Warm Bhutan India Ties Reinforced By Modi Visit

Strategically located but land-locked, Bhutan is bordered by both India and China, with the latter regularly negotiating land concessions from the tiny kingdom.

India has traditionally been a  non-predatory support to the kingdom with regular concessionary loans, electricity purchases, and a defence protection pact with it. India and Bhutan also have long-standing cultural ties, and at present has loaned it some sacred  Piprahwa relics of Lord Buddha for a 10 day period during a special Peace Prayer.

Bhutan has always favoured its autonomy and unique ways, including emphasis on its world famous ‘Gross Domestic Happiness’.

 In this current two-day visit, not postponed, despite an Islamic terror attack in New Delhi’s Red Fort area by JeM and ADuG inspired operatives, Prime Minister Narendra Modi of India and King Jigme Khesar Wangchuk, the fourth Druk Gyalpo, jointly inaugurated the 1020MW  Punatsangchhuu-II hydroelectric project. The occasion also marked the King’s 70^th birthday.

The project inauguration was hailed as a milestone in the vibrant and growing mutually beneficial partnership between India and Bhutan. India also announced a new concessional line of credit of Rs 4,000 crores for Bhutan to fund other energy projects.

Bhutan currently produces all its electricity from renewable energy and has a negative carbon footprint. This latest hydroelectric project will increase electricity production from hydro sources by 40%. India will also assist in the resumption of work on the main dam structure of 1200 MW at Punatsangchhu.

To promote connectivity for Bhutan and give it easy access to India’s vast markets a new initiative is about to unfold. The Bhutanese border towns of Gelephu and Samtse will be joined with India’s vast railway network shortly. Bhutan intends developing the Gelephu Mindfulness City as a consequence. India will establish an immigration check post at Hatisar, just across from Gelemphu and develop infrastructure on its side of the border.

The two countries signed 3 MoUs during this visit of 11-12 November 2025,  on renewable energy, mental health services, and healthcare.

India had earlier also announced a contribution of Rs 10,000 crores in 2024, towards Bhutan’s Five-Year Plan of development in areas such as roads, agriculture, finance, healthcare.

The railway connectivity with buffer state Bhutan will also help strengthen infrastructure to protect the so-called Chicken Neck  and the Siliguri Corridor overseen by China from the Doklam plateau. India has already strengthened its military presence in the area of the Chicken Neck including the revival of a WWII airport in the area, the placement of troops, missiles, fighter aircraft and other items. It has also been conducting elaborate military exercises in all its border regions to ensure preparedness and smooth coordination between the different arms of the military

This is important because, in addition to China, Bangladesh and Pakistan have also been taking a renewed interest in the Chicken Neck and Siliguri Corridor area, vital for India’s communication and connectivity with its North Eastern States.

Bhutan is not very comfortable with Chinese attention and blandishments towards development and trade, because as a hereditary kingdom it is wary of the powerful Communist dictatorship. However, there are some in its population and political makeup that favour closer ties with China. Bhutan therefore has to perform a careful balancing act between India and China.

Matters have improved somewhat because of China’s rivalry with the US and the weakening of its economy. It is preoccupied with its own troubles and less interested with outside adventurism abroad. Much of the billions it has spent on its belt and road initiatives plus its string of pearls strategy has gone bad.

India, on its part, has identified two chicken neck like areas in Bangladesh with access to the Bay of Bengal in both cases, which makes it vulnerable to outside attack and capture. This could restrain its ability to seek any misadventure against India. India also controls much of the water that flows into Bangladesh and could cancel its water sharing arrangements just as it has with Pakistan. Likewise it is dependent on India for electricity to a large extent. A misadventure could nevertheless happen, because of jingoism and miscalculation, egged on by Pakistan and China.  However neither country may in the end get directly involved nor will any other Islamic country Bangladesh might count on, such as Turkiye.  Myanmar is also going through a troubled relationship with Bangladesh.  So if a military misadventure goes wrong for it, it could trifurcate Bangladesh territory as it stands.

The fact that India is rapidly improving its defences and aatmanirbhar defence preparedness is important. In a demonstrator by way of its highly successful showing in  the  short Operation Sindoor against the combination of Pakistan assisted by China, was most telling. Nobody in the neighbourhood including a China that prefers to use proxies in conflicts, is left sure of itself in any future conflict with India.

India’s exports of armaments and the demand for them has risen sharply since Operation Sindoor. Meanwhile new systems are being added that extend its range, speed, surveillance and technology. A possibility of Operation Sindoor 2.0 in kinetic mode is hovering in the air and could do substantially more damage to Pakistan than the earlier one. The Taliban in Afghanistan are already at war with Pakistan but have mended fences with India.

All this is also not lost on tiny Bhutan as it weighs its options.

