Rajan’s Argument
Raghuram Rajan claims semiconductors are easy to smuggle, citing China and Russia’s backdoor chip imports.
He suggests India could rely on its diaspora (35M abroad) to procure chips if global supply is denied.
He argues fabs are dependent on foreign machines and silicon, so India should reserve “strategic” focus for munitions.
Where He Is Right
Manufacturing jobs in India have stagnated.
Indian firms often seek protection instead of innovation.
India missed the battery and EV transitions due to low R&D spending.
Education is underfunded; IITs left to self-finance while mediocre colleges proliferate.
Universities should be the industrial policy of the future.
Where His Claim Fails
Smuggling is not reliable:
Jan 2025: US capped India’s advanced GPU purchases (~50,000 units). No diaspora workaround.
Apr 2025: China restricted rare-earth magnet exports, requiring embassy countersignatures. Indian auto industry nearly stalled.
Large-scale industries (AI, EVs) cannot depend on suitcase smuggling.
Chips = Munitions
Modern munitions rely on semiconductors (missile seekers, drone controllers).
Ukraine war shows chip supply = military capability.
India has faced technology denial before (Cray supercomputer in 1987, cryogenic engines in 1992) but eventually built its own.
Lesson: start building before denial, not after.
Economic Logic
Value lies in technology ownership:
Apple keeps $450 per iPhone for design/brand.
Taiwan earns $150 for chips.
India/China earn ~$30 for assembly.
India risks repeating pharma’s mistake: world’s pharmacy but dependent on China for 70% of APIs.
The Case for Starting Now
Rajan dismisses assembly → manufacturing as too slow (5–15 years).
But Korea (Samsung, 1983) and Taiwan (TSMC, 1987) built industries with decades of state backing.
Today, US ($52.7B), EU (€43B), China ($47.5B) all fund chip industries. India’s 2021 commitment (₹76,000 crore) is modest in comparison.
Delay means falling a decade behind.
Automation Argument
Rajan: automation reduces factory jobs.
Counterpoint: if machines do the work, profits go to machine-makers (motors, magnets, chips).
Fewer jobs ≠ less need for fabs; it strengthens the case for owning technology.
Chips vs Classrooms
Rajan frames it as a choice.
Reality: India spends ₹1.39 lakh crore annually on education vs ₹76,000 crore on chips spread over years.
Both are affordable; money is not the obstacle. Governance and vision are.
Conclusion
Rajan is right about India’s weak innovation culture and education gaps.
But his reliance on smuggling and diaspora supply is unrealistic.
Chips are as strategic as munitions; without them, India risks dependence.
Building fabs is slow, but that is the reason to start now, not to delay.
👉 The real danger is treating smuggling as policy. Industrial sovereignty requires R&D, state backing, and long-term investment in both chips and classrooms
No comments:
Post a Comment