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Date: 07-07-16

Sun without subsidy: Advances in solar energy mean it may be time to throw out that rooftop solar panel

For the first time, solar power this year is forecast to contribute more new electricity to the US grid than any other form of energy. If you think that’s a milestone, it will soon be overshadowed by other developments. And not a moment too soon, as the world desperately combats climate change. Soon, it may be possible to provide zero emission energy without compromising on the dream of providing every home with electricity.

Forecasts of International Energy Agency (IEA) indicate energy from renewables is expected to overtake coal by the early 2030s. Among renewables, solar stands out. Its cost is falling, which means that for the first time it is possible to promote clean energy without offering large production subsidies. For instance, cost of electricity from large solar installations in the US is on occasions lower than that from natural gas.

These developments are crucial for India as the Narendra Modi government has bet big on solar. The government’s National Solar Mission has been crafted on the basis of a subsidy for expanding rooftop solar systems. But such systems are inefficient and expensive, compared to large scale solar installations which feed power into the grid. Rooftop solar may make sense only in off-grid locations, or if one wants to enjoy the romance of generating one’s own power. The pace of technological change should trigger a re-evaluation of a subsidy-led approach. Germany, for example, has been scaling back solar subsidies without a negative impact on the industry. Solar energy, when generated on a large scale, is on its way to being competitive without artificial boosts. The next phase of policy making should factor this in and take advantage of the fiscal space offered.

Date: 06-07-16

The FDI illusion

The defence sector needs much more than increased foreign direct investment

Written by C. Uday Bhaskar

The successful induction of the first two Tejas light combat aircraft (LCA) on July 1 into the IAF, pending final operational clearance, provides the appropriate backdrop to the recent announcement of the Narendra Modi government to allow 100 per cent FDI in the defence sector.

This policy announcement is being heralded as the fillip that India’s moribund military indigenisation effort needs and that very soon Make in India will gain robust traction. However, this is an arduous path. India’s many institutional deficiencies and distinctive cultural DNA traits may make this highly desirable goal more elusive than imagined.

The 100 per cent ceiling is not very different from what the UPA had announced, but the many caveats and procedural constraints ensured that the initiative was not very successful in attracting foreign capital.

The Tejas success, which is to be commended, is illustrative of the mindset that has crippled India’s indigenous defence industry for decades. The LCA programme wherein India would design and build its own combat aircraft dates back to 1985 and the heady Rajiv Gandhi years. Yet, the reality is that it took 31 years for the first two aircraft to be inducted, albeit in a sub-optimal manner, and it merits notice that both the engine and the primary radar are imported. Could the Tejas have been completed sooner had the 100 per cent FDI route been adopted earlier? And the related question is: Will the current 100 per cent ceiling make that much-needed difference?

The LCA apart, two other recent revelations provide the context for the FDI challenge. The Indian Army is the second largest in the world and yet for decades on end, India has been less than successful in designing and manufacturing its own rifle. What has been produced — the INSAS (Indian Small Arms System) — is sub-optimal. Currently, the army is reportedly facing a massive shortage, including that of ammunition and bullet-proof vests. Consequently, India is one of the largest importers of military inventory. Over the next decade, India will allocate over $ 200 billion towards acquisition and modernisation. A truly competent and nimble policy making body would be able to prioritise and attracting investment

But the sad reality is that the Indian defence leadership is clueless about how best to invest such a large sum of money over a decade with foreign participation and add tangible capacity to the military in a sustainable manner. Yes, stove-pipe wish-lists do exist. But what is missing is the holistic institutional integrity and multi-ministry competence that can envisage a national systems-engineering equivalent.

Thus, the 100 per cent FDI ceiling in defence, while being welcome, will have to be preceded by some very rigorous introspection about existing inadequacies. The holy grail of indigenisation can be attained only if the vast resources of the Defence Research and Development Organisation and Defence PSUs are dis-aggregated and re-cast on the lines of successful models that exist in countries such as Israel. A DRDO-centred, incremental approach will not succeed.

PM Modi needs to mobilise young entrepreneurial Indians to undertake cutting-edge defence research. Concurrently, with defence budgets likely to shrink in real terms, there is an urgent need to create a cadre, within the ministry of defence, equipped for such onerous responsibilities.

Date: 06-07-16

A new tryst with Africa

SREERAM CHAULIA

Prime Minister Narendra Modi’s four-nation tour of Africa from July 7-11 is a historic visit that adds new dimensions to his motto of India as a “leading power” in the world. It provides high-level gravitas to crucial bilateral relationships with long-term consequences for India’s strategic, economic and soft power ambitions.

