January 15, 2011


Dr. Babu Suseelan


The Sabarimala tragedy and untimely death of over hundred Ayappa devotees clearly demonstrates the callous disregard and devilish indifference of the Marxist government’s apathy and disregard for Hindu devotees life. The Police and the Marxist government officials knew or should have been known that millions of Hindu Ayappa Bhaktas visit Sabarimala every year. Instead of providing effective services for Hindu devotees, successive anti Hindu governments in Kerala have been collecting increased taxes from Ayappas devotees for minimum services government agencies provided to Hindu pilgrims.

Several attempts were made previously to destroy Sabarimala Ayappa Temple. Timely Hindu outrage has stopped or prevented the destruction of one of the greatest Hindu Temples of Kerala. This tragedy again proves reality gives ways to illusion. This reckless and irresponsible behavior of the government again conclusively proves their disrespect and disregard for Hindus in Kerala.

We see such tragedies again and again in India. In Kashmir, Hindu devotees are forced to pay Jasiya to Muslim rulers while central and state governments are paying extra money and spent millions for Muslims to visit Saudi Arabia for beheading animals.

In much of modern India, there seems to be a belief that anything that involves mass death of Hindus ought to be forgotten. The government collects millions of rupees from Ayappa devotees year after year. The Marxist government in Kerala considers Ayappa devotees a good source of revenue. Today we see little public outrage about discrimination and harassment against Hindu devotees. The central and pseudo secular state governments controlled by Jihadis and the Sonia gang have constructed a defensive wall built of bricks of diversion, blame game, half-truths and deliberate indifference towards Hindus. There is lack of outrage when tragedy strikes. The modern allergy to and indifference for Hindu lives is deeply problematic. The willingness of our citizens to make judgments about serious matters involving our life and death is pertinent for our cultural continuity. A nation can survive only on the people’s capacity to make reasonable judgment based on moral principles.

Many citizens no longer express their anguish and outrage when the victims are Hindus. When people do not think, react, express their outrage, then they have decided to submit to the dictatorial will of the Marxists, atheist, Jihadis and the missionaries. If people choose to make no effort to understand the dark forces behind such tragedy then they have chosen to be victims. If people choose to disregard past tragedies and highhandedness and abuses, they choose to sacrifice themselves to the next killers. This Sabaarimala tragedy reminds Hindus again not to be lethargic and indifferent and never expect any great leap forward from anti Hindu governments. Hindus cannot ignore the problems of the past and the present. To preserve our culture, to save our temples, and to promote our sacred values, Hindus must act now. If not now, when?

Disconnect or ruse?

China's civilian leadership, says N.V.Subramanian, must be held to account for any "assertiveness" of the PLA.


New Delhi, 14 January 2011: Robert Gates, the US secretary of defence, made a puzzling observation about China soon after his recent visit there. In bits and pieces, that puzzle has been evident to strategists besides this writer. Unless that puzzle is understood and resolved, it would be difficult for democracies like India and the United States to deal with, let alone moderate, a growingly assertive China.

During Gates visit to China, its new stealth plane, J-20, made a flight test. The test got considerable publicity, including over China's tightly-controlled internet. But later in Japan, Gates said there were "pretty clear indications [that the civilian leadership was] unaware of the flight test". Gates went on to mention a disconnect between the civilian leadership and the PLA which extended to the anti-satellite test of January 2007 and to the more recent PLA-Navy aggressions. But he ended puzzlingly, saying that president Hu Jintao is "in command and in charge".

It is possible that Gates put out that throwaway line about Hu not to upset the Chinese leadership he had so recently met. It is equally probable that Gates believed what he was saying about Hu being "in command and in charge". But if that be the case, it sits oddly with the "disconnect" he found between the PLA and the civilian leadership on the three major issues that he chose to reveal. And he spoke of "signs" of the "disconnect" being evident "over the last several years".

Certainly, there are puzzling aspects to Gates' statement. But it does not take away from the inherently puzzling nature of the problem that someone as senior as Gates of any government in the world publicly has articulated for the first time. What needs to be resolved is this. Is there a real disconnect between the PLA and the civilian leadership? Or is this disconnect manufactured, with China employing a good cop (civilian leadership)/ bad cop (PLA) ploy to bamboozle the world to hasten its Middle-Kingdom peak?

This writer has been hearing about the "disconnect" at least since the (former) prime minister, A.B.Vajpayee's June-2003 visit to China. That visit will be remembered for Vajpayee's ill-judged recognition of the Tibetan Autonomous Region as Chinese. What the Indian government covered up was that during the visit, a PLA raiding party roughed up and disarmed an Indian patrol well within Arunachal Pradesh. When the raid got press-leaked and the government was forced to confront China, China retaliated with the by-now-familiar claim on Arunachal Pradesh.

The Indian government then put out the "disconnect" version. It suggested that the PLA provocatively was undercutting the civilian leadership's peace moves with India. It is conceivable that at least some of this "disconnect" theory was coming from the Taiwanese, who argued, not without logic, that the PLA was more extremely nationalistic than the civilian leadership. But the Taiwanese also made the point that at moments of perceived weakness, or during internal power struggles, civilian leaders took up the extremist drumbeat, with the PLA joining in.