(885 words)

November 12^th, 2025

For: Firstpost/News18.com

Gautam Mukherjee

 

US Keen To Sell Its Armaments To India Via Freshly Minted 10 Year Defence Framework Agreement

Is the tide turning with the GOP itself voting against President Trump’s tariff policy? The Indian Commerce Minister Piyush Goyal and President Trump himself are both suggesting that a framework trade agreement may be agreed upon between India and the US very soon. It would also probably reduce the punitive tariffs to no more than 15% overall. But, with the mercurial Trump administration one never knows till the signing and the drying of the ink.

While the 50 percent trade tariffs on India persist in the meantime, one of the highest in the world, peppered with constant and diplomatically offensive pressure, a freshly minted agreement on defence cooperation offers unexpected hope. Is this a first step to the classic Trump roll-back or just the sniff of a parcel of deals?  

The framework agreement signed at the Defence Ministers Meeting in Kuala Lumpur, the ADMM-Plus, by Indian Defence Minister Rajnath Singh and US Secretary for War Pete Hegseth was accompanied by many feel-good statements on the importance of the US-India defence relationship, the rule based order, international maritime security, the Asia-Pacific and so on. But this was at the level of the defence ministers and offers a platform for a U turn.  Because the Indo-Pacific strategy to contain China is no longer a Trump administration priority. Neither is QUAD from all indications.

It does cover real-time intelligence sharing but let us remember America refused GPS coordinates during the Kargil War. The formation of a joint task force for the Indo-Pacific, joint naval patrolling, technology transfer, joint manufacturing of advanced military systems in India are all in the document.

It says America will manufacture drones and the F414 fighter engines in India with partial if not full technology transfer. Stryker armoured vehicles will begin to be produced in India in 2026. This one has been in the air for years and meanwhile India has made a number of good armoured vehicles of its own. The plan is to manufacture the 31 Predator drones on order in India by 2027. America will work with India on Hypersonic missile technology by 2027. It will start developing KN engines in India, and by 2035 America will transfer  complete 5^th generation fighter technology. Can  all this be believed? Why did America decide to draw up such an agreement for the first time ever? Is India meant to cross over into the US camp in delight?

As far as India’s defence cooperation with the US towards its aatmanirbhar programme and technology transfer needs go, the possibilities have always been vague and undefined. This, particularly in contrast with its progress made with France, Israel, and Russia.

However, America is not enamoured with India’s policies of strategic autonomy in order to suit its own national needs. It prefers docile allies who do as they are told. So this is a persistent hindrance to the Indo-US relationship unlike its progress with an apparently compliant Pakistan. Now the Americans are saying Pakistan is only useful for short term goals. But how can one defence agreement turn a persistent more or less anti-India policy on its ear? Americans have been good at saying one thing and doing another rather like the Chinese. Written agreements mean little to both.

America is also busy finding ways to cooperate with China, as the Trmp-Xi meeting in South Korea demonstrates, after its attempts to bully it into submission failed.  

With India, the same thing applies in the minor register, we too won’t be bullied, but India does not enjoy the points of leverage thar China does. So America tends to renege on commitments with impunity, and drag its feet generally. It does not want to lose India altogether from its sphere of influence and so keeps agreements like this one going. If it means business it could start with delivering the F404 engines quickly for a start.

Purchases of American defence equipment by India, often necessary for their technology and quality, have to bear with interminable delays and sometimes renegotiations of cost. The American system has many barriers and checks that take time for high technology equipment, not helped by America not being in a hurry to execute them on time lines agreed.  America does not part with its codes for defence equipment and has been known to use them to cripple aircraft and other weapons at critical times.

Nevertheless, we do have several new defence deals on the anvil and ongoing, in addition to the $25 billion in American military equipment purchases made by India since 2007.  Right now there is a $ 3.8 billionMQ9B armed Predator drone on order for 31 of them, being executed for completion by 2029-30. They say these will now be made in India. The last three of six Apache helicopter gunships are being flown over in a transport aircraft for the Indian Army after a long delay. The order for 99 GE F404-IN20 engines for the Tejas MK1 A executed in 2021 for $716 million is proceeding very slowly after a two-year stoppage in supply.  Only four engines of the 99 ordered have been delivered so far. Another follow-on order for 113 engines worth $ 1 billion is being negotiated and almost ready to be signed.  Yet another order for hundreds of  the GE F414 engine intended for the Tejas MK2 along with an 80% technology transfer and manufacture in India is also being negotiated. Is this defence agreement saying it is through? At what price? To be built in India starting when?

This snail’s pace in these orders and negotiations suggest a strategic dimension in which America is apparently not keen on seeing India make its own fighter aircraft any time soon. But perhaps it also wants to lure us away from the competition.

India is working on alternatives of its own manufacture  for UAVs,drones and fighters and in collaboration of Safran of France even as its fit-for-battle fighter squadrons are much below comfort levels.

