Time for India to leverage global anti-China sentiment towards strategic autonomy

Source : Firstpost

India has the ability to put a full stop to China's global dominance (Image Credit : The Quint)

Three headlines grabbed my attention. The Times of India stated: “Semiconductor shortage: Cabinet approves ₹76,000 crore incentive plan to woo manufacturers”. South China Morning Post stated: “Is India the new China for start-up investors?”. Bloomberg Quint headline read: “India’s Next Software Boom: A New Tryst With Destiny”.

While each headline tells you its story, when they are put together a larger picture looms in the air. We need to thank China and Xi Jinping who have given us a golden opportunity to attain a degree of strategic autonomy which I never thought would come our way so fast and with such great form and clarity. For better understanding, let me summarise what each report says and then I will analyse them.

The Times of India Reporting (News Link : Click Here)

The Times of India explains that the Cabinet has approved a ₹76,000 crore plan to create a semiconductor manufacturing base in India. It is incentivised through the production linked incentive (PLI) scheme to establish a complete ecosystem for semiconductors in the country. It includes design, fabrication, packaging and testing. Twenty semiconductor units are to be established over the next two years through joint ventures. The plan is the product of a yearlong preparation and effort by the government. Presumably, some Taiwanese or South Korean entities will set up shop here.

Why is the government going in for this? Simple. India imports semiconductors whose current value is $24 billion. This will increase fourfold to $100 billion by 2025. In any case, even currently, there is a dire shortage of semiconductors resulting in massive production delays across all industries. We cannot get out of this mess unless we are self-sufficient. Currently, most of the semiconductors come from Taiwan, China or South Korea. The high-end ones are from Taiwan. If China annexes Taiwan by force or otherwise in the near future, it will have India and the world by its short hair. See it from any angle — Indian, Taiwanese or international — this move makes immense sense.

South China Morning Post (SCMP) reporting on Indian startup revolution (News Link : Click here)

The South China Morning Post report reveals critical issues. First, Xi Jinping’s common prosperity-driven corporate crackdown is turning people away from China. In my opinion, this is going to be force multiplied by the extensive lockdowns, travel bans and factory shutdowns which are getting to be more frequent due to the Chinese ‘zero Covid’ policy. Omicron is going to only complicate the issue. Both these factors have a long-term impact. People want an alternative to China. In scale and potential, the alternative is only India.

Second, investors and venture capitalists have started hedging bets. Start-up unicorns (valued at over $1 billion) are blooming in India at approximately four per month in 2021 as against seven in 2020 and six in 2019. The number of start-up unicorns in India is next only to the US and China. Third, there is surplus investable cash due to Covid-related economic stimuli worldwide.

Bloomberg Reporting on India's Software Boom (News Link : Click Here)

Fourth, India represents a huge under-tapped market. The potential for the digital economy to grow is huge in retail, food, education, pharmacy and other service sectors. The concentration at present is really in these sectors. Fifth, the government has already dampened Chinese investment as a safety net. Hence most investment is out of China’s manipulative control. Sixth, the IPO market is booming. Indian companies have already raised a record $15 billion in 2021.