India’s political-bureaucratic failure to unleash economic reforms with sustained momentum is the single-biggest differentiator with China and other successful Asian economies. This is the reason why India has been missing out on her DeepSeek moments over and over again.
Yet again, a Chinese product is making global headlines with devastating impact. This time it is DeepSeek, the Chinese AI model launched by a startup, which experts say is far more advanced and far more cheaper than its western counterparts such as ChatGPT.
Developed by the Chinese in the face of technology denial by theUS, DeepSeek deployed an innovative, Open Source architecture to develop its AI model at a fraction of the amount spent by world leaders such as Nvidia. DeepSeek’s innovation has had a crushing impact on Wall Street with the leading AI chipmaker Nvidia taking a massive $593 billion hit on its market cap.
DeepSeek is the latest success story from China— a superpower with an impressive economic might. In a 2023 paper (China’s Emergence as a Superpower: A Graphic Comparison of the United States, Russia, China and Other Major Powers), the leading American think tank Centre for Strategic and International Studies (CSIS) said China was lot more than the world’s dominant manufacturer. It was emerging as the largest spender on global research and development and the first or second rank holder in the highest national effort in high-impact research in defence, space, robotics and transportation technologies including Drones, Swarming and Collaborative Robots and advanced robotics. China had also undertaken heavy military spending in 2023 leading to massive force modernization, even as there was a sharp rise in Chinese nuclear capability, CSIS said.
One after the other, good quality, innovative and affordable Chinese products have captured the world markets, the latest being the electric vehicle BYD which is world class. Other Chinese brands in the retail, consumer durable and other segments which have made a mark globally include Alibaba, Tencent, Lenovo, Xiaomi, Haier, OnePlus, Vivo, OPPO, Baidu, TCL, TikTok and Taobao.
China, Japan, South Korea and Taiwan are among the Asian countries with a number of world class products and brands. Isolated examples from India include those of Bajaj Auto and Hero Motorcycles- world leaders in certain segments of the two wheeler industry. Even in the case of Serum Institute of India —the world’s largest vaccine manufacturer— the Covishield vaccine was developed by Oxford–AstraZeneca in the UK and manufactured in billion-plus doses by Serum Institute in India in the global war against the pandemic.
Param Supercomputer: India’s DeepSeek moment
When India developed her first low-cost supercomputer, the Param 8000 in 1991 in the face of technology denial by the United States, it was nothing short of India’s DeepSeek moment.
In 1988, Prime Minister Rajiv Gandhi during his visit to the United States had requested for a Cray X-MP Supercomputer for advanced weather forecasting. The request was, however, turned down by the US out of fear that it would be used for India’s nuclear weapons program. At the request of the prime minister, the challenge of developing an Indian supercomputer was taken up bravely by Dr Vijay Bhatkar, a hardworking out-of-box thinker and electrical engineer. He succeeded in developing the supercomputer in 1991 through innovative and indigenous parallel processing technology at sharply reduced costs as compared to the imported version.
While that supercomputer did not represent a paradigm shift as is the case with DeepSeek, it was nevertheless a breakthrough moment for India. While India lost her momentum in building faster, bigger and better supercomputers it has regained this mission. As of November 2024, the AIRAWAT was listed as the fastest Indian supercomputer and ranked 136th in the TOP500 Supercomputers list headed by the American, El Captain.
India’s nuclear program under the Atomic Energy Commission and the space program under the Indian Space Research Organisation (ISRO) are nothing short of successes in the face of technology denial. The space program in particular has been developed at a fraction of the cost of the West and ISRO has emerged as a cheaper and a reliable agency to launch and deploy satellites of other nations.
Indian innovations and enterprise in the cooperative dairy industry helped achieve the White Revolution with the inspiring leadership of the Gujarat Cooperative Milk Marketing Federation’s iconic brand, Amul. Like Amul, India has a few other inspiring Bottom of the Pyramid success stories in healthcare, telecom and higher education. However, to what extent has India been able to replicate these successes in the poor nations of Africa, Latin America, Asia and even the South Asian neighbourhood as a part of soft power diplomacy?
Why did India Miss Out on the Asian Growth Story?
Most Asian nations such as China, India, Japan, South Korea, Taiwan faced somewhat similar struggles in the 1940s and the 1950s when they emerged out of colonial shadows (China and India); civil strife in India and China leading to the creation of Pakistan and Taiwan; the post World War II reconstruction in Japan and the post-1950 Korean war which split the nation into the Communist North and Democratic South.
Communist China blundered in the initial years with Mao’s Cultural Revolution and the Socialist model under the influence of the Soviet Union, but did a major course correction with the post-1978 economic and political reforms initiated by Deng Xiaoping, the Architect of Modern China.
Single-minded focus on economic growth is what helped the emergence of Japan, South Korea, Taiwan and the Asian Tigers and the creation of competitive global brands such as Toyota, Honda, Sony, Mitsubishi, Nippon; Samsung, Hyundai, Kia, LG and others.
The single biggest differentiator between India and China is the failure of the political leadership in India to focus single-mindedly on economic growth as was done by Deng from the 1980s onwards.
The ‘LicenseRaj- stifling Government control on Indian industry, innovation and R&D establishments from 1950s which peaked under Indira Gandhi’s regime in the 1970s and continued through the 1980s resulted in a bureaucratic stranglehold which continues till today. Under Prime Minister Narendra Modi, India’s Ease of Doing Business ranking as computed among 190 nations by the World Bank, improved from 142 in 2014 to 63 today. This compares to China’s 31, US (6), UK (9), UAE (16) and Singapore (2).
