The Hindu Business Line : Importance of investing in technology

The future of China and India is at risk because neither owns the technology it operates. Both countries will be in serious trouble any moment the US and Europe decide to turn off the technology tap. The short answer to this problem is that both countries should develop their own technology and must acquire so much intellectual property that the West will be as much dependent on us as we are on them, says P. V. Indiresan.

A professor at IIT Kharagpur demonstrating the use of virtual technology... The Government must promote talent as vigorously as the other countries — Parth Sanyal.

FRESH WINDS have started blowing. It is not quite as big as the Hindi-Chini Bhai-bhai storm that swept across our country some fifty years ago, but it smells better. The new dream is: Let China become the factory of the world, India the office of the world, and the two together conquer the world! This new slogan is an improvement on the old one; it is also plausible. However, one should not get carried away.

Undoubtedly, both, particularly China, are enjoying global success. Future prospects are even more alluring. At the same time, strictly speaking, neither country is in the driving seat; the success of either depends on the patronage of the West.

China has no doubt become a remarkable factory but it can manufacture only what the West has devised and is willing to outsource. India's situation is even less autonomous. What business the US and Europe have transferred today to India, they can shift tomorrow to Nigeria or Egypt or wherever. We are a dependent nation, not an economically independent one.

Manufacturing productivity is increasing so rapidly that the time will soon come when manufacturing employment may shrink to an insignificant figure the way it already has in agriculture. When that happens, Western countries may not consider it necessary to outsource their manufactures to China. China too is still in the woods.

It is yet possible that China will become the factory of the world, India the office and the two together conquer the world. It is also possible that the moment either tends to get too powerful, the West will cut off oxygen supply, and leave it breathless. Today's dreams can turn into tomorrow's nightmares.

The future of both China and India is at risk because neither owns the technology it operates; the Intellectual Property continues to remain in the West. Any moment, the US and Europe decide to turn off the technology tap, both countries will be in serious trouble. Hence, in the final analysis, both countries are still at the mercy of West. The short answer to this problem is that we should develop our own technology; we should acquire so much Intellectual Property that the West will be as much dependent on us as we are on them. That leads to the related question of national self-interest in a globalised economy.

That question was analysed in a very original manner by Robert B. Reich, Labour Secretary under the first Clinton administration in two articles entitled "Who Is Us?" and "Who Is Them?" (they are worth reading: Harvard Business Review, 1991)

Reich made a critical distinction between employees and owners.

According to him, the labour force is always `Us' but the owners may or, may not be even if they are citizens. He says: the Corporation is "profoundly less relevant to...economic future than the skills, the training and knowledge commanded by...workers".

He adds that control and ownership of corporations is not important. What is crucial is how much corporations invest in the future capability of the workers, and how far they employ local scientists, engineers and technicians in R&D. A corporation which invests in the training and upgrading of human capital is "Ours" even if it is owned by foreigners; a corporation which does not invest in human capital is not "Ours" even if owned by our own citizens.

So, Reich's emphasis is on human capital, as distinct from financial capital.

As he explains, international capital movements are far simpler and easier than international movements of human capital. For that reason, human capital is reliable; financial capital is ephemeral and untrustworthy. Hence, development based on human capital is dependable; that based on financial capital is undependable.

As he says: "... well-trained workers attract global corporations, which invest and give the workers good jobs; the good jobs, in turn, generate additional training and experience. As skills move upward and skill accumulates, a nation's citizens add more and more value to the world and command greater and greater compensation from the world, improving the country's standard of living... "

In the Hindu idiom, Reich says: Worship Saraswati, not Lakshmi! That leads to a complementary question to "Who is us?" What is "ours"? According to Reich, an Indian owned firm, even if it is a public sector undertaking is not one of `ours' if it is wedded to imported technology. Many public sector firms that have depended on imported know-how — the Indian Telephone Industries and the Hindustan Machine Tools, for instance — are now critically ill.

Neither firm invested in human capital; both remained, technologically, a colonial appendage rather than a truly national asset. That has happened not because qualified manpower was not locally available, but because such talents were not patronised nor encouraged.

The ITI remained an independent player with a life of its own so long as it backed the design team of C-DoT. Once, it gave up C-DoT, its life started ebbing away. Any firm, irrespective of ownership, which invests in R&D employing Indian scientists, engineers and technicians to develop world-class technology, is truly one of `ours'. All other firms, including those that are hundred per cent owned by the India government, are agents of foreign firms, not ours!

Addressing the National Manufacturing Competitiveness Council, the Prime Minister said that industrialisation is the driving force behind societal transformation everywhere and, that India, whose manufacturing sector has stagnated at around 17 per cent for nearly 15 years, has prematurely migrated to the service sector. In his view, the present growth is creating a rural-urban divide which is neither viable nor sustainable.

These are important words of caution: An economic divide by which the West produces Intellectual Property, China undertakes contract manufacture and India provides the back-up services, does not provide us enough bargaining power to make our growth sustainable. It will not let us pursue our national welfare; our future will be constrained by the self-interest of the nations that control technology.

As a matter of interest, the Chinese Prime Minister demonstrated his priorities by visiting Bangalore and the IIT Delhi before meeting our Prime Minister. It is equally interesting that no Indian minister visits the organisations the Chinese Prime Minister included in his busy schedule.

The Chinese Premier set apart considerable time to interact with IIT students. In all my years at the IIT, not one Indian minister ever did so. For our politicians and administrators, IITs are a file to be disposed of, for the best of them with sympathy and for the worst, with contempt. For none of them are they places of pilgrimage the way the Chinese Prime Minister considered them to be.

At the time the Chinese Prime Minister visited IIT Delhi, it was headless. The government knew that the previous director's term was coming to a close. It had decided months earlier not to extend his term. Yet, it took no steps to avoid a break.

Likewise, the All India Council of Technical Education has remained headless for months, and an IAS officer is running roughshod over its technical staff.

In recent weeks, 11 directors of National Institutes of Technology were dismissed by a stroke of the pen. Nobody in the government has ever been concerned about the harm such decapitation does to the health of the affected institutions.

In stark contrast, when I. G. Patel was made Director of the London School of Economics, his appointment was confirmed two years in advance. Developed countries take special care to plan well in advance the future leadership of institutions.

In India, IAS officials have been reduced de facto to daily wage labour to be shifted at will. In turn, the IAS itself treats positions of technical leadership in the same manner, not the way the British treated the Directorship of the LSE.

The world is all praise for India's technical manpower. Country after country is going out of its way to woo our engineers and scientists. Our government has no such interest. There is no move in India to exploit efficiently and effectively the technical manpower the country produces.

Private industries are no different. They patronise IIT graduates only after they have migrated to management, and not as engineers. They want IIT talent not to produce better technology but to produce better-looking balance-sheets. Neither the Indian government nor Indian industry is concerned why Indian engineers are technically as productive as they are abroad but not within India. It appears that the government is more interested in subjugating talent (including that in the IAS) than in courting it the way other countries are doing.

Reich said that a corporation which does not invest in human capital is not "ours" even if owned by our own citizens. What does that say of a government which has similar indifference to human capital? Of late we have started worshipping Lakshmi assiduously. In the process, we have consigned Saraswati to the dustbin. I fear for the future of our country which is treating teachers, scientists, engineers (and the IAS too) like domestic servants, with the latter, in turn, succumbing to the mother-in-law/daughter-in-law syndrome to subjugate younger talent.

(The author is a former Director of IIT Madras. Response may be sent to indresan@vsnl.com)

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