India is also advancing a cooperation with Brazil for its Embraer C-390 Millenium transport aircraft in a possible barter deal for an equivalent value of Tejas fighter aircraft and Prachand helicopters.

A collaboration with Airbus is already ongoing for H125 helicopters and C295  military transport aircraft in partnership with the private sector Tata Group.

Russia is very eager to offer its latest Su- 57E stealth fighter aircraft with full technology transfer and production in India in addition to the Sukhoi 30s made under licence in India with the Su-30MK1 largely customised to Indian needs.

Very recently India has signed an agreement with Russia to jointly produce medium sized commercial aircraft, the SJ-100 with full technology transfer in India. The message to America is that India is clearly not restricted by American sanctions imposed on Russia. This again in the context of massive delays in supplying Boeing aircraft to the Indian aviation industry as well as quality concerns highlighted by the tragic Dreamliner crash in Gujarat.

India is already very successful with its BRAHMOS missiles jointly developed with Russia. It extensively uses the Russian S 400 air-shield with more sets on order. Other cooperation with the UK, Russia, Germany and France in the naval engines, propulsion units, nuclear engines, submarines and specialised naval ships are a precursor to more in commercial shipbuilding as a new thrust area.  While American Cummins engines are used in our light Zorowar tanks, India is trying to develop its own as well.

So, it is clear that America is not our only mainstay, even as the Indian aatmanirbhar defence industry is growing very fast and is reflected in more and more export orders as well.

Perhaps America realises these are favourable results of India’s strategic autonomy and wants to ensure it stays in India’s procurement and technology demand game.

In the overall scheme of things however, and on the face of it, this 10 year defence framework agreement is most welcome.

(1312 words)

November 1^st, 2025

For: Firstpost/News18.com

Gautam Mukherjee

 

The Season Of FTAs  With Switzerland and Britain Done Will Likely Take India GDP To 8 Percent

The advantages of becoming the world’s third largest major economy by 2028 are many. It has been stated and oft repeated by India. But this time the British prime minister himself, heading up the 6^th largest economy now, said it, during his visit just concluded. These advantages are likely to manifest thick and fast as more and more countries make a bee-line for the most populous country on earth.

India, with a 70 crore strong consuming middle class alone, compared to a total population of 7 crores in Britain and 25 crores in America, is the fastest growing major economy in the world. It has a roaring domestic economy and huge consumption statistics. It is building infrastructure to modernise at a frenetic pace.

India’s own ambition of becoming a developed country by 2047, calls for a quickening of the GDP rate from the present 6.5% to 8% and more. Greater trade and cooperation with the international community may well provide the necessary fillip.

The trade agreement with Switzerland and three other small countries not in the EU, namely the EFTA- Switzerland, Norway, Iceland and Liechtenstein, just became effective in October 2025, and promises to pour in an investment of $ 100 billion over 15 years. It took decades to finalise this agreement, but now India’s time has come.

 The EU-India FTA is also nearing completion, as is the Indo-US interim trade agreement, despite knotty issues in the negotiations mainly related to agricultural items. The fact that India follows strategic autonomy in its foreign policy and its national interest in trade negotiations rankles the West, long used to enforcing unequal treaties when dealing with a poor and pliant India. But under the present Modi government, there is little choice but to respect its stance.

The Indo-UK FTA, also in the works for a long time was finalised in July 2025 and was signed recently when Prime Minister Modi visited the UK. The follow-up visit by British Prime Minister Keir Starmer over two days, along with a 125 strong entourage, resulted in at least three substantial announcements.

There will be nine British university India campuses opened shortly. Letters of intent were received during the visit from Lancaster University for a campus in Bengaluru, and an in-principle approval for a campus of the University of Surrey in GIFT City, Gujarat. Many others will follow with Prime Minister Starmer saying all the British universities will come. This will provide access to quality British higher education at a greatly reduced overall cost to the Indian students and their families. Will the American universities and those from Singapore and Australia follow suit?

India signed an agreement to buy over Rs4,000 crores worth (350 million pounds sterling), of Lightweight Multirole Missiles (LMM) manufactured by Thales of UK. In addition, India and Britain intend to finalise a government-to -government agreement to cooperate on developing maritime electric propulsion systems for Indian naval platforms. This will be worth an estimated 250 million pounds in the first phase alone.

There was an agreement for training of IAF flying instructors with the RAF. There will be joint research and development in AI and critical minerals. Efforts are on to revitalise existing joint trade bodies and CEO forums afresh.

Prime Minister Narendra Modi expects trade and cooperation with Britain to double in five years or sooner, to over $100 billion from the current $ 56 billion. With the UK growing at 1% or less, this FTA is extremely important for it and represents the first major agreement after Britain left the EU in Brexit.

