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Editorials/Opinions Analysis For UPSC 19 August 2023


Editorials/Opinions Analysis For UPSC 19 August 2023


Contents

  1. India-Japan Semiconductor Collaboration: Supply Chains and Innovation
  2. GDP to Job Creation: Rethinking India’s Economic Growth

India-Japan Semiconductor Collaboration: Supply Chains and Innovation


Context

In a significant milestone, India and Japan have teamed together to form a strategic partnership in the semiconductors industry in July 2023. This alliance focuses on fostering innovation and talent development within the semiconductor ecosystem while also aiming to increase the resilience of the semiconductor supply chain, a technology that is essential to many different industries. The partnership highlights the rising significance of international cooperation in a time of supply chain interruptions and geopolitical unrest.

Relevance

GS Paper 2 – International Relations

Mains Question

Discuss the five priority areas for the India-Japan relationship in semiconductors, including talent development, manufacturing, and design. How do these strengthen the supply chain and promote innovation? Relate this to Japan’s “Society 5.0” and India’s desire for self-sufficiency. (250 words)


The relationship between India and Japan is multifaceted and focuses on five important fields in the semiconductor industry:

  1. Semiconductor Design: Enhancing semiconductor design capabilities, a cornerstone of innovation in the sector, will be the focus of collaborative efforts. The Indian and Japanese semiconductor companies’ interchange of technological information and research will enhance design capability.
  2. Manufacturing: The partnership is aware of the need for more capacity in semiconductor production. To meet the rising demand for specialised chips, efforts will be focused on developing semiconductor fabrication plants (fabs).
  3. Equipment Research: The creation of cutting-edge machinery is an essential part of the semiconductor manufacturing process. The alliance intends to promote semiconductor equipment research, furthering the sector’s technological development.
  4. Supply Chain Resilience: Following recent supply chain disruptions, creating robust supply chains is receiving increasing attention. The alliance aims to improve the supply chain for semiconductors’ reliability and solve risks.
  5. Talent Development: Understanding the value of skilled labour, the collaboration will concentrate on fostering talent within the semiconductor ecosystem through skill-exchange programmes, workshops, and training initiatives.

Common Policy Objectives:

The cooperation between India and Japan is founded on common policy goals that put an emphasis on technical independence and growth that is driven by innovation. The “Make in India” programme of India and the “Society 5.0” concept of Japan share the objective of fostering local technology capabilities. In order to encourage semiconductor manufacturing and research, both countries have harmonised their policies, fostering a favourable climate for bilateral collaboration.

Initiative “Make in India”

  • Launched in 2014, the initiative “Make in India” aims to establish the country as a significant worldwide hub for manufacturing and investment activity. This initiative, spearheaded by the Department for Promotion of Industry and Internal Trade (DPIIT) under the auspices of the Ministry of Commerce and Industry, Government of India, extends a broad invitation to potential investors and partners worldwide to participate in the forward-thinking story of the “New India.”
  • Within the framework of Make in India 2.0, significant advancements have been made throughout a wide range encompassing 27 sectors. Both important manufacturing sectors and crucial service sectors are included in this comprehensive range.

“Society 5.0” Vision:

  • Society 5.0 represents a radical paradigm in which human welfare is at the centre of technical innovation, providing practical solutions to improve people’s lives all around the world. This innovative idea was first presented in 2016 in the technologically advanced country of Japan, and it was later unveiled in 2017 in Hanover, Germany. Society 5.0’s central aim is a harmonious blending of the physical and digital worlds that smoothly incorporates technology into everyday life.
  • This revolutionary idea takes advantage of the progress brought about by Industry 4.0, incorporating crucial components like Big Data, autonomous robotics, simulations, the Internet of Things, and 3D printing. However, what makes it stand out is the way it intends to use the potential of these technologies to advance humanity. The result of these ground-breaking technological innovations, all designed to improve human existence in general, is Society 5.0.

Utilising Strengths:

Japan is a world leader in chip manufacture and research thanks to its sophisticated semiconductor sector. The information technology sector is expanding quickly in India, on the other hand, and there is a growing market for semiconductor devices across a range of businesses. The cooperation is built on the teamwork, which takes advantage of these complimentary strengths.

Addressing Difficult Problems

Geopolitical unrest and supply chain interruptions have highlighted the importance of encouraging international cooperation and diversifying the supply chains for semiconductors. Complex problems in semiconductor design, manufacturing methods, and materials science can be better addressed by combining resources and expertise through joint research endeavours. The creation of innovative ideas is accelerated by this cooperative approach.

Global Implications:

The alliance between India and Japan has a big impact on the semiconductor industry worldwide. The partnership will stay dynamic as technology develops, tackling new problems like semiconductor miniaturisation, AI integration, and quantum computing developments. This collaboration has an impact on the Indo-Pacific region’s geopolitical partnership aspects across the entire global technology ecosystem.

Consolidation of Like-Minded Partners:

In the Indo-Pacific region, notably in the field of essential technologies, bilateral agreements between India and Japan and India and the United States demonstrate the consolidation of like-minded partners. These agreements recognise the national security and geostrategic ramifications of such engagements. This alignment becomes more important in light of the CHIPS and Science Act of 2022, which places restrictions on the growth of semiconductor manufacturing by nations considered to be direct threats to the U.S., particularly China.

Diversification and Confidence:

The cooperation is an example of the confidence that the Quad nations—India, Japan, Australia, and the United States—have in India. It represents India’s expanding technological prowess in semiconductor research and development. The collaboration opens the path for a future characterised by better electronics, improved connectivity, and a shared commitment to technological excellence by fusing Japan’s technological know-how with India’s innovation and design capabilities. The collaboration demonstrates the potential of strategic partnerships to promote international innovation and tackle difficult problems in a connected society.

