitically using what was built in the US. It is focusing on applied /experimental research, and repurposing disruptive technologies built elsewhere. China acquired those via theft, forced tech transfers, and acquisitions.
• Short-cuts: Hence China quickly brought new technologies in 5G, ICT, robotics, EVs, high-speed rail, biotech markets etc. The bedrock is tech made elsewhere!
• India's right model: The US model of "networked science state" is good for India, which will entail reformed bureaucracy with a developmental mindset. It has to be led right from the top of the political hierarchy.

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