Other items discussed include intelligence sharing, negative media in Britain, Khalistani activists, vociferous Islamists who favour Pakistan, fugitives from the law in India residing in Britain, economic offenders, but it is difficult to assess if Britain is politically able to do very much to curb their activities, or to repatriate any of them. Likewise Prime Minister Starmer is holding firm on not letting in more Indians into Britain, or loosening stringent visa conditions.

Britain is closely allied to America, and will need to harmonise its changing policies to a great extent with the US, and this could affect security cooperation including technology transfers between India and Britain despite the FTA.  However, because France, a NATO member like itself, and a leading force in the EU along with Germany, that is also cooperating in defence with India, these rival competitors will persuade Britain to try and  stay in the fray as much as possible.

America’s overall waning influence in an increasingly multipolar world is another reason to reorient policies that are=out-of-date including those in the UN and UNSC. The conversations on these matters is cordial but it is likely that the UNSC permanent members with the veto, and the G7, despite a push from BRICS, will not budge from long held positions, for as long as it can.

India, on its own, a major player in the G20 and BRICS, and increasingly in the SCO and ASEAN, plus a leader of the Global South, cannot be easily pushed aside, and both Europe and America are coming to terms with this. They’ve had to do so for long with China, and now India too won’t be denied. That India is inching towards better relations with China is also not lost on them.

India’s warm relationship with Russia including the purchase of large amounts of crude oil and armaments from it, despite Britain’s hawkish stance on Ukraine, has not been allowed to get in the way.

The dramatic cut in duties both ways in the Indo-UK FTA will facilitate Indian exports of most materials under 50% tariff from the US such as textiles, gems and jewellery, leather goods, agricultural produce, sea-food, and likewise lead to imports of multiple British goods including Scotch at much lower prices.

However, in all the FTAs under negotiation, there are some red lines drawn by both sides, but the attempt is to agree on as much as possible for the sake of greater trade and industry. This is the realistic situation in today’s world as the old order with a dominant West gradually gives way to a multipolar world led by China and India.

(1,027 words)

October 10^th, 2025

For: Firstpost/News18.com

Gautam Mukherjee

 

High Technology Comes To The Rescue In Land Of Stampedes

Sometimes a good idea hiding in plain sight comes at last to the fore and begins to receive due attention. Home Minister Amit Shah, exasperated no doubt at the endless deaths and injuries that is giving India a bad name for callousness, has come up with a plan.

It applies to a host of situations, though he specifically mentioned temples. It could be used at political rallies, weddings, funerals, processions, railway stations, hordes going to hill stations, forts, any other large moving or static gathering. It applies also to ecologically sensitive areas in the mountains, rivers, lakes, animal sanctuaries, other tourist spots.

This is by way of a first national SOP (standard operating procedure) for crowd control and will prevent needless deaths and injuries if strictly implemented.

It will become the first design and template for excuse-proof structured crowd management. Of course, a lot of work needs to be done on it, because, particularly for ancient temples and temple towns, and traditional pilgrimages and melas. It applies to the crowds going to the Char Dhams in Uttarakhand, the Jagannath Rath Yatra in Puri, The Sabarimala in the South, Vaishno Devi and Amarnath in J&K. Huge congregations of the old and infirm such as at the Ganga Sagar in West Bengal, men women, children, sadhus, foreigners at the gargantuan Kumbh Melas held every four years, culminating in the Mahakumbh at Prayagraj. It is clear the SOP needs to be elaborate because one size does not fit all. It could be worked into a law by parliament and the state legislatures so that breaches and flouting of it can be punished without constituting fact finding committees after each disaster.

Ingress by bus, train, aircraft, on foot, and departure by similar means, needs looking at, inclusive of traffic routing, parking and controlled arrivals and departure.

A beginning on this was made at the last Maha Kumbh Mela which, though it saw a couple of stampedes, was by far the best managed gathering at the Prayagraj Sangam ever. It was also the greatest such gathering ever held on earth.Full marks for that goes not only to the Centre but also the Yogi Adityanath government in Uttar Pradesh. And yet people broke through police barriers in their indiscipline and trampled others underfoot. Statistically it may not have been much but the human tragedy in this and all other such incidents cannot be wished away.

Use of  new tools such as AI for crowd management,  and drones to oversee the crowd movements forms part of it, along with real time communication between administration, police and para military forces deployed to regulate and guide crowds. Lighting, medical facilities, epidemic control, water, toilets, accommodation, food, all need to be adequate to ample.

Political interference, with the authorities and others on high manipulations including out of turn VIP access, that disrupts security must be strictly avoided. These do untold damage to the common man even if an SOP is in place because it overrides instructions. The SOP could well restrict the VIP appearances to Video conferencing to avoid the special security needs of such people.

The need felt for an SOP has come not a moment to soon in a country teeming with over 1.4 billion people. Many of the people routinely killed in stampedes are the weak, the elderly, women and children.

