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On July 31, 2024
2 Sources
[1]
Money where our mouth is: Why India needs new public enterprises - now - The Economic Times
To maintain strategic autonomy in a geopolitically-riven world, India needs not just to spend more on defence but also to master assorted new technologies, ranging from quantum computing and nano technologies to advanced semiconductors, cybersecurity, space technology, and carbon capture and use. Such competence calls for visionary corporate leaders and a gargantuan appetite for risk-taking and innovation.When the scale of strategic challenges and techno-economic opportunities calls for a horde of corporate titans, we have just one - and that one makes ornaments and accessories. To occupy the commanding heights of innovation and strategic competence that the timid ambitions of India Inc have fled, India needs a new crop of public enterprises charged with producing the wherewithal of India's strategic autonomy and sustained economic dynamism. To get rich is glorious, declared Deng Xiaoping, marking complete rupture with the Maoist era of trying to leapfrog from primitive, farm-centred subsistence to socialist modernity, dispensing with the rigours of capitalist development and articulation of the economy. Deng elaborated on the thesis with his essentialist definition of the cat as something that catches mice, regardless of its colour. In the decades since, lots of Chinese have achieved glory. Indian businessmen pursue their dharma when they create wealth. They, too, have contributed their fair share to the world's growing billionaire numbers. But there is a difference between the wealth creation culture in the two countries. Some Chinese fat cats, at least, seem to look for their mice in the air. Because they see blue-sky opportunities, to which Indian businessmen putting their shoulder to the wheel seem totally oblivious. Huawei today not just produces phones and sophisticated gear for 5G networks, but also has designed and built advanced microchips with sub-7 nm circuits, thumbing their nose at US sanctions that bar the sale of advanced chips and chipmaking technology to Chinese producers. It has a hand in the quantum communications and computing pie. TikTok, the video-sharing platform built by ByteDance, is as successful as it is because of the advanced AI that guides its video recommendation algorithm. Chinese companies are at the cutting edge in RE, in battery technology, and in the chemicals and optical equipment that go into manufacturing microchips. A Chinese company has manufactured a mid-range passenger jet not made by the duopoly of Boeing and Airbus: the C919. Commercial Aircraft Corporation of China (Comac) built the plane with Russian design help, and Franco-American CFM engines. It carries around 200 passengers for flights of duration up to six hours. The ambition of Indian companies is best measured by their investment in R&D. Amazon, as an individual company, spends upwards of $80 bn on R&D. India, as an economy, spends about a quarter of that. Of that quarter, the bulk is spent by central and state governments, including via universities. Indian business accounts for 37% of India's R&D expenditure. India ranks 40th on the Global Innovation Index. In 2010, India spent 0.8% of GDP on R&D. Since then, the rhetoric on R&D has soared, anusandhan (research) has joined the ranks of jawan, kisan and vigyan as national heroes - but expenditure has declined to 0.65% of GDP. South Korea spends 4.9% of GDP on R&D. That proportion is 2.43% for China, 3.14% for Germany, 3.3% for Japan, and 3.46% for the US, according to the World Bank. According to the World Intellectual Property Organisation, the average share of R&D in net sales for the top three companies was 18.5% for the US, 14% for China, and 13.9% for Switzerland. Corporate diversification strategies reflect their scale of ambition. Birla is moving into jewellery marketing. JSW added paint to its portfolio, and is daring to dream higher, all the way up to airlines. Reliance's R&D expenditure struggles to match the reported spending on Ambani weddings. HDFC Bank struggles to keep its IT system robust enough to not be overwhelmed by customers' digital operations. Yes, the Tatas are spending a bit on R&D. Adani and Ambani have promised to produce green hydrogen at a price of $1 a kg, through scale economies, if not by innovation. This does mark signs of life. But not of the vigour India needs. At the time of Independence, India didn't have a private sector capable of producing steel, power, machine goods, power generation equipment, scientific research in nuclear and space technologies, and other bits of the industrial muscle the country needed to end poverty and ignorance and disease and inequality of opportunity among India's impoverished masses. The state set up enterprises to build the tissues and sinews the nation required for growth and redemption. Over time, the private sector acquired the capability to produce what the economy needed the state to provide. It became fashionable to condemn cornering of the commanding heights of the economy by the state. Tectonic plates have since shifted. Old peaks that had seemed tall now stand dwarfed byβββββnew challenging heights that have cropped up. India's private sector will continue to play with jewellery and software plugs. The economy and India's geopolitical challenges cannot wait for it to grow up. India needs new public enterprises - now.