Conclusion

The cooperation between India and Japan in the semiconductor industry is proof of the potency of strategic alliances. This cooperation has the potential to transform the global semiconductor landscape with a holistic strategy covering design, production, research, supply chain resilience, and talent development. Both countries are well-positioned to take advantage of technology’s revolutionary potential to advance their economies and strengthen national security by combining their respective strengths and policy objectives.


GDP to Job Creation: Rethinking India’s Economic Growth


Context

During a recent parliamentary debate on a motion of no-confidence, the Union Finance Minister bragged about India’s double-digit GDP growth and position as the fastest-growing economy in the world. She cited recognition from organisations like Morgan Stanley and the IMF. She was refuted by a former finance minister, who argued that the annual GDP growth during the previous administration was higher. In this discussion, one key question has gone unanswered: Whose GDP growth is it ultimately enhancing?

Relevance

GS Paper 3 – Indian Economy

Mains Question

Describe the discrepancy between the GDP growth and employment creation in India. What role does automation play in this gap? Make policy recommendations to alleviate this inequality. (150 words)


Employment Prospects: A Difference in Economic Success

While India’s economy is allegedly expanding quickly, demand for minimum-wage jobs under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) programme paradoxically rises. The demand for such job shows that those who have no other means of support are looking for menial compensation for laborious chores. Surprisingly, throughout the duration of the current administration, demand for MGNREGA jobs increased by 5.4% annually while India’s real GDP increased by 5.3% (annualised). This discrepancy between GDP growth and MGNREGA work demand draws attention to an unsettling imbalance.

The Insufficient Connection between GDP Growth and Job Creation

The claim that job possibilities should result from a growing economy is incompatible with India’s reality. Genuinely strong economic growth would inevitably lead to job creation and reduce the demand for minimum-wage jobs. This is not the case, though. Rapid productivity increases, increased automation, and the quality of GDP growth have all significantly decreased employment creation. In the 1980s, each percentage point of GDP growth provided about two lakh formal jobs; by the 1990s, this number had fallen to about one lakh jobs per percentage point, and it has continued to erode throughout the following decades.

This decrease in job creation for every percentage point of GDP development is a global concern related to automation and the changing nature of work; it is not specific to India. As a result, the emphasis must change from promoting GDP growth at any costs to supporting economic projects that have a large employment component.

Social Effects of Job Inequalities

The fact that the employment being produced maintain socioeconomic inequities just makes the situation worse. The bulk of MGNREGA workers come from marginalised castes including Dalits, tribals, and backward communities, whereas higher-caste individuals predominate in the formal service sector employment prospects brought about by GDP growth. This job disproportion widens already existing societal rifts.

A Road to Inclusive Economic Growth: The Mines and Minerals Bill

The Mines and Minerals (Development and Regulation) Amendment Bill, 2023—also known as the MMA Bill—is a potential solution currently being considered by the government. Minerals like lithium, cobalt, and graphite are becoming essential for electric vehicle supply chains as the world transitions to electric mobility. The shift to electric mobility, which is being firmly led by nations like China, is built on these minerals.

India has a geologically favourable setting that makes it possible to find mineral resources that are similar to those in places like Afghanistan and Western Australia. India hasn’t fully utilised this potential, though; less than 10% of its underground mineral resources have been explored, and even fewer have been mined. By encouraging private sector involvement in the exploration of key minerals, including lithium, the MMA Bill aims to change this. In contrast to semiconductor production, mining has the potential to significantly increase local employment, especially for low-skilled individuals from underrepresented communities. Furthermore, by giving suppressed castes a place to work, mining can promote social inclusion.

Future of India’s Mining Depends on Inclusiveness

Mining, in contrast to sectors like semiconductor manufacture, is labor-intensive by nature and has the potential to create a large number of jobs. Growth in this industry can help India’s socioeconomic inequities and unemployment problems. Deep-sea mining also has unrealized potential given India’s more than 7,000 km of coastline. However, worries about the effects on the environment and labour exploitation have slowed down development in this field.

The MMA Bill has the potential to unleash India’s mining potential, but its success depends on careful implementation as well as protections against exploitation and environmental degradation. The government must use judgement and give priority to projects with the highest social returns rather than blindly committing resources to efforts like “SemiconIndia” or “Make in India.”

Changing the Conversation About the Economy: From GDP to Job Creation

Political leaders must change the way that the economy is discussed in order to make real change. The emphasis on headline GDP growth that economists, technocrats, and international organisations like the IMF promote is useful for comparisons and predictions but falls short in addressing the true wellbeing of the public. For real economic development to benefit all citizens, this attitude change is essential.

The Finance Minister’s plan to host a “chintan shivir,” or thought workshop, for senior economic policymakers is a positive move. However, the workshop should give priority to “Jobs Data Product” (JDP) rather than just concentrating on generating high GDP growth rates. This entails putting less emphasis on the country’s GDP growth targets and more emphasis on how economic measures translate into real job possibilities for the general public.

Conclusion

In conclusion, the story of India’s economic progress is significantly more complex than what the headline GDP estimates imply. Due to elements such as automation and changing industries, the relationship between GDP growth and job creation has diminished. If the MMA Bill is implemented carefully and with consideration for social and environmental issues, it has the ability to encourage inclusive employment creation through mining. It’s past time for the country’s economic debate to broaden from a limited concentration on GDP growth to a more inclusive focus on establishing chances for meaningful work for all residents.


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