Future Frontiers of India-US Collaboration

Future Frontiers of India-US Collaboration

jointly organised by 

The Takshashila Institution and US-India Business Council (USIBC)

Event Summary Report

Date: 10 September 2024

Venue: Taj West End, Bengaluru 

Time: 1600-1730 hrs IST

1. Introduction

The event began with an introduction to USIBC and Takshashila Institution by Jahaanvi (Manager, South Asia, USIBC). Following this, Amb. (retd.) Atul Keshap (President, USIBC) delivered welcome remarks; he appreciated the role Nitin Pai (Director, Takshashila) and the Takshashila Institution is playing in the policy space. On India, he remarked that if India truly achieves its vision of Amrit Kaal for the next quarter century and Vikist Bharat by 2047, it will lead to marvellous outcomes for the country and her citizens. He also noted India’s potential to be a pillar of stability for the entire planet. 

Edward Knight (Executive Vice Chairman, Nasdaq & Chairman, USIBC) delivered the opening remarks. He stated that the USIBC was founded for unique purposes and that it was founded at the behest of both governments. He emphasised that great debates create great policies.

2. Takeaways from the keynote address

Narayan Ramachandran (Co-Founder, Takshashila Institution) delivered the keynote address and presented key recommendations from a joint (upcoming) report on India-US relations by the Takshashila Institution and the Hudson Institute. 

At the beginning of his keynote address, Narayan contended that amid the ups and downs of the India-US relationship, it was important that the torch be carried by institutions in both these states. Noting that the event is being organised in Bengaluru, Narayan emphasised the role of Bengaluru as a knowledge link between India and the US. 

Narayan continued his address by briefly highlighting the history of the US-India relationship, touching on the budding relationship in the 1930s and the 1940s when the then US President Franklin D. Roosevelt and MK Gandhi exchanged letters and thoughts as well as the strains on the relationship during the Cold War. While acknowledging the contemporary strengthening of the relationship,  Narayan contended — from a realist perspective — that India and US would be loosely interdependent but at the same time continue to be friendly to each other. 

Presenting the highlights from the Takshashila-Hudson roundtables, Narayan focused on two recommendations. First, expanding the 2+2 format (involving the periodic meeting of foreign and defence ministers of India and the US) to become 3+3 by inviting ‘commerce’ to the table. Narayan urged the USIBC to push for any version of the 3+3 that involves commerce in addition to the foreign and defence already represented. Second, there is a need for deeper human capital exchange. For true progress there is a need for scholarship in the US and India studying each other. This can be done only if the visa regime in both countries is reimagined — H1B should be a historical artefact while India should make the visa process easier for US researchers. 

3. Highlights of the panel discussion 

A panel discussion followed Narayan’s keynote address. The theme of the panel discussion was ‘Collaborative Frontiers in Emerging Technologies’ and the panel primarily deliberated on the contemporary contours of India-US tech partnership and the measures required to strengthen it. The panel discussion was moderated by Brad Staples (CEO APCO) and the panellists were Amy Hariani (Senior Advisor, USIBC), Pranay Kotasthane (Deputy Director, Takshashila Institution), Sudhir Rao (India Managing Partner, Celesta Capital) and Saurabh Chandra (CEO, Ati Motors). 

The highlights of the panel discussion (in the question and response format) are listed below.  

Question: Some argue that the US-India tech partnership is imbalanced where more back office work is in India when Indians really have the knowledge and skills to be at the forefront of innovation. GenAI has highlighted this divide again. Is the US-India tech partnership truly balanced, or are we witnessing a new kind of digital divide where one side disproportionately benefits? What can we do to make sure both economies rise to the top of the innovation frontier?

Response: While tech was a barrier in the India-US relationship two decades ago, tech has now become a bridge between the two states. India has not just been doing a back office job for the US, but a lot of innovation has been happening in India. The phrase 'complementarity of capabilities’ describes the current partnership. In the field of semiconductors, for instance, trailing edge manufacturing can be done better in India. 

It is also important to dissect the nature of disparities between India and the US. For example, the Large Language Model (LLM) development has been happening at sky speed in Silicon Valley in the US and it would be difficult for India to compete on the same. At the same time, India has been leading in the fintech sector and is far ahead in digital payment infrastructure. There is a need for India and the US to lean on their respective strengths. While there were disparities in particular industries, that was not the case with the overall scenario of the India-US relationship. 

There is no divide as far as foundational technologies like generative AI are concerned because the latter opens the space for everyone. This happens especially because a lot of these foundational developments are open source. 

Question: In frontier technologies like AI and defence tech, how do we ensure the current investment climate in India competes globally as opposed to creating tech hubs for outsourcing?

Response: The market scenario in India is improving, particularly the venture capital market. For example, the mutual funds market which was virtually non-existent in India three decades ago has expanded to become a nearly USD 650 billion market now. 

On government's procurement policies, there is a need for the ‘buyer of first resort’ model in contrast to the ‘buyer of last resort’ model; the earlier model is especially needed for defence tech.

Question: Are the regulatory frameworks in both countries moving fast enough to keep up with the pace of AI and cloud tech advancements, or are we bound by bureaucratic inertia that stifles real progress? 

Response: First, the account aggregator model that is being tried in India’s fintech and the health sector should be made to work in other sectors as well. Making this model work is important for India. Second, it is pertinent to overcome the hurdles in defence partnership between US and India posed by International Traffic in Arms Regulations. Third, while the US government restricts export of GPUs beyond a certain threshold, there should be exceptions for partner countries like India whose concerns should be addressed. 

Question:  What is the impact and relevance of the EU’s approach to AI regulation for India and the US?

Response: EU’s approach has been disincentivizing investment. Heavy handed regulations would mean that LLMs may not emerge from Europe. The US and India should exercise caution in learning from the EU approach. 

Question: How do tech and funding companies reconcile Government of India’s emphasis on

‘self-reliance’ in technology and how do we marry that mantra with the spirit of US-India

collaboration?

Response: Indian entrepreneurs who want to grow global do not like this focus on self-reliance. They believe that others should be welcome in India to do business the way Indian entrepreneurs expect to do business abroad. But it is a divided-house on the matter of self-reliance. There are some who benefit from this focus on self-reliance and there are some who want greater integration with the global market. 

Question (from audience): Do political uncertainties in the US lead to economic uncertainties for India-US relationship? 

Response: The protectionism angle in the US political landscape is worrying. However, there appears to be a shared understanding that on certain technologies there is a need for multilateral and plurilateral cooperation. As long as there is some geopolitical understanding between states, the flow of technology can take place. 

4. Conclusion

The Takshashila-USIBC joint event not just captured the contours of the contemporary India-US relationship, but also explored the direction in which it is headed — especially in the technological domain. Certain key insights emerged from the panel discussion, including presence of complementarity in capabilities in the India-US tech partnership and disparity in particular industries (LLMs and fintech) but balance in overall US-India relationship. The need for overcoming the hurdles posed by International Traffic in Arms Regulations in the India-US defence partnership was also stressed. The event concluded with an optimistic note that there is a bipartisan understanding in the US on the importance of the India-US tech relationship.