BY INVITATION
RAVI VENKATESAN
Ram Vilas Mahato and Kapil Prasad, master-weavers from Bihar, are among the last living exponents of their craft. They are also the faintest echoes of the Big Bang of the first industrial revolution. In 1750 AD, India’s share of global industrial output was 25%; by 1900, this had declined to 2%.The main reason was that India missed out on the industrial revolution. This revolution saw the invention of the steam engine and powered looms which made handlooms uncompetitive. The British East India Company forcefully colonised India and converted Indian weavers from producers of the world’s most exquisite and prized handloom fabrics to exporters of commodity cotton and consumers of mill cloth from Manchester. India’s handloom industry was decimated; India deindustrialised and fell into abject poverty from which it is struggling to emerge. Today a few people are racing against time to revive the few remaining traditions using modern methods and designs, thereby creating employment for a new generation of weavers. The lucky ones will make $3-4 a day.
What does this have to do with Amazon, Google, Facebook, Uber or other tech companies? All these companies use technology and new business models to re-architect industry after industry, leaving a swathe of destruction in their wake. The new business models delight consumers, create eye-popping wealth for their shareholders and employees but often impose huge costs on society such as invasion of privacy, destruction of trust, net loss of middle-income jobs.
This has remarkable parallels with the industrial revolution that created wealthy citizens in Britain and western Europe while leaving hundreds of millions of people impoverished in China and India. The British East India Company was the first example of a successful global monopoly that massively extracted and redistributed wealth. The danger today is that we stand at the cusp of a new era of exploitation, this time not by other countries but companies; we should all be grateful to Facebook for alerting us to this threat. We must be careful before mindlessly celebrating disruptive innovation.
The response isn’t to become Luddites or protectionist and vainly attempt to stall technology-driven innovation. India desperately needs the productivity revolution of new technology. We also need foreign capital, technology and skills.
However we must have a thoughtful technology policy and regulation that encourages innovation but safeguards the interests of our society and citizens and ensures that India doesn’t become a digital colony of US or Chinese firms.
There are two imperatives. First, India must have a strategy to moderate the behaviour of foreign companies so that the relationship is genuinely symbiotic, not exploitative. This is particularly important in the case of platform companies like Google and Amazon that are near monopolies; their behaviour must the closely monitored and occasionally regulated to ensure that they are “good for India and Indians”.
Nandan Nilekani has been advocating a National Data Strategy to ensure that data is used to empower people, not to exploit them. A key element of this is a data and privacy protection law like Europe’s GDPR, and hopefully the data protection law being drafted by the Srikrishna Committee will strike a fine balance between regulation and innovation.
India could also learn much from China which is a master at trading market access for investments in building indigenous capability in new technologies. More than a decade ago, India successfully leveraged open-source software to get Microsoft, at that time at the peak of its power, to moderate its pricing in India, develop India-specific products, set up a local data centre and research lab and make huge investments to develop the Indian software ecosystem. Microsoft also ended up with a thriving business, resulting in a win-win outcome. Global technology companies need India every bit as much as India needs them. A similar nuanced approach is needed with other major tech companies. This is not economic nationalism; this is strategic prudence.
Second, we must do much more to ensure that India has a thriving, competitive local ecosystem of companies that are leaders in the technologies of the fourth industrial revolution. Yes, India does have a genuine world-leading platform innovation in the India Stack that includes Aadhaar and UPI. But there are few other examples where Indian firms are at the leading edge in key technologies. The blunt fact is that the technologies of the fourth industrial revolution are overwhelmingly dominated by American and Chinese companies, some of which are the biggest investors in the Indian innovation ecosystem. Our vaunted champions Ola, Flipkart, PayTm and others are essentially owned by the likes of Alibaba, Tencent, Softbank and perhaps Walmart. In areas like artificial intelligence, robotics, autonomous vehicles, India has no world champions. China has done a spectacularly superior job in creating flourishing world-class companies in these areas and is therefore much better positioned to win the battle for the future.
The first of these imperatives is easier to address than the second but we can do a few things. We can start by ensuring that there is a thoughtful public discourse on these matters so that we progress with awareness rather than wake up with regret. There must be forums for an informed, intelligent dialogue between key stakeholders: innovators, policymakers, scientists, civil society and business leaders, and from this a real technology strategy can emerge. In the 1960s, India approached space and atomic energy in mission mode; it may be time for missions in some of the new areas. Perhaps India needs the equivalent of America’s DARPA, which led to successes like the internet, GPS, the graphical user interface and the driverless car. America’s leadership in these areas is no accident.
The fourth industrial revolution simultaneously poses the biggest opportunity and the largest threat to a prosperous future. India cannot afford to squander this moment.
Venkatesan is former chairman of Microsoft India