Is the better ranking abroad among the reasons why many wealthy Indians— evidently, mostly Hindus— are emigrating to New Zealand (Ease of Doing Business ranking No.1), Australia and other successful nations as highlighted by Dr. Sanjaya Baru in his book, ‘India’s Power Elite-Caste, Class and a Cultural Revolution’?
Although the 1991 economic liberalisation initiated by Prime Minister PV Narasimha Rao and continued by Prime Minister Manmohan Singh helped enormously, India continues to lose economic momentum from time to time due to political and communal distractions, disturbances and upheavals such as the Babri Masjid demolition (1992), Mumbai bomb blasts (1993), Godhra riots (2002), and today’s Hindutva agenda.
Classic Example of India’s Brain Drain
A classic example of how Indian bureaucratic control stifled innovation and enterprise is that of the eminent scientist, Stanford University’s Emeritus Professor Aryogyaswami Paulraj. A brilliant electrical engineer with the Indian Navy, he indigenously developed the Advanced Panoramic Sonar Hull Mounted (APSOH) technology for the Navy which was taken up for production. The inspiration for this project came from the sinking of the naval Frigate INS Khukri by a Pakistani torpedo. This happened due to the absence of advanced sonar technology to detect the Pakistani submarine which fired the torpedo off the coast of Diu in Gujarat.
After the success of the APSOH project, Dr Paulraj went on a two year sabbatical to Stanford where he developed pioneering expertise in 4G and 5G technologies for which he received the highest award in telecommunications, The Alexander Graham Bell Medal in 2011. His other distinctions included two distinguished service awards, the Ati Vishisht Seva Medal (AVSM) and the Vishisht Seva Medal(VSM), and the Padma Bhushan.
After returning from Stanford, Commander Paulraj founded three labs in India—the Centre for Artificial Intelligence and Robotics (CAIR), Central Research Lab (CRL) for Bharat Electronics and co-founded C-DAC (Centre for Development of Advanced Computing). He was also attached to the Light Combat Project of the Indian Air Force which he quit over differences with the Defence Research and Development Organisation (DRDO). As noted by Maj Gen Nitin Gadkari (Retd) in his paper for Pune International Centre, ‘Outstanding Indian Achievers and Their Quest for Atmanirbhar Bharat’: “In 1991 he returned to Stanford due to excessive bureaucratic tussle that his presence created in government organisations. His move back to Stanford, this time for good, was a significant loss to India’s scientific community. The then CNS (Chief of Naval Staff) Admiral Tahiliani commented: ‘The circumstances that led to his move explain why India has so few Nobel Laureates.’”
Stating that Dr Paulraj “left the Navy and finally left the country,” Gen. Gadkari has noted in his paper that restrictive government policies are a deterrent for innovation as happened in the case of Dr Paulraj.
Failure of Indian IT Industry
While India’s IT industry has contributed enormously to employment generation and wealth creation, logging IT exports of $205.2 billion in 2023-24 (up from 200.6 billion in the previous fiscal), the industry is essentially services-based and has failed to develop products as done by global giants such as Apple, Microsoft, Dell, Intel, IBM and Accenture among other world leaders. In fact, it is immigrant Indian professionals by the thousands who have been part of the brain drain, and who have contributed significantly to many of their innovations, successes and growth.
While the best of Indian IT talent flocks to the US and other Western nations to join the world leaders, Indian IT multinationals such as TCS, Infosys, Wipro and others have been accused of being happy in their comfort zone of providing cheap labour to Western markets.
PM Modi Must Focus Single-mindedly on Development and Economic Growth
In 2014 the then Gujarat Chief Minister Narendra Modi was elected Prime Minister of India because he had promised development for the nation on the lines of the Gujarat model. Modi has been credited with speed and efficiency in decision-making and working closely with the bureaucracy. He was known for quick decisions and approvals, single window clearances and breaking the bureaucratic red tapeism.
One of his legends is the way in which, as the Gujarat CM, he sent an SMS saying ‘welcome’ to the Indian industrialist Ratan Tata when he announced the exit of his Nano car project from West Bengal due to fierce opposition from the Trinamool Congress Party leader, Mamata Banerjee. It was on the strength of that SMS and quick discussions that the Rs. 1,500 crore Nano project was re-located from West Bengal to Gujarat.
Make in India: In September 2014, Prime Minister Modi launched the ‘Make in India’ initiative to promote India as a global manufacturing hub. While mega announcements such as Micron Technology’s investments for a semiconductor plant in Gujarat happen from time to time, a closer look at the big picture merits attention.
An October 2023 paper published by the Carnegie Endowment for International Peace (‘Is the Make in India Initiative Working? Suyash Rai and Anirudh Burman) noted that the share of manufacturing in Gross Value Added (GVA) 2022-23 for a 20 year period; data on investments in the manufacturing sector; employment generation in manufacturing and exports of manufactured goods for a 20 year period have shown no appreciable improvement.
The Modi Government has now outlined its ‘Amrit Kaal’ vision for the next two decades leading up to the 2047 centenary of Indian independence. As articulated by theUnion Finance Minister Nirmala Sitaraman in her 2023 Budget speech, Amrit Kaal is a vision for India’s inclusive growth and development and “includes a technology-driven and knowledge-based economy, with strong public finances and a robust financial sector.”
This vision will not be realized unless it translates into aggressive policies for innovation-led product development and a single-minded focus on unleashing economic reforms and growth.
For this to happen the Modi Government, BJP and the RSS will have to keep its Nehru-bashing agenda and the targeting of Muslims aside, and focus exclusively on the economic agenda.
The writer is a former Washington Correspondent of The Times of India and a public policy scholar. He may be reached at abhayvaidya02@gmail.com and @abhay_vaidya (X)
(Readers are welcome to treat this as an ‘open source’ essay. I’ll be happy to incorporate insightful comments and observations from readers in version 2.0.)
