by Y.S.Rajan Dr.Vikram Sarabhai Distinguished Professor, ISRO Headquarters

1. NATIONAL INTEREST (NI) AND TECHNOLOGIES STRATEGIC CHALLENGES AND TACTICAL ACTIONS FOR CRITICAL TECHNOLOGIES by Y.S.RajanDr.Vikram Sarabhai Distinguished Professor, ISRO Headquarters [ysrajan1944@gmail.com] (views personal) [website: www.ysrajan.com] Presentation in the Advanced Briefing Programme on Critical Strategic and Economic Themes of the Future at ICRIER, New Delhi16th November, 2010

2. PREAMBLE…….. • It is presumed that the earlier paper on technology for NIP has been studied by all. • It was mainly meant to be an ALERT CALL about the need to include TECHNOLOGY (CIVIL, MILITARY AND COMMERCIAL) as an important element in evolving and executing STRATEGIC PLANS AND TACTICAL ACTIONS FOR NI • The paper gave some information as to where India stands in various sectors / areas of technologies. Mostly as laggards and followers; very little in leadership roles. • This situation particularly calls for many tactical foreign policies and diplomatic actions to tide over crises / difficulties as well as to develop long term strengths.

3. PREAMBLE……. • Long term sustainable strategy on technologies (for India) is to develop core strengths in the firms, institutions and innovation ecosystem (includes govt. policies and procedures, financing etc.). This will require orchestration as well as sustained (about 15 to 20 years) actions on select civil, commercial, military and internal security areas. • Current situation is a heavy dependence on foreign sources, even for items of domestic consumption. • Case put forth here is NOT for total self – reliance and self – sufficiency (the slogans of the past!) • But interdependence requires some minimum strengths and capabilities to be a part of a CLUB; or to play on market forces; or to do geopolitics! • How to go from near total DEPENDENCE to respectable INTERDEPENDENCE, is the key issue.

4. SOME DOUBTS ? ? • There are govt. policy papers which state India is on way to become global super power in science. There are policy prescriptions which state that an expenditure of 2% of GDP on R & D will assure that. Premise is that lot of basic research lead to future technologies. • On the other hand many from Industry and economists would state that there is a global market in technology – any thing can be bought for a price. Even nuclear technologies are now available. Defence equipment can be bought, if surplus is created through economic growth. • For the position (2), the question is how long? (India is a small player now). • For the position (1) and (2) it is good to understand what is science, technology, engineering, etc.

5. SOME DOUBTS ? ? Continues……. • Extensive discussions on the interplay between trade, technology, foreign policies, and national growth etc as well as the distinctions between science and technology itself (embodied; codified; tacit; person – embodied etc) are given in my book: • EMPOWERING INDIANS - With Economic, Business and Technology Strengths for the Twenty-first Century.(See Google for availability) Also downloadable from www.ysrajan.com Article section. • There are also extensive quotes from scholarly and empirical studies. Now I quote some from Sir David Davies, Engineering as an Innovator of Change in Society and the Role of Engineering Academics, Address by Sir David Davies, CBE, FEng, FRS, Chief Adviser to the lylinistry of Defence, UK, and President, the Royal Academy of Engineering, at the Annual Function of the Indian National Academy of Engineering (INAE), New Delhi, December 3,1998.

6. WHAT IS SCIENCE ? “ Science is unquestionably a search for a better understanding of the laws of nature described in the broadest possible sense from astronomy to medicine and from engineering to genetics. Despite massive steps forward in each field, the understanding always remains incomplete….” - Sir David Davies (1998)

7. WHAT IS ENGINEERING (TECHNOLOGY) ? “Engineering on the other hand is about innovation, design and the construction of new products and new capabilities. We must take care not to define this solely in terms of physical products since engineering can also often offer new services often without the need for additional hardware………. However, whatever the form of the new innovation its design is inevitably a compromise between many different parameters. The success of the products is therefore bound up with the efficiency of the design process which has the role of matching the design to the requirements in as efficient a way as possible…” . - Sir David Davies (1998)

8. WHAT IS INNOVATION ? “In terms of an engineering product or service an innovation enables it to offer some new advantage in capability or performance (including cost) that there is a strong coupling between engineering and science but this does not necessarily mean that this engineering innovation derives directly from the latest improvements or understanding in scientific theories……..”. - Sir David Davies (1998)

9. WHAT IS INNOVATION ? Continues……. An example: “Perhaps the most obvious example here is the steam engine. That innovation arose from experimental observation but is was not based upon any current understanding a theory of heat at the time. Indeed the whole subject of thermodynamics was developed afterwards. It provided better understanding of the performance of heat engines and was further evolved in order to aid the design of improved equipment”. - Sir David Davies (1998)

10. OPERATIONAL DEFINITION OF TECHNOLOGY A comprehensive operational definition of what is technology in the business or national sense is given by Lewis M. Branscomb in his book Empowering Technology : implementing a U.S. Strategy/edited 1993, MIT Press.

