Politics trumps economics: S Jaishankar's veiled dig at US amid trade tensions
The comments come against the backdrop of recent trade disputes and steep US tariffs, including a 50 per cent rate on Indian imports levied by US President Donald Trump.
Speaking in Kolkata after receiving an Honorary Doctorate from IIM-Calcutta, he stressed the importance of diversifying India’s supply sources to safeguard national interests.
"This is an era where politics increasingly trumps economics and that is not a pun. Decisions are now being made not merely on cost, but taking into account ownership and security.
Where a product is made, or who offers a service, is as important as their price points. When de-risking overrides the logic of efficiency, the mantra of ‘just in time’ actually gives place to the caution of ‘just in case’. "
He also maintained that while "globalization still exists" - but hastened to add -- "because it is too far gone to be rolled back - but with powerful counter-forces today brought into play."
"Far from being an aberration, these trends have only just started and will probably pick up pace in times to come".
He said:
"The United States, long the underwriter of the contemporary system, has set radically new terms of engagement. Not just that; it is doing so by dealing with countries on a one-on-one basis, rather than through regimes. China has long played by its own rules and is now doing so, even more.
In the ensuing scenario, other nations are unclear on whether their attention should be on their visible competition, or the tradeoffs and understandings that punctuate them.
"Faced with such pulls and pressures of globalisation, of fragmentation and of supply insecurity, the rest of the world responds by hedging against all contingencies," he said.
Dr Jaishankar said:
"... please also bear in mind that the relative weight of nations in different domains is also undergoing a major change. Whether it is manufacturing, energy, trade, finance, technology, natural resources, connectivity or mobility, the world is not what it was, say, just a decade ago.
"A third of global production currently takes place in China.
This has put the spotlight on the resilience and reliability of supply chains. Conflicts and climate events have added to the possibility of their disruption.
"When it comes to energy, the US has gone from being a major importer to a significant exporter of fossil fuels. At the same time, China dominates the world of renewables.
Where trade is concerned, supply-side risks are aggravated by demand-side uncertainty. The salience of tariff rates to trade prospects has obviously heightened volatility. As for finance, the prolific application of sanctions, the seizure of assets and the advent of blockchain based technologies are today part of the new realities.
And what can we even say about technology when the mother of all changes - Artificial Intelligence moving towards Artificial General Intelligence - is at our very doorstep?
Understandably, it has a direct impact on the competition for natural resources, especially rare earths and critical minerals.
The Minister said: "Now even as these developments unfold, we are revisiting history by reinventing connectivity.
The hardwiring designed by the vested interest of imperialism needed to change as new centers of production and consumption came up. While some of it was organic and some of it was market-driven, others appear to also have a strategic intent.
Indeed, the very concept of dual-purpose connectivity challenges the orthodox assumptions and definitions that many of us hold.
"Another dimension worth recognizing...," he said -- ".. is the importance of the mobility of talent. The flow may be driven by demands of technology, but they are actually made possible by a globalized economy.
Over a period, it was not just the talent that is moving; so too is the tasking. And we see that in the rise of Global Capability Centers."
He also said:
"A major power, that too one with higher aspirations like us, must have a significant industrial base.
Unfortunately, this was not an assumption necessarily accepted by policy-makers before 2014. Promoting industrial growth, and even incentivizing it, is today a key economic priority.
The emphasis on ‘Make in India’ in the last decade speaks of a different mindset and greater ambition.
"For its full potential to be realized, industry has to partner wholeheartedly and look beyond the short-term. It must help build the domestic supply chain, even as we seek to participate more in the global one.
As it strikes roots, make in India is strengthened by research in India, innovate in India and design in India. Not all missed opportunities of the lost decades of the last century can be recovered. But there is considerable scope, believe me, to play catch up, especially in selected domains.
"At the same time, attention is being paid to advanced technologies, to advanced manufacturing so that India does not perpetually lag behind.
We are now in the world of chips and semiconductors, electric vehicles and batteries, drones and space, or that of nano-tech and bio-science.
Each of them offers opportunity to leapfrog and establish unique capabilities. Which is why they feature today so strongly in the Government’s policy
support."
Dr Jaishankar pointed out that --
"A third of global production currently takes place in China.
This has put the spotlight on the resilience and reliability of supply chains.
Conflicts and climate events have added to the possibility of their disruption.
When it comes to energy, the US has gone from being a major importer to a significant exporter of fossil fuels.
At the same time, China dominates the world of renewables. Where trade is concerned, supply-side risks are aggravated by demand-side uncertainty. The salience of tariff rates to trade prospects has obviously heightened volatility.
"And what can we even say about technology when the mother of all changes - Artificial Intelligence moving towards Artificial General Intelligence - is at our very doorstep?
Understandably, it has a direct impact on the competition for natural resources, especially rare earths and critical minerals," he said.
ends
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