[2]
Money where our mouth is: Why India needs new public enterprises - now
To occupy the commanding heights of innovation and strategic competence that the timid ambitions of India Inc have fled, India needs a new crop of public enterprises charged with producing the wherewithal of India's strategic autonomy and sustained economic dynamism.To maintain strategic autonomy in a geopolitically-riven world, India needs not just to spend more on defence but also to master assorted new technologies, ranging from quantum computing and nano technologies to advanced semiconductors, cybersecurity, space technology, and carbon capture and use. Such competence calls for visionary corporate leaders and a gargantuan appetite for risk-taking and innovation. When the scale of strategic challenges and techno-economic opportunities calls for a horde of corporate titans, we have just one - and that one makes ornaments and accessories. To occupy the commanding heights of innovation and strategic competence that the timid ambitions of India Inc have fled, India needs a new crop of public enterprises charged with producing the wherewithal of India's strategic autonomy and sustained economic dynamism. To get rich is glorious, declared Deng Xiaoping, marking complete rupture with the Maoist era of trying to leapfrog from primitive, farm-centred subsistence to socialist modernity, dispensing with the rigours of capitalist development and articulation of the economy. Deng elaborated on the thesis with his essentialist definition of the cat as something that catches mice, regardless of its colour. In the decades since, lots of Chinese have achieved glory. Indian businessmen pursue their dharma when they create wealth. They, too, have contributed their fair share to the world's growing billionaire numbers. But there is a difference between the wealth creation culture in the two countries. Some Chinese fat cats, at least, seem to look for their mice in the air. Because they see blue-sky opportunities, to which Indian businessmen putting their shoulder to the wheel seem totally oblivious. Huawei today not just produces phones and sophisticated gear for 5G networks, but also has designed and built advanced microchips with sub-7 nm circuits, thumbing their nose at US sanctions that bar the sale of advanced chips and chipmaking technology to Chinese producers. It has a hand in the quantum communications and computing pie. TikTok, the video-sharing platform built by ByteDance, is as successful as it is because of the advanced AI that guides its video recommendation algorithm. Chinese companies are at the cutting edge in RE, in battery technology, and in the chemicals and optical equipment that go into manufacturing microchips. A Chinese company has manufactured a mid-range passenger jet not made by the duopoly of Boeing and Airbus: the C919. Commercial Aircraft Corporation of China (Comac) built the plane with Russian design help, and Franco-American CFM engines. It carries around 200 passengers for flights of duration up to six hours. The ambition of Indian companies is best measured by their investment in R&D. Amazon, as an individual company, spends upwards of $80 bn on R&D. India, as an economy, spends about a quarter of that. Of that quarter, the bulk is spent by central and state governments, including via universities. Indian business accounts for 37% of India's R&D expenditure. India ranks 40th on the Global Innovation Index. In 2010, India spent 0.8% of GDP on R&D. Since then, the rhetoric on R&D has soared, anusandhan (research) has joined the ranks of jawan, kisan and vigyan as national heroes - but expenditure has declined to 0.65% of GDP. South Korea spends 4.9% of GDP on R&D. That proportion is 2.43% for China, 3.14% for Germany, 3.3% for Japan, and 3.46% for the US, according to the World Bank. According to the World Intellectual Property Organisation, the average share of R&D in net sales for the top three companies was 18.5% for the US, 14% for China, and 13.9% for Switzerland. Corporate diversification strategies reflect their scale of ambition. Birla is moving into jewellery marketing. JSW added paint to its portfolio, and is daring to dream higher, all the way up to airlines. Reliance's R&D expenditure struggles to match the reported spending on Ambani weddings. HDFC Bank struggles to keep its IT system robust enough to not be overwhelmed by customers' digital operations. Yes, the Tatas are spending a bit on R&D. Adani and Ambani have promised to produce green hydrogen at a price of $1 a kg, through scale economies, if not by innovation. This does mark signs of life. But not of the vigour India needs. At the time of Independence, India didn't have a private sector capable of producing steel, power, machine goods, power generation equipment, scientific research in nuclear and space technologies, and other bits of the industrial muscle the country needed to end poverty and ignorance and disease and inequality of opportunity among India's impoverished masses. The state set up enterprises to build the tissues and sinews the nation required for growth and redemption. Over time, the private sector acquired the capability to produce what the economy needed the state to provide. It became fashionable to condemn cornering of the commanding heights of the economy by the state. Tectonic plates have since shifted. Old peaks that had seemed tall now stand dwarfed byβββββnew challenging heights that have cropped up. India's private sector will continue to play with jewellery and software plugs. The economy and India's geopolitical challenges cannot wait for it to grow up. India needs new public enterprises - now.