Mr. Modi is renowned for setting foot on countries which have almost forgotten what it means to receive an Indian leader. In Mozambique, he will become the first Indian Prime Minister to be present since Indira Gandhi went in 1982. In Kenya, he will be the first Indian Prime Minister since 1981. Although Manmohan Singh did go to South Africa in 2013 as Prime Minister, it was in the context of a BRICS Summit and not an exclusive bilateral visit to further one-on-one cooperation. By undertaking dedicated bilateral missions to key nations of southern Africa, Mr. Modi is signalling that he values these countries intrinsically for what they are.

Securing the east coast

One of the hallmarks of Mr. Modi’s foreign policy is an emphasis on defence diplomacy to boost India’s position as a net security provider for fellow developing countries. The choice of the four nations on his itinerary this week is not a coincidence but part of a well-thought-out doctrine of giving primacy to the Indian Ocean Region (IOR), whose westernmost edge is defined by these countries.

The east coast of Africa is the flank which India’s expanding naval and commercial strategy needs to be aligned with if it is to emerge as a shaper of stability and peace in the IOR. Mr. Modi’s government purposefully restarted serious defence dialogue with Mozambique in 2015 after years of neglect. I recall meeting the Deputy Minister of National Defence of Mozambique, Patricio Jose, earlier this year where he said that they are “eagerly looking up to India” to enhance their coastal surveillance, military training and maritime security capabilities.

Mr. Modi’s mega-modernisation project of ‘Sagar Mala’, which involves coastal area development, port infrastructure advancement, connectivity and sea-based industrial synergies, is not merely a domestic policy priority but interlinked to our strategic drive to be the defence and logistical partner for Africa’s eastern coast.

Already, Mr. Modi has been to Mauritius and Seychelles — two pivotal African countries off the mainland — and ramped up India’s security assistance there. Now, by drawing in countries of east Africa into a trustful embrace where they have faith in India to share and transmit sensitive technology and know-how in intelligence, reconnaissance and training, he is making a proactive push to be not merely an economic actor on the continent but a political one too.

The economic outreach

Economics is, of course, never off the agenda when India interacts with Africa. But here, too, what is new is how Mr. Modi’s flagship ‘Make in India’ campaign has the whole of Africa excited. With the Chinese economy in slowdown and its absorption rates for African minerals at a low point, African governments and people are on the lookout for an alternative big Asian power that can generate steady export revenues for them and also help them industrialise. India appears to many Africans as a preferred, democratic partner whose outreach is not totally state-driven (unlike China) and whose private sector is increasing its footprint on the continent. The Prime Minister’s personal interest in connecting Indian agribusinesses with African nations for food security, and also in joint exploration and harnessing of energy sources, is a big draw in Africa.

Some cynical sections of the Western commentariat club India in the same category as China, i.e. as a mineral-grabber that is out to plunder Africa and denude it of its vast natural wealth. The message sent out by the Prime Minister’s team ahead of his visit to the continent is that “we are not here to exploit” and “we want to be partners in development.”

I was quizzed about this developmental intent of India during a recent public lecture in the Ministry of Statistics of the Government of South Africa in Pretoria. The question was: “You say India is only here to help build our human resources and beef up our security. But no country does charity. Why is India doing these things? What are its real motives?”

Mr. Modi needs to satisfy this critical line of inquiry by not only offering more novel schemes that bring Indian technical and educational expertise to Africa but also by showing how co-dependent India and Africa are in the twenty-first century. We need export markets as we industrialise, and Africa has the youthful demography and the rising purchasing power that will eventually take our two-way trade from $72 billion to $700 billion or more. Unless Africa grows in wealth, stability and confidence, we will be handicapped. Unless Africa is with us on the big crises facing the planet, we can never turn into a great power in world politics. Our fates are thus intertwined not just due to geography, identical views at the United Nations or common historical experiences as colonised people, but also because of the fundamental complementarity of the future that awaits both sides.

China has been trumpeting its South-South cooperation model as a resounding success in Africa. But the absence of a human resource component, a transparency element, and a social sector or democracy angle in that model means that India has an indispensable place on the continent. We already enjoy a special place in the hearts of African people going back centuries. What Mr. Modi’s sojourn to the continent can do is to embed India in the futuristic minds, pocketbooks and dreams of Africa.

Sreeram Chaulia is a professor and dean at the Jindal School of International Affairs.

Date: 07-07-16

क्रांतिकारी सुधार का आधार क्या सरकार है तैयार?

राहुल खुल्लर

डीबीटी सब्सिडी सुधारों की दिशा में क्रांतिकारी साबित हो सकता है लेकिन इस कारगर हथियार का उपयोग करने से सरकार क्यों हिचक रही है? बता रहे हैं राहुल खुल्लर 

(लेखक पूर्व केंद्रीय वाणिज्य सचिव हैं।)