For nearly two decades, Swaminomics has argued that India must stop treating the outside world as a threat – as in the old socialist days – and view it as an opportunity. Historically, India was and can once again become a great trading power.
So, I was gratified to find Rahul Gandhi taking this very line in the Parliamentary confidence motion. “Instead of worrying about how the world will impact us, we should start thinking about how we will impact the world.” India and China would become the world’s largest energy importers in coming years, he said, and big buyers could shape the whole global industry. “This should be treated as an opportunity, not a threat.”
This echo of Swaminomics made me feel good. Yet, Rahul’s vision was limited to the power emanating from India becoming a big buyer. He could not see that, once India’s nuclear isolation ends, it can also become a major exporter of nuclear equipment. Thus, it can impact the world as a seller, not just as a buyer.
This may seem a giant leap in imagination. Yet, we have already achieved this in several fields. When India started opening up in 1991, critics predicted that Indian companies would go bust or become subordinates of MNCs. Instead, Indian companies have become MNCs in their own right, acquiring foreign giants including Corus and Jaguar. We can do so in nuclear equipment too.
Indian technical competitiveness is very broad. Starting from obscurity, Bharat Forge is now World No 2 in auto forgings, Suzlon is World No 5 in windmills, Moser Baer is No 4 in compact discs and optical discs, and Essel Propack is global No 1 in laminated plastic tubes.
Microsoft, Intel and IBM are all using Indian engineers to improve their high-tech products. Top pharmaceutical MNCs are using India as an R&D base.
Carlos Ghosn of Renault-Nissan has decided to build a small car in collaboration with Bajaj Auto. Now, Bajaj is a two-wheeler producer that has never made a car. Yet, Ghosn has entrusted the R&D for the small car to Bajaj, believing that its engineering depth is so strong that it will do a better job than Renault-Nissan’s engineers.
Last month, I met officials of Areva, France’s huge nuclear equipment MNC. They said the global nuclear power industry grew very slowly for decades after the accidents at Three Mile Island and Chernobyl. But today’s high oil and gas prices had persuaded every country to once again build massive nuclear power stations. This huge demand for equipment could not be met by existing suppliers, so massive new capacities were needed. Part of this would have to be located in countries with low costs and high engineering skills – like China and India. Areva itself wants such facilities in India, once the nuclear deal goes through.
General Electric, Westinghouse and other equipment suppliers will also need new production hubs to meet the exploding world demand. They will find India a good production base, to meet both Indian and world demand.
China plans to expand nuclear power sixfold by 2020, and fourfold again by 2030 to 160 GW. It has given contracts to Westinghouse and Areva for six new nuclear power plants. These provide for transfer of technology to China, and indigenisation of production. This will enable Chinese companies to make the most modern nuclear power equipment themselves.
To begin with, these companies will manufacture for the domestic market. But they hope to emerge in due course as major exporters. India needs to take exactly the same route.
Indian machinery manufacturers already aim to become major players. L&T has long made nuclear reactors, and plans a new plant of Rs 1,800 crore for nuclear forgings. Anil Ambani is interested in entering this field, and he casts a long shadow. The Jindals and Bharat Forge are interested in making nuclear forgings – the world currently suffers from a severe shortage of forging capacity for nuclear reactors. Bharat Heavy Electricals has long made small reactors for our indigenous nuclear programme, and would like to scale up.
To begin with, these companies may have technical and equity tie-ups with MNCs. This will facilitate the first stage, involving transfer of know-how and indigenisation of components. But as they develop, Indian companies will improve on imported designs, and become world class themselves. They will then bid to supply not just India but the whole world, as they have done in so many other fields.
This will be more than an economic achievement. It will transform security and foreign policy issues. Today, Opposition MPs worry what will happen if future events oblige India to conduct Pokharan III (ie further nuclear tests), resulting in fresh sanctions. But if the world’s biggest multinationals are already producing equipment in India, how effective can external sanctions be? Indeed, once it becomes a major equipment exporter, India will be among those that take decisions on sanctions. It will no longer be at the receiving end of other people’s decisions; it will be one of the decision makers itself. Rahul Gandhi, please take note. This is how we will impact the world.