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The Hindu Editorial

24-January-2024

1. The larger message to New Delhi from the Red Sea

Topic: GS2 – International Relations – Effect of policies and politics of developed and developing countries on India’s interests
Critical for UPSC aspirants, the article discusses India’s strategic shift, emphasizing the need for an Indo-Pacific strategy amid evolving challenges from China.
Context:
  • The article explores India’s strategic shift to the maritime domain, addressing challenges posed by China’s expanding influence.
  • It emphasizes the need for a comprehensive Indo-Pacific strategy to safeguard India’s interests.
 Indo-Pacific Shift and Maritime Challenges:
  • India’s shift from continental to maritime focus marked a significant strategic move, breaking free from land borders dominated by China and Pakistan.
  • The recent Houthi attacks on commercial ships in the Red Sea and Indo-Pacific raise concerns about the region’s stability and India’s maritime challenges.
Response to Houthi Attacks:
  • External Affairs Minister S. Jaishankar’s swift response to Houthi attacks involved diplomatic efforts in Tehran and the deployment of Indian Navy destroyers in the broader region.
Lack of Maritime Grand Strategy:
  • The article questions India’s long-term vision for the Indo-Pacific and its absence of a cohesive maritime grand strategy beyond reactive measures and naval exercises.
Two-Front Challenge:
  • India faces a new two-front challenge, not just from traditional foes Pakistan and China, but a combination of continental and maritime challenges.
  • China’s aggressive expansion in the Indian Ocean, coupled with its naval strength and overseas military bases, poses a significant threat to India.
China’s Maritime Expansion:
  • China’s rapid naval growth with a battle force exceeding 370 ships and submarines, and its intentions to reach 435 ships by 2030, contrast with India’s current naval capacity of 132 warships.
  • Chinese military bases and strategic investments in Djibouti, Gwadar, Hambantota, Kyaukpyu, and potential bases in the Seychelles, Cambodia, and Comoros, signal a comprehensive containment strategy.
Global Attention on Indo-Pacific:
  • India should leverage global interest in the Indo-Pacific to build coalitions with like-minded nations concerned about China’s influence in the region.
  • The Indo-Pacific’s significance to major countries, including the U.S. and its allies, offers an opportunity for strategic partnerships against common challenges.
Need for a Coherent Indo-Pacific Strategy:
  • While Quad and Malabar initiatives are steps in the right direction, India must develop a comprehensive Indo-Pacific strategy beyond declarations.
  • Investments in partnerships and a well-thought-out strategy are crucial for India to navigate its new two-front challenge and counter China’s influence effectively.
Conclusion:
  • India’s maritime turn demands a proactive Indo-Pacific strategy. As China expands influence, strategic partnerships and a cohesive plan are essential.
  • A decisive approach is crucial for India’s security and counter-containment efforts.
PYQ: The newly tri-nation partnership AUKUS is aimed at countering China’s ambitions in the Indo- Pacific region. Is it going to supersede the existing partnerships in the region? Discuss the strength and impact of AUKUS in the present scenario. (250 words/15m) (UPSC CSE (M) GS-2 2021)
Practice Question: Discuss India’s evolving maritime strategy in response to geopolitical challenges, focusing on the imperative for a comprehensive Indo-Pacific approach. (150 words/10 m)

2. The need to overhaul a semiconductor scheme.

Topic: GS3 – Indian Economy – Issues relating to growth.
GS2 Governance – Government policies – Interventions for development in various sectors Critical for UPSC as it addresses challenges in India’s semiconductor strategy, emphasizing design capabilities and global competitiveness for economic and strategic goals.
Context:
  • The article discusses the mid-term appraisal of India’s Semiconductor Design-Linked Incentive (DLI) scheme.
  • The article highlights its shortcomings in supporting start-ups, proposing enhancements to delink ownership, broaden objectives, and reconsider the nodal agency for fostering semiconductor design capabilities.
 Current State of DLI Scheme:
  • Only seven start-ups approved, falling significantly short of the five-year target of supporting 100 start-ups.
  • Mixed results from Indias $10 billion Semicon India Program.
Objectives of Indias Semiconductor Strategy:
  • Reduce dependence on semiconductor imports, especially from China.
  • Build supply chain resilience by integrating into the global semiconductor value chain.
  • Leverage Indias comparative advantage in chip design.
Importance of Design Ecosystem:
  • Stimulating the design ecosystem is less capital-intensive than the foundry and assembly stages.
  • Design stage can establish strong forward linkages to a growing fabrication and assembly industry in India.
Issues with DLI Scheme:
  • Foreign Investment Restrictions: Beneficiary start-ups must maintain domestic status for three years and limit foreign direct investment to 50%, creating a significant barrier.
  • Capital Requirements and Funding Landscape Semiconductor R&D has long-term payoffs, but funding landscape for chip start-ups in India is challenging. Lack of success stories reduces risk appetite of domestic investors. Modest incentives under DLI scheme may not justify trade-off for start-ups.
  • Ownership Restrictions: Ownership restrictions hinder access to crucial long-term funding and discourage equity financing from foreign funds.
Recommendations for Scheme Enhancement:
  • Delinking Ownership and Development: Delink ownership from semiconductor design to attract more foreign funds, boost financial stability, and provide global exposure to start-ups.
  • Broadening Objective of DLI Scheme: Revise the scheme to focus on cultivating semiconductor design capabilities in India for a wide array of chips, irrespective of ownership.
  • Financial Outlay Increase: Enhance the financial outlay of the DLI scheme substantially to support the shift towards focusing on design capabilities.
Nodal Agency Concerns:
  • Reconsider the role of the Centre for Development of Advanced Computing (C-DAC) as the nodal agency due to conflicts of interest.
  • Propose the Semiconductor Fabless Accelerator Lab (SFAL) as a model for a suitable implementing agency under the India Semiconductor Mission.
Re-calibrated Policy Approach:
  • A revamped DLI scheme, steered by a capable institution, should tolerate a certain failure rate and treat beneficiary start-ups as exploratory vehicles to establish India’s foothold in the high-tech sector.
Conclusion:
  • The mid-term appraisal provides an opportunity to address the shortcomings of the DLI scheme and realign it with the broader objectives of India’s semiconductor strategy, focusing on design capabilities and global competitiveness.
Practice Question: In the context of India’s semiconductor strategy, discuss the challenges faced by the Semiconductor Design-Linked Incentive (DLI) scheme and propose measures for its effective implementation. (250 words/15 m)
 

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