Of course, in addition to restricting the numbers admitted to a crowded venue, including the routes leading to it, attention needs to be paid to entry points/ internal pathways and routing, seating, and separate exits so that they do not make for classic choke points. 

Here too, like roads that are made one ways to let one side out before the other is let in, or boarding procedures at aircraft, crowd management is a must. 

Compensation paid to the families of the dead and injured after yet another disaster runs a poor second to prevention. So does trying to pinpoint blame, always inconclusive, after the fact.

Mere breach of permissions and flouting of stated rules, which happens with sickening regularity both by the organisers and the people, can be anticipated and prevented.

Temple access is often through ancient and crowded areas and as in Varanasi at the Kashi Vishwanath temple and also at Ujjain modern avenues may have to be rebuilt by demolishing old buildings and pathways. This has been done extensively also at Ayodhya, where a lot of infrastructure has also been recently created by way of hotels, the airport, a new and renovated railway station, roads. Likewise at Varanasi. Similar works are being carried out at Mathura by means of a special corridor. Facilities at Katra at the start of the Vasno Devi yatra is another case in point. Roads to the Char Dhams are largely renovated and expanded. Ropeways are being put in.

In other words, the SOP  must include a much broader swathe of works, extending much beyond the local area. All of it, now well underway in terms of modernisation of infrastructure contributes to the convenience and safety called for.

In India it might have been long assumed that human life is cheap. It is perhaps  only now being regarded as valuable because for decades, if not centuries,  very little regard was paid to those who were killed by flood, famine, pestilence, marauders, riots, let alone stampedes.

But no country that is on its way to shortly becoming the third largest economy in the world can afford to treat its citizens with such scant respect. Indians may be numerous, and India may have the largest population in the world, but it is this very fact that gives us an enormous and young workforce that powers us ahead. Education, civic sense, medical facilities all come into the mix to lift ourselves out of the stampede culture we have had to endure for far too long. Home Minister Amit Shah must be commended for his sterling initiative and the administration must implement his SOP with diligence and alacrity.

(995 words)

October 3^rd, 2025

For: Firstpost/News18.com

Gautam Mukherjee

 

Time For India To Open Its Own IT Innovation Hubs

India has long lamented its ‘Brain Drain’ from the Indian Institutes of Technology (IITs), in particular. The Indian taxpayer has subsidised top class technical higher education, right  from the days we could ill afford it, only to see the entire highly talented class of graduates make a bee-line for the US.  This is true of our doctors and nurses prominent all over the world in addition to the US and Europe as well.

There, at the fabled El Dorado, our IT people have had  challenging opportunities, excellent pay and perquisites, and a high standard of living. This has gone on for decades. In India the IT companies like Infosys and TCS among a host of others have also blossomed alongside and contributed handsomely to India’s software exports.

Now all this may have to change, at least for new aspirants for the H1B visa, because the Trump administration has put a $100,000 fee on it  The existing visa holders,( nearly 80 percent of all H1B visas are held by Indians), can continue and renew them without additional charges, beyond the nominal rates applied at present.

This $100,000, if it remains unchanged, puts a virtual ban on new applicants. It is an amount neither the individual nor his sponsoring company, either in India or the US, can afford. However, if the intent is to force the hiring of American citizens instead, the IT companies may have a difficult time of it, because there are not many with the requisite skill sets.

Some American and European companies have already opened and operate design hubs, data mining, back-office and other types of centres in India. But before this new hundred-fold increase in visa charges, most American companies ran their Centres of Innovation in America, but largely using top grade Indian talent.

Because of this dominant global structure imposed by the biggest buyers of the resultant software, Indians ended up doing much of the basic IT work via what has been derisively called technical coolie work. Indian companies have thus far avoided competing with Innovation Centres of their own. These could have come up quite easily in India, and will, no doubt do so now. They can also sprout in nearby offshore locations, with liberal tax laws and excellent infrastructure, such as the United Arab Emirates (UAE).

India  now has a Free Trade Agreement (FTA) with the UAE since 2022, which can greatly assist swift cooperation and collaboration for such Innovation Centres.

Artificial Intelligence development that is changing the entire IT landscape, as the next step up from semiconductors/chip manufacturing and use, with its revolutionary abilities and cost saving applications need vast amounts of electricity.  So does the semiconductors and chip development industry getting started in a big way in India, in addition to large amounts of water, and of course, rare earth mineral products such as ‘magnets’. But AI, while essentially using semiconductors/chips can constantly improve their capability and quality.

Rare Earth mineral development and its products are also being fast-tracked in India from mining onwards. But right now it relies on imports from current monopolist China. Neither the semiconductor/chips nor AI can function without rare earth products.