11. THE TOTALITY MATTERS…………… “A technology is the aggregation of capabilities, facilities, skills, knowledge, and organization required to successfully create a useful service or product. Technology policy concerns the public means for nurturing those capabilities and optimizing their applications in the service of national goals and the public interest”. - Lewis Branscomb

12. Export and Import of India • Exports grew 17% during 2009, Imports grew at 29% (Huge Trade Deficit) • India’s Export/Import ratio is below 1 with most trading partners. (with USA 1.2, UAE 1, Singapore 1.1, Hong Kong 1.1, Brazil 2.2, UK 1 for 2008-2009 Overall 0.6)

13. Global Position of India in High Technology Trade • HTT = EU Definition : Aerospace, Computer – office M/c, Electronics – Commns., Pharma, Scientific Inst., Sel. Elec. M/c, Select Chem. Sel. Non-elec. M/c, Armaments • India’s HTT increased from US $ 1021M in 1995 to US $ 4463M in 2006. • During the same period Brazil’s HTT increased 8 times China’s HTT increased 25 times • Share of India’s HTT in India’s GNP 0.49% in 2006 lowest among a group of select countries. • Share of India’s HTT in The World increased from 0.14% to 0.23% in 2006.

14. Global Position of India in High Technology Trade Continues… • India’s import of HTT 1995 : US $ 2621 Million 2006 : US $ 23 Billion India’s Import of HTT in World Share : 1995 : 0.36% 2006 : 1.16% (Look at India’s Trade Deficit in HTT !) • In Computer trade (2006) Export US$ 275 Million Import US$ 3.760 Million Standshigh except for China for imports because of better IT penetration. • Pharma is the only sector where India has a marked presence among developing countries. India’s share of Exports : 5% Highest even of OECD countries except for China but difference slim.

15. Global Position of India in High Technology Trade Continues… • Export of Aerospace instruments (very low) $ 5 Million in 2006 • Import and Export of Scientific instruments by India very low • Global share of China (imports) 24% in 2006 China (exports) 3.5% in 1995 Global share of India : 2006 : 1.05% 1995 : 0.83% India export of Scientific Inst. US$ 563 million (2006) Israel export of Scientific Inst. US$ 2 Billion (2006) • Armaments India exports US$ 325 Million in 1995 US$ 4,363 Million in 2006 Global Share 0.5% • Commercial Services Export (incl. transportation & travel also) 0.64% (2006) of World Exports. Better than China, Korea, Israel and South Africa.

16. Global Position of India in High Technology Trade Continues… • Within Commercial Services Export, the share of computer, communication and other services is about 74% in 2006 • When we compare major exporters of computer & info. services in 2005 (15 major economies) EU : 60,000 Million 60% Extra EU < 10,000 Million > 20% India < 10,000 Million < 20% USA> 8000 Million < 10% • Followed by Israel, Canada, China, Japan, Australia, Malaysia, Russia (Source: All the above data and the following are on MSME derived from India Science & Technology 2008 – NISTADS, CSIR. Full report in www.nistads.res.in)

17. Global Position of India in High Technology Trade Continues… • In the overall India is a small player, performing better in Pharma – but in generic world class production (through obtaining embodied technologies from abroad)… • In Pharma our technology, R & D base is weak – no new molecules from national labs or industry – so our Pharma firms are being taken our by global firms with R & D (new technology) base (tacit knowledge) and IPR – WTO protected knowledge) • In other HTT our imports are more than exports, as we pay for embodied technologies, consultancies (tacit knowledge) and royalties. • Even ITES / BPO sector import / license component of value is very high. Hence per person value addition low compared to developed countries.

18. Important NI questions ? ? ? • Can this position be improved through continuing import of technologies? Through Indian firms purchase of technology firms abroad? • More importantly, when India’s share in global market goes up, will those countries which possess core technologies, sit quiet noting their core strengths being acquired by India (or China)? • Do we have any INTERDEPENDENCE LEVER (S) to loosen their blockages?

19. Some Questions Needing Answers in the NI context? • The overall use of high tech machinery in India has increased manifold during the past 7 years. However the Indian manufactures of machine tools have now a low percentage of share of sales. Most machines (about 70%) are imported. Also there does not seem to be any effort to revive India made medium – and high end machine tool industry. HMT is practically weak. Other few private sector players are struggling. No major R & D institution – in national lab or in industry – seem to be around. Nor any attempt at a consortium. Such a situation makes bulk of the profits of Indian firms going to the suppliers of know – how etc, eroding into Indian firms’ profit and competitive advantages. • If so what are the long term implications for the manufacturing sector in India, in terms of its competitiveness? Who are the primary sources of import? Can this mode sustain? • India’s import of electronics products (microchips to finished products) is very high. More than 40% of such imports are from PR China. What are the long term economic and / or other implications?

