India can differentiate itself from its competition by offering a sovereign guarantee to moving supply chains through military commitments as far as India-centric backward and forward linkages are concerned

India’s inability to understand its own power resonates well with the age-old ‘elephant rope story’. The story is about the chance encounter between a person and a fully-grown elephant, restrained by a puny rope. The person is informed that though the rope appears inconsequential, for the elephant it is a formidable restraint. The reason why the elephant does not merely walk away, breaking the rope in the process, is because from a very early age the animal is conditioned to believe that it cannot break the very shackles that bind it.

India’s $10 billion subsidy plan (under a PLI scheme), unveiled on December 15 in a bid to attract semi-conductor supply chains away from China, reeks a similar level of a lack of conviction, and strategic intent. Instead of aggressively pursuing its goals, and officially announcing its intent to be a rival to China, India is competing with smaller nations on a purely commercial basis. This line of thinking can be disastrous, given the urgency of the matter, and the fact that the future belongs to those who control the semi-conductor supply chain.

The belief is that India is a large consumer market that offers unrivalled growth potential to investors, looking at sustained earnings over a long-term horizon. Therefore, in the wisdom of our policy makers, consumer base and economic potential are perhaps the only variables deemed important from a strategic viewpoint. Over the next few years, the expectation is that India will attract commitments worth a couple of billion, netting India some of the business, which is also pursued by rival ASEAN member states. From a tactical perspective, the plan appears to be inadequate.

Like the restrained elephant, India’s disregard for its own stature is astonishing, as it competes with comparably inconsequential military and economic nation states. As a country of nearly 1.4 billion people (compared to ASEAN’s 0.6 billion people), India’s economy is just a speck lower than the bloc’s combined nominal GDP. Nevertheless, India chooses to compete with these smaller nations at their terms, instead of dictating its own. Additionally, to India’s disadvantage, supply chain moves are expensive, and given our poor infrastructure, investment justification in the form of long drawn discounted cash flow statements is often rendered prohibitive.

The only way India can differentiate itself from its competition is by offering a sovereign guarantee to moving supply chains through military commitments as far as India-centric backward and forward linkages are concerned. Our policy makers must realise that at its command India possesses the world’s fourth-most powerful, nuclear-armed military force. With such capabilities, India must quit acting like a docile, vulnerable and ‘also-ran’ nation dependent on alms offered by the bigger powers. Instead, India must actively stake its claim on semi-conductor supply chains with full involvement of its civil-military complex, and offer semi-conductor majors and their respective governments a viable alternative.

As China-driven hostilities grow in the Taiwanese Strait, and the Strait of Malacca (primary nodes of the semiconductor supply chain), India must commit its significant naval assets to safeguard the interests of partners. This also includes the official backing of the Taiwan cause. This could mean the permanent positioning of a Carrier Battle Group (CBG) at INS Jarawa Joint Command Base, Andaman and Nicobar Islands. Along with the deployment of nuclear attack submarines (SSBNs), the presence of a CBG with its full complement, will make India the official gatekeeper to the Indian Ocean. The presence of such a fleet at the mouth of the Malacca Strait will also allow the Indian Navy quick deployments in the Sulu Sea, accessing the East China Sea swiftly. An opportunity towards this end will present itself in H2, 2022, with the commissioning of INS Vikrant, India’s second aircraft carrier.

Such a move will give confidence to semiconductor majors that their interests are secure, making India a dependable military, and economic partner. India must realise that if it is serious about its play on the global stage, it must not shy away from involving its military might. Given India’s ambition to be a global power, the days of passive military postures are over.

Of course, these military overtures will antagonise China, and may invite its support to its “all weather friend” Pakistan. As it is China, with its border incursions (such as in Arunachal Pradesh), military aggression (as seen at Galwan Valley), and economic pressure (China’s string of pearls), is not adopting a favourable approach towards India. Beijing’s policies are increasingly making it clear that peaceful co-existence is a luxury that’s no longer available.

It is time for India to act like a power and orient its industrial and high-tech economy to create military offensive capabilities at an accelerated rate. History shows that countries have attained economic supremacy with military backing. China understands and acts upon this thought; India must not waste its time contemplating.

https://www.moneycontrol.com/news/opinion/indias-multibillion-dollar-semiconductor-push-needs-military-backing-7892371.html/amp