SOURCE / ECONOMY
Devt of India’s high-tech sector needs to embrace Asian industrial chain cooperation
Published: Jan 05, 2025 11:16 PM
Illustration: Liu Xidan/GT

Illustration: Liu Xidan/GT

US National Security Advisor Jake Sullivan is visiting New Delhi, India, on Sunday and Monday, as announced in a White House release on Saturday. During his visit, the US official is expected to review the India-US Initiative on Critical and Emerging Technologies (iCET), Press Trust of India (PTI) reported.

The iCET, announced by the two countries in May 2022 and launched in January 2023, is an initiative intended to "deepen connectivity across the innovation ecosystems" of both nations. It focuses on emerging technologies such as artificial intelligence (AI), semiconductors, biotech and defense innovation, according to PTI.

Sullivan's visit to New Delhi to review the iCET has once again drawn attention to India's ambitions to enhance its high-tech sector. While the iCET presents opportunities, it also highlights some of the challenges facing India's manufacturing sector and high-tech ambitions.

India indeed needs to develop in high-tech fields, which can be driven by participating in global technological innovation cooperation. However, India's basic manufacturing industry still needs improvement to support its high-tech sectors. Products in high-tech fields still require processing through basic manufacturing. 

Leapfrog development is not feasible for India or any other country. The advancement of India's high-tech innovation industries can thrive only when they are supported by strong basic industries. If cooperation with the US cannot address the gaps in India's basic industries and manufacturing sector, and instead focuses solely on high-end technology development, it would amount to a "pie-in-the-sky" approach. 

Currently, India's capabilities in high-tech manufacturing are relatively underdeveloped, which pose barriers to its aspirations of becoming a global technology leader. To boost development of the high and new technology sectors, India needs to strengthen its foundational industries first. To enhance its basic manufacturing sector, it is beneficial for India to effectively engage in the existing Asian industrial and supply chain cooperation.

For instance, India now has to import a large amount of equipment from China even for textile production and processing. The import ratio of critical machine tool components in India is as high as 60 percent. This substantial gap indicates India's need to actively explore partnerships within the Asian industrial chain to develop its basic sectors. 

Under the promotion of free trade frameworks such as the Regional Comprehensive Economic Partnership (RCEP), cooperation in Asia's industrial chain has yielded results after years of integration. Various economies have fully leveraged their comparative advantages, achieving effective collaboration and integration.

India could also actively explore partnerships within the Asian industrial chain. While some Asian countries have established themselves as leaders in high-tech manufacturing, others are developing into manufacturing powers and can provide essential support.

In the field of basic manufacturing, enhancing cooperation with the Asian industrial chain will solidify the foundation for manufacturing development in India, allowing for a gradual upgrade to high-end manufacturing, which will be more beneficial for the growth of India's manufacturing industry.

China, as a core player in the Asian industrial chain, offers essential products and resources that India can tap into. India's current manufacturing sector is heavily reliant on imports, particularly intermediate products from China. The rapidly developing mobile phone manufacturing industry in India cannot avoid importing electronic components from China. Chinese imports into India rose almost 11 percent to $46.6 billion during April to August, largely pushed by computers, telecom equipment, and components. Electronics, machinery and organic chemicals account for two-thirds of India's imports from China, Times of India reported in October.

From the perspective of global industrial and value chains, India is not in the same segments as China. As India is seeking to boost its manufacturing and high-tech sector, such a difference is poised to bring significant development opportunities for both nations. 

If India remains reluctant to participate in industrial cooperation with the existing Asian industrial chain, for instance to participate in the RCEP cooperation, but chooses to deepen so-called connectivity across the innovation ecosystems with the US, it may face challenges in achieving its goals.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn