India’s market sees US-China tech rivalry


Geopolitical Notes From India

M D Nalapat

THE State of California in the United States is the single biggest reason why the country is the world’s leading economy. Its coastal allure and relatively mild climate, coupled with a liberal approach to life is very different from the fundamentalist and regressive mindsets found in States such as Mississippi or Alabama, both of which are economic backwaters. The more the freedom to think, the higher the prospect of development. In the 1998, the Atal Behari Vajpayee government brought in a political operator known mainly for his fund-raising skills,Pramod Mahajan, as the Minister for Information Technology (IT), a field in which India had been setting a scorching pace over the previous six years. It must be said that in his other assignment, that of Information & Broadcasting Minister, Mahajan was an outstanding success. He was accessible to journalists and – a rare quality among politicians – truthful to them, although usually off the record.
Once, when this columnist was in Atlanta, having just returned from the CNN studio after having given a sound byte on an incident involving an aircraft, the Minister tracked him down to his hotel and warmly congratulated him on the points made. Suffice it to say that Pramod Mahajan, despite his fund raising, was very popular with both the media as well as even those in opposition parties. However, in the field of IT, he introduced a law for the industry that over the years has been added on to in regressive and restrictive ways. As a consequence, the IT industry in India has seen far lower growth rates than would have been the case had the BJP-led government followed the example of its predecessors and left the Information Technology industry alone. Since then, successive governments have sought to impose government controls on the industry, for such is the best way to garner benefits for politicians and officials. During Mahajan’s time, a company favoured by him entered the IT field to great fanfare, assisted by the Minister in his usual energetic fashion.
Every morning, software programmers would arrive in the well-furnished offices of the company, clad in suit and tie. They would, of course, leave at the end of their shift, being replaced by the next shift, also smartly attired in suit and tie. In contrast, programmers in existing IT companies that were on their way to becoming world leaders, such as WIPRO and Infosys, would reach their offices in the most casual of attire, often following timings that were flexible. Needless to add, it was the latter group rather than those belonging to the company favoured by the IT minister that did well. The “smart dresser” corporate had to exit the IT business after making a very poor mark despite huge expenditure on buildings and furnishings. Creative thought cannot be locked up in a box, nor can it be generated merely through infusions of cash. A liberal atmosphere and flexibility in rules is essential for progress, something that the European Union “Eurocrats”, for example, just never understand.
Thanks to California and to a lesser extent Washington State (the home of Microsoft), the US is far and away the top Tech Power in the world. Within South Asia, companies such as Google, Amazon, Facebook and Twitter have what may be termed a monopoly position within the market. In India, for example, Google and Facebook take in more than 95% of the advertising revenue of the sectors in which they are operating. Should algorithms be altered, or other technologies get deployed, it would be possible for Google and Facebook to destroy the image and therefore the careers of almost any politician of consequence. This could take place through disseminating unflattering information about the target individual in a viral manner, including material that may be made up for the purpose of destroying reputations.
It is presumably the awesome power of social media and the technology behind it that made the Chinese Communist Party ensure that in the world’s second biggest economy, only home grown social media platforms would flourish. Today, while European tech enterprises are puny in comparison, only Chinese internet platforms have the ability to take on and possibly surpass their US competitors. Not being able to meet such competition through the market, US companies have found a helping hand in the US Government, which is not only walling off the US from Chinese tech competition but persuading other countries to do likewise. An example is the manner in which Huawei is being blocked from marketing its 5G products in a welter of countries, the latest being New Zealand.
The calculation is that if Huawei is unable to garner a sufficiently large market share, it would lack the resources to overtake its US and other competitors in a field that is crucial to the future. Whichever company has a dominant position in 5G in a country would have at its command information about users across several fields of activity. Security agencies in the two markets that are core to Huawei’s success in emerging as the market leader are being warned by the US and by French, British and other security services that the company’s 5G technology must not be allowed to enter a country. The consequence would be a lowering of competition and consequently higher costs and less service to the consumer, but such factors seem to be of no concern to those seeking to block Huawei 5G from entering South Asia, especially India, which comprises over 80% of the region’s market in such fields.
For Chinese tech companies, freedom to enter and compete in India would be key to developing skills and financial muscle to break into markets such as Africa and South America. Should Chinese tech companies achieve a leadership position over US and other competitors in India, that would be of immense value, especially to market leaders such as Huawei. As yet India has not joined the group of (mainly western) countries that have banned Huawei hi-tech products from entering their markets “on national security grounds”. The term “national security” is used by many policymakers for a variety of purposes, most of which have little to do with national security. It remains to be seen whether Prime Minister Narendra Modi and President Xi Jinping will reach an agreement during their Buenos Aires meeting to open the door for Huawei 5G to enter India. This would compete with other enterprises that are rolling out the same technology in the fast-expanding market in India.
Both China and India have a lot to gain from each other and much to lose if tensions between them increase. Much depends on Modi and Xi and on the trajectory followed by both sides up to the 2019 national elections. There is enough time for Modi to go ahead with policy breakthroughs both on the China as well as the US front, and it remains to be seen whether the Prime Minister delivers on the expectations of his admirers or undershoots his potential in the months that he has left before the polls.
—The writer is Vice-Chair, Manipal Advanced Research Group, UNESCO Peace Chair & Professor of Geopolitics, Manipal University, Haryana State, India.

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