India is now more than willing to take the comprehensive plunge and just as it has obtained collaborators from Taiwan and South Korea for chips and semiconductor manufacture, supported by huge government incentives under generous PLI schemes, there is no reason why the same cant be done for the development of Technical Innovation in IT.

India can also offer long-term visas to Europeans, Americans, Taiwanese, Japanese, Koreans and technical Chinese to set up  on their own. We couls also collaborate with the Chinese in China and learn rare earth technology, chip magnet manufacturing and probably cyber protection. They want Indian technical talent and are offering visas. India’s major advantage is this large pool of technical personnel that could be employed in the Indian Innovation Centres and elsewhere. Germany and China may have been quick off the mark, but there will be many others such as Canada and Britain wanting to employ Indians for their technical expertise and ease with the English language.

With ongoing economic reforms, a robust economy, and the growth of India as a manufacturing and investment destination, the possibilities are indeed great.

Internally, lowering of GST rates, income tax rates, hike in government pensions and salaries, are collectively setting off a consumer boom to counter the US tariff wars. We can see a flash growth already in automobile sales right at the beginning of the festive season. Rate cuts in  repo interest by thew RBI based on low inflation and a reduced trade deficit is stimulating private sector investment. This includes the MSME sector that employs large numbers. There is greater consumer spending as intended. News reports indicate there is a likelihood of allowing greater foreign investment in Indian banks in the near future.

In short, things are accelerating in the Indian economy. Present threats to labour intensive employment because of high US tariffs will probably resolve soon.

 FTAs with the EU and indeed the US may both be in place by the end of this calendar year 2025.  From 50% tariffs imposed by the US we may be down to about 10 to 15% with an interim trade agreement in hand as well.

The Innovation Centres that India may soon set up will contribute to the immense demands of the domestic market let alone export. That will interest foreign investors because few such opportunities exist now.  AI could contribute substantially to spends even as it improves efficiency and profits. India’s stress  on aatmanirbhar Make in India is the leit motif.

This is being seized upon by a large number of foreign companies who regard it as their way into the vast Indian market. In addition, there is the consumption of the huge domestic defence industry. Companies off the starting block with MROs, collaborations, technology transfers include Dassault and Airbus from Europe, Embraer from Brazil, GE  from the US , Rolls Royce from the UK, Russian defence companies. An FTA with the UK and another with four countries in Europe including Switzerland already exist.  There is a lot of collaboration in missile and drone technology with Israel in addition to substantial imports as well.

Submarine technology is coming into the collaborations with France and Germany. Other aircraft companies such as Boeing, Airbus, Rafale (Dassault), and Lockheed Martin are  also sourcing parts and components from India and its private sector independently.

AI can greatly help the semiconductors and chip industry, the electronic space, the automotive industry including electrical cars, alternative energy,  fuel refining and distribution, lubricants, nuclear energy. , infrastructure, including roads, tunnels, airports, dredging, dams, canals, railways and civil aviation, UAVs, drones, chemicals, fertilizers, ISRO and space, machines used in manufacture themselves. Then there is food production, afforestation, conservation, animal welfare,  indeed value addition of various sorts to almost every endeavour. The sky is the limit in India and IT innovation Centres can contribute massively to it all. If we get it right, we can do it all for ourselves and export our cutting edge know-how too.

Commercial  Ship-building is attracting big investments from South Korea, Japan and others. Modern ports are developing at a fast pace including container handling deep water ports. Off shore drilling for large oil reserves off the Andaman Islands offer great prospects. The electronics sector is not only attracting major American companies like Intel and Apple but also Samsung of Korea. And  all are committed to Make in India.

The question is not really about the potential. It is about how quickly India can move to seize the day.

(1,271 words)

September 24^th, 2025

For: Firstpost/News18.com

Gautam Mukherjee

 

The Topsy Turvy World of Coercive Trump Tariffs & Penalties And What India Can Do About It

The US-India relationship, called a geostrategic imperative for decades now, particularly in conjunction with the rise of China as a challenger to US hegemony, seems to have soured very suddenly.

What India now does about the situation will define not only the bilateral relationship going forward, the multilateral one in QUAD, and India’s standing in the world. This, as it goes towards becoming the world’s third largest economy before 2030.

The answer lies in a combination of retaliatory tariff hikes and even brand-new impositions on American companies operating in India, for example in the digital space, and diplomatic accommodation of American demands on trade wherever possible.

Caving in abjectly to US dictation has been swiftly ruled out. Perhaps the policymakers in Washington have not properly assessed the determination and backbone of the Modi administration.   In response to the near abusive tone adopted by Trump, unable to bully India into buckling under, India has said it will act only in its national interest.

But having said that, to take the relationship forward without a rupture, very skilful give and take will nevertheless have to take place. Even an adversary like China realises this in the midst of this tariff war with the US.

The Indian stock market is not unduly perturbed because tariff impositions like this cannot make too much of an impact in a country driven by its domestic economy. This is the key difference between India and many other highly export dependent countries.

