According a recent Bloomberg report, China has yet again erected roadblocks in India’s attempt to industrialise and integrate into the global value chains.
The report notes:
“The Mukesh Ambani-led oil-to-telecoms conglomerate, which had aimed to begin cell manufacturing this year, had been in discussions with a Chinese lithium iron phosphate supplier. Xiamen Hithium Energy Storage Technology Co. to license cell technology, according to the people who did not want to be identified as the information is not public.
Those talks stalled after the Chinese company withdrew from the proposed partnership amid Beijing’s curbs on overseas technology transfers in key sectors, the people said. The setback has prompted Reliance to refocus on assembling battery energy storage systems, or BESS — containers for its own renewable power projects, they added.
It further notes:
“Reliance’s struggles reflect how the companies expected to help Prime Minister Narendra Modi’s goal to make India carbon-zero by 2070 cannot log substantial progress without better bilateral ties with Beijing. China has stepped up scrutiny of clean-energy technology deals as it seeks to protect strategic advantages in sectors, complicating localization efforts by foreign manufacturers.”
Now this raises an important question: If Beijing is committed to protect its presence in the global value chains by curbing overseas tech transfer, how should India tackle the dual goal of a) integrating with the global value chains which China dominates b) de-risking from China?
The answer isn’t an easy one. The Indian companies will have to take the costly option. It must do two things. One, license the technology from other countries which have a presence even if it is costly. Second, begin investing in R&D. Indian companies are notorious for lack of R&D investment and rather choosing to find the easy way out via licensing while pushing for protection by the government. Habits have to change. And it will not be easy. The alternative is costly but also certain.