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India's economic landscape is evolving, with a growing emphasis on the role of public enterprises. This article explores the rationale behind creating new public sector units (PSUs) and their potential impact on the country's economic growth and development.
In a surprising turn of events, India is considering the creation of new public sector units (PSUs) to bolster its economic growth and development. This move comes at a time when many countries are privatizing state-owned enterprises, making India's approach particularly noteworthy 1.
India's public sector has played a crucial role in the country's industrialization since independence. However, in recent decades, there has been a shift towards privatization and disinvestment. Despite this trend, the government is now reconsidering the role of PSUs in driving economic growth 2.
The rationale behind creating new PSUs lies in their potential to serve strategic sectors and national interests. These enterprises could focus on areas such as defense, space technology, and critical infrastructure, where private sector participation might be limited or where government control is deemed necessary for security reasons [1].
New public enterprises are expected to generate employment opportunities and contribute to economic growth. By investing in sectors with high growth potential, these PSUs could create a multiplier effect, stimulating related industries and fostering innovation [2].
One of the key arguments for new PSUs is their ability to address market failures. In sectors where private companies may be hesitant to invest due to high risks or long gestation periods, government-backed enterprises can step in to fill the gap and ensure critical services are provided [1].
Critics argue that PSUs often struggle with efficiency and profitability. However, proponents suggest that a new generation of public enterprises could be designed with better governance structures and clear mandates to balance commercial viability with social objectives [2].
In an increasingly competitive global economy, new PSUs could play a role in enhancing India's position in strategic sectors. By focusing on research and development, these enterprises could help India move up the value chain in manufacturing and technology [1].
While the idea of new PSUs presents opportunities, it also comes with challenges. Ensuring transparency, accountability, and efficient management will be crucial for their success. The government will need to carefully consider the sectors in which to create these enterprises and design appropriate governance mechanisms [2].
As India contemplates this economic strategy, the debate continues on the optimal balance between public and private sector participation in the economy. The success of this initiative will largely depend on implementation and the ability to learn from past experiences with public sector enterprises.
Reference
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[2]
India's ambitious plans for becoming a developed nation by 2047, focusing on AI, skill development, and technological growth. The country aims to leverage its demographic dividend and address challenges in the rapidly evolving global landscape.
2 Sources
India's efforts to boost its manufacturing sector and compete with China's industrial prowess are encountering significant hurdles. Despite government initiatives, the country struggles to match China's scale and efficiency in production.
3 Sources
India's potential in the semiconductor design industry is gaining attention. Experts suggest focusing on design capabilities and creating a national brand to establish a strong presence in the global market.
2 Sources
India is making significant strides in the semiconductor industry, aiming to become a major player in the global market. The country's strategic initiatives and partnerships are positioning it to compete with established semiconductor giants.
3 Sources
India's startup ecosystem is facing challenges due to a lack of domestic funding. This article explores the reasons behind this issue and its potential impact on the country's entrepreneurial landscape.
2 Sources