 Still, the US currently accounts for half of all Indian exports, and till lately, the bilateral trade was expected to treble to $500 billion by 2030. Unless repaired, the present figure of $ 150 billion, with the balance of trade in India’s favour, could largely evaporate.

Instead of it being thought of as the ‘plus one’ to China as the US seeks to create new supply chains, other countries in South and South East Asia could assume this mantle, albeit collectively. This would be bad for India as a historic opportunity missed.

At the same time, India’s stellar growth rate of about 6.5% in GDP year-on-year, the highest amongst all major economies, could be impacted by up to 0.5% by US tariffs at 25% on Indian exports.

This is not counting as yet excluded sectors such as service exports, meaning software in the main. Pharmaceuticals are also not included but tariffs on them have been threatened. US pharmaceutical companies, which have Indian counterparts have been brought under the US Food and Drug Administration (USFDA) scanner. These include Aurobindo Pharma, Dr Reddy’s Laboratories, and Sun Pharma. Various inspections are being conducted. But generic drug exporters, could face tariffs next.

Then there are as yet unspecified penalties for India’s membership of BRICS perceived as an anti-US organisation hostile to using the US dollar as a global currency for most trade. Does India need to really stay in BRICS which leans towards China, or could it move away to a leadership of the Global South instead?

India wants to promote its UPI but not get rid of the US dollar in favour of the Chinese currency. It has made this clear on more than one occasion.

America is also annoyed along with the NATO countries in Europe at India’s neutrality on Ukraine and buying petroleum from war sanctioned Russia.

The Trump administration also does not want India to buy armaments from Russia either despite the great success of the S-400 and Brahmos missiles in the recent Operation Sindoor against Pakistan.

We will know the extent of the blow only when the penalties are specified, but it could be well over 100%.

For now, India has been subjected to one of the higher tariffs amongst its export competitors, Vietnam and Bangladesh for example. These begin, in the absence of its agreement to allow American dairy, GM seeds and agricultural products at nil tariff into the country. The sectors gravely affected are textiles and ready-made garments, plus gems and jewellery, which are all labour intensive.

India could consider redirecting these exports via the UK with whom an FTA has just been concluded at nil duty. The UAE, with which country India also has an FTA, presents another route.

We do not have tariffs like Vietnam for conducting third party exports either. India, like others, and China before it, could look for circumventions too.

Even after five rounds of face-to-face negotiations and a sixth meeting scheduled around the 20-21^st of August 2025 in Delhi, dairy and agricultural products are sticking points. Will India be able to concede ground on some items within this sphere, particularly in the processed foods area, to allow the Trump administration to call it a win?

Of course, the dairy and agriculture sectors are politically sensitive in India with rural India, its farmers and others, constituting a very powerful voting block and lobby, ever ready to march on Delhi in an instant. Still, certain items in the detail which don’t pose a threat to Indian agriculturists could be allowed in.

An interim trade deal could then result, and the punitive 25% tariffs would be overtaken. A full agreement could come after at least a year when all issues have been scrutinised and negotiated. America wants access to the Indian market and India would be churlish to miss the chance to achieve a good FTA with America. This more so with China as our main economic and military competitor next door.

India could also further diversify its imports of oil and gas, looking father afield to reduce its purchase of Russian product. This, provided lucrative deals better than those on offer from Russia could be struck. Hopefully, the Trump administration will not take an absolutist position and live and let live.

As for armaments, can America supply what India needs quickly enough and at a reasonable price? The US track record on the supply of GE 404 and 414 engines for India’s hugely delayed Tejas 1A and 2A fighter programmes has been most discouraging. Likewise, the Apache AH-64E combat helicopters on order are vastly delayed for some years, the deal was signed in 2020. With only three out of the six just delivered, and the other three promised by the end of 2025.

America is also very expensive, slow on export permissions on its high technology armaments, and reluctant to collaborate and transfer technology. It would have to change all this, and be consistent going forward without using any of it for leverage against India.

 While Russia is immersed in the war in Ukraine, it has continuously tried to support the Indian armed forces, and has offered best terms on its advanced equipment with technology transfer. France, Germany, the UK and Israel have also become defence partners with India and provide alternatives to both Russia and America.

The commercial Boeing aircraft on order by the private sector are also much delayed, even as various Boeing aircraft in India and abroad are showing a lot of technical problems, that even resulted in a major crash of a 787-8 Dreamliner at Ahmedabad recently.

Is the American aviation industry slipping? The $100 million F35 is showing problems with one stranded for over a month in India before it was repaired and another crashed in America. Everything military equipment wise, if it comes from the US, is most tardy. Yes, there is definitely room for give and take and revisions of stance between the two great democracies.