20. Some Questions Needing Answers in the NI context? Continues…… • While China is able to launch its own 3G system, in India almost all of the telecom revolution is based on import of all essential parts of the system. What are the economic and / or security implications? • Most of the designs, structures and even project management for the Common Wealth came from USA, and other countries. Are there any inherent weaknesses in our manufacturing, construction, and project management systems? • The expanding health care industry (bio medical equipment, various supporting systems etc) is almost fully import dependent. What is the extent of it? How much is the indigenous capability (I would even include those elements being manufactured in India with import of technology, as indigenous)? Is there any Indian (industrial oriented) R & D capability being but in India? • Our civilian aircraft industry is almost entirely import dependent. Any NI impact?

21. Some Questions Needing Answers in the NI context? Continues…… • Advanced sensors of various sorts – electro optical, bio sensors etc with variety of applications: environment monitoring, industrial application to civilian security surveillance etc, are totally absent in Indian manufacture. There was a major TIFAC Vision 2020 study – since then Sensors have advanced very much more. But even those capabilities referred to in the TIFAC are not there India. It is an areas worth looking at. • Energy sector is another import dependent area from coal, to petroleum to nuclear. With climate change hypes, it can become worse. Our giant energy industries require all critical technologies from foreign companies. So it is in the steel sector. • I can list more items. You may like to arrange for closer look at these from the NI view point.

22. COMMENTARIES ON THE QUESTIONS • One argument that will be made by the economists and the business persons will be that India is huge market and therefore all companies will vie with each other to sell to India. Hence no problems. We can continue to import. • Some business persons may also add that since technologies are changing fast, they can continue to import technology and know – how instead of going through the risky and uncertain route of building local / endogenous capabilities. Some of them would also add that they can acquire companies abroad with right kinds of technologies.

23. POSSIBLE POLICY RESPONSES • These are overreactions. As we grow at a double digit rate, all these issues will resolve themselves • Another response : So what? • Yet another : Let market forces and entrepreneurial spirit act. Things will find their own equilibrium. • More : We should have some form of national level apex mechanism for appraisal (and approval) of technologies used by Indian Industries so that in the long term we do not land up in a mess of foreign countries holding our economy to ransom. • More: We should also aim at total self – reliance in critical areas of technology. • More: We can do precious little because most of the Indian governmental interventions will be disallowed under WTO regulations. Equal treatment to foreign companies too!

24. OUR SUGGESTIONS FOR SUSTAINABLE NI • Premise: Without the possession of globally competitive innovative strengths in a few key technology areas, it is difficult to maintain a respectable position of bargain for interdependence (in civil, commercial or military sectors) • Goal: Such a respectable position has to be achieved in at least 50% of areas of NI (in civil, commercial and military sectors) and maintained subsequently. • The Process: In order to do so sustained efforts for 15 to 20 years are required, starting with many tactical acquisition of technologies or technology partnerships with the STRATEGIC directions described above in our minds and internal actions.

25. The Process and Role of MEA • Rationale: As can be seen in the earlier parts the presentation, India has to depend on other countries for obtaining various forms of technologies to keep its Agriculture, Manufacturing, Services, Internal Security and Military systems reasonable state – of – art and meeting the current challenges from other countries / actors. • Such a technology access may be in the forms of: • embodied technologies (equipment, machinery, system import) • acquisitions of firms abroad. (embodied, tacit and person – embodied technologies) • technology partnerships (as above) • purchase of IPRs (legal protection and some tacit knowledge) etc.

26. The Process and Role of MEA Continues…. • As Indian share in some areas grow up there will be attempts to place various forms of barriers and even barricades (ranging from IPR to regulations to MTCR). Resolution of the problems will require quiet diplomatic efforts combined with commercial leverages. These need to be done only for select NI types of areas (civil, commercial and military) • MEA role should be organically linked instead of last minute fire fighting (as is currently being done). • In addition to the above, strategically (long term) planned and orchestrated technology development plans have to be instituted for our firms, institutions and other agencies.

27. The Process and Role of MEA Continues…. • Such a strategic actions will require several related actions mentioned as in the tactical items mentioned earlier but also • Long term joint cooperative agreements not just at govt. labs but with foreign firms and Indian firms (individual and / or consortium type). • This requires considerable research of Technology Foresight, Business Intelligence and also about the geopolitics of various technology possessing countries (assessing their potential to partner with India, the quid pro quo they will expect etc.) • Of course Govt., Industries and S & T Policy systems need to restructured within India to be able to absorb all the above. I presume Govt. will be willing to take initiative for NI. • If done with a commitment for 15 – 20 years, then all the earlier steps to be taken require a strong MEA presence in an organic mode (not as cut – and – paste mode!) • That is all what we have to say for NI Project addressing technologies.

28. For the next 15 years Observe calmly; secure our position; cope with affairs calmly; hide our capabilities and bide our time; be good at maintaining a low profile; and never claim leadership. - Deng Xiaoping Taken from the Editorial column of the Business Line News paper published on 12th October, 2010

29. THANK YOU