(1,234 words)

August 1^st, 2025

For: Firstpost/News18.com

Gautam Mukherjee

 

 

 

India Must Recycle, Mine, Refine, Import, Critical Rare Earth Mineral Products To Get Away From Chinese Market Dominance

A worry on what to do with EV Lithium batteries once their life is over, in about eight years, based on current technology, is being addressed. Instead of heaping them up without use, the batteries can be recycled to extract critical rare earth minerals. This process is faster, and is at least 25% cheaper than setting up greenfield mines and refining facilities, and, deals with some part of the waste material at the same time.

India could even import expired EV batteries to recycle their rare earth minerals and magnets. It already runs some of the largest ship scrappage facilities in the world and attracts many large ships at the end of their useful life from all over the world.

China’s trade war with America is based on restricted sale and export of critical minerals/ metals/magnets. But it also restricts such sales in general, so that the requirements cannot be sourced from third countries not on the embargoed list. This has prompted most of the world to seek alternatives.

India and its fast-developing aatmanirbharta manufacturing programme is hard hit as stockpiles of the rare earth magnets run out.  

Besides recycling, several countries including major consumers in the US and Europe, plan to increase the mining of their own resources and set up refining plants for end products.

So far, most countries who have been hit with Chinese embargoes, were content to source them from China for its cost advantages, and the fact that mining and refining rare earth minerals is a highly polluting business. Despite being a near monopoly on the part of China, the price of rare earth minerals, metals and magnets have been falling according to Australia. This may be another engineered tactic on the part of the Chinese to keep competition out.

However, even as countries resolve to reduce this dependence on China, alternative facilities cannot sprout overnight. The sudden shortage is crippling the Electrical Vehicle (EV) production market. In addition, the renewable energy resources area, in which India has been making rapid strides is also hampered. Likewise, the crucial defence manufacturing ventures that use sophisticated electronics as well. For the moment the leverage advantage is definitely with China.

India is not only planning to mine its own reserves of rare earth minerals but has been active in setting up trade agreements with other countries in Africa and South America that have these resources. America has large reserves in- country as well, and could well become a new developed source.  

So while China, because of its dominance and economies of scale in the field can hamper and disrupt various activities for now, it is probably not for too protracted a period.  Other supply chains are under development, with cooperation between nations without involving China. Explorations are ongoing in new countries like Oman, Vietnam, Sri Lanka and Bangladesh. Thereafter, as this effort is up and running over the next few years, China may find itself in trouble trying to export these very monopolistic resources that it has spent so much time and money developing.

Meanwhile India is already taking some concrete steps. It proposes to incentivise domestic production of rare earth minerals and magnets by Indian companies with an amount of Rs. 1,345 crores. The key target sectors are electric vehicles, electronics and defence. One item for example, neodymium magnets, are crucial in EVs, wind energy systems, mobile phones, defence equipment.

The early Indian initiative is designed to support the production of 1,500 tonnes of rare earth magnets. India currently produces only 1% of global output in critical rare earth minerals even though it has 6% of the global reserves. India is also exploring a partnership with Australia which has at least 5% and is selling it to Japan, that has managed to reduce its dependence on China to 60%. However, Australia is highly dependent on China for its trade and investments and cannot go against Chinese wishes.

Therefore, India is also looking elsewhere for supplies. Presently, China controls 69% of the rare earth minerals, metals and magnets production and market. America contributes 12%, Myanmar holds 11% and Australia accounts for 5%. Myanmar has a strong alliance with China, that takes the joint tally to about 80%. The manufacturing process combines light rare earth elements such as neodymium and praseodymium with traces of heavy rare earths such as dysprosium and terbium. Procuring all these elements is not easy. India currently produces the light rare earth items some 2,900 tonnes worth, and none of the heavy earth minerals. Most of the product is found in coastal beach sands with low mineral content. Samarium-cobalt magnets are being developed in a pilot plant for the defence industry. Explorations are going on in different coastal and sand rich interior states like Rajasthan.

Its Lithium that has been discovered in J&K, but that is another part of the EV jigsaw.

Efforts are also ongoing to develop Sodium-Ion batteries in countries like Japan, ever more efficient internal combustion engines with almost nil pollution in various developed economies. This will prolong and preserve their automotive fuel based industries. Then, there is propulsion using hydrogen. India has made both buses and trains at the trial stage that can run on hydrogen and have nil pollutants. It also has hydrogen producing factories. Other technological applications such as nuclear energy are also being explored to take a leaf out of nuclear-powered submarines, aircraft carriers, and some specialised ships.

For the moment however, there is very little option but to persuade China to sell us rare earth minerals and magnets to keep various industries going. This will take negotiation and give and take. America, for example, that had put restrictions on high-end electronic chips from being sold to China, has been forced to lift them in exchange for the rare earth products.

(964 words)

July 23^rd, 2025

For: Firstpost/News18.com

Gautam Mukherjee