This is not to argue entirely against a disconnect between the PLA and the civilian leadership. As much as the civilian leadership has been exposed to the outside world, so the PLA remains insulated. To be sure, the PLA's foreign-affairs department is worldly wise. But its leadership by and large still is at an everyday remove from worldwide engagement unlike the central political authority, and this is likely to make one remain largely conservative and the other a little more experimental and accommodative. Plus, institutions over a period of time are known to develop ruddy defining characteristics, and a strongly conservative and extra-nationalistic PLA would perfectly sit with its military and disciplinary traditions and with its foundations immersed in the Maoist revolution.

And yet, the PLA/ CMC are absolutely subordinate to the Chinese communist party (CPC). The officer corps owes its first allegiance to the CPC and then to China, although it doesn't make the PLA less patriotic. And, quite apart from PLA hawkishness, the civilian leadership has mastered the art of provoking its citizens to extremes of nationalism against manufactured foreign threats from the US, Japan, and to a lesser degree, India.

So it is a puzzle if the PLA is quite as disconnected from the civilian leadership as Gates makes it out, although he adds the rider of Hu Jintao being in "command and in charge". For example, just ahead of Gates visit to China, where he was expected to question the opacity and diabolic aims of the Chinese military build-up, pictures of the J-20 flashed on the internet, snapped by ecstatic citizens. Then the J-20 was flight-tested, again attended with masses of publicity, in the midst of the Gates visit. It is hard to believe that the civilian leadership was unaware of all this wild euphoria or its central cause.

It is still harder to accept that the Chinese assertiveness over the past year and more, which has nearly united East Asia against it, brought fresh favour to the US there, and turned up friendly invitations for India from that region, have been spearheaded by a manner of PLA activism which is disconnected from the civilian leadership. Robert Gates did not make that connection. But somebody could. And most recently, a Japanese news agency got hold of a secret PLA paper advocating a move away from no-first use. Quickly, the Chinese government denied a shift. But this writer was left puzzled.

The point is this. There may be a disconnect between the civilian leadership and the PLA. But the civilian leadership's past misconduct persuades this writer that it may be up to artful deception as well now, of which the "disconnect" could be a ploy to frighten the world into early submission to the Middle Kingdom, a more dangerous form of practice of the Nixon-is-crazy line. What makes it worse is China's opacity. Nobody on the outside really knows what is going on inside.

Therefore, for starters, the only way to make China accountable for its extremism is to hold the civilian leadership entirely responsible. Once China is convinced that its good cop/ bad cop ploy has no takers, it may see reason to return to an early phase of peaceful rise. If there, indeed, is a disconnect between the PLA and the military leadership, there will be new compulsions to remove it.

There is no reason to go easy on China now.

N.V.Subramanian is Editor, www.NewsInsight.net, and writes internationally on strategic affairs.

Nearly half of H1B visa holders are from India: Report


Nearly half of H-1B work visa holders in the US were from India, who were mostly hired for technology-related positions, according to an official report.

The Government Accountability Office (GAO) said that between 2000 and 2009, 46.9 per cent of the total approved H-1B visa holders had India as their country of birth.

"Between fiscal year 2000 and fiscal year 2009, the majority of approved H-1B workers (initial and extensions for both employers subject to the cap and cap-exempt employers) were born in Asia," said the report titled 'H-1B Visa Programme: Reforms are needed to minimise the risks and costs of current programme'.

"Over the last decade, the top four countries of birth for approved H-1B workers were India, China, Canada and the Philippines. Across all 10 years, about 64 per cent of approved H-1B workers were born in these four countries, with the largest group from India," it added.

Although information on the total H-1B workforce is lacking, data on approved petitions show that, since 2000, most people that were approved to be H-1B workers were born in China or India, were hired for technology positions and increasingly held advanced degrees, it said.

"Using publicly available data on H-1B hiring employers we learnt that at least 10 of the top 85 H-1B hiring employers in fiscal year 2009 participate in staffing arrangements, of which at least 6 have headquarters or operations located in India," the report said.

"Together, in fiscal year 2009, these 10 employers garnered nearly 11,456 approvals, or about 6 per cent of all H-1B approvals. Further, 3 of these employers were among the top 5 H-1B-hiring companies, receiving 8,431 approvals among them," it said.

The H1B cap for 2011 quota is 65,000 for general category.

To ensure that the H-1B programme continues to meet the needs of businesses in a global economy while maintaining a balance of protections for US workers, the report recommends that the Congress may wish to consider reviewing the merits and shortcomings of key programme provisions and making appropriate changes as needed.

Such a review may include, but would not necessarily be limited to the qualifications required for workers eligible under the H-1B programme; exemptions from the cap; the appropriateness of H-1B hiring by staffing companies; the level of the cap; and the role the programme should play in the US immigration system in relationship to permanent residency.

The 34 H-1B employers GAO interviewed reported that the cap has created some additional costs, though the cap's impact depended on the size and maturity of the company. For example, in years when visas were denied by the cap, most large firms reported finding other – sometimes more costly – ways to hire their preferred job candidates.

On the other hand, small firms were more likely to fill their positions with different candidates, which they said resulted in delays and sometimes economic losses, particularly for companies in rapidly changing technology fields.

Elements of the H-1B programme that could serve as worker protections – such as the requirement to pay prevailing wages, the visa's temporary status and the cap itself – are weakened by several factors, the report said.

First, programme oversight is fragmented and restricted. Second, the H-1B programme lacks a legal provision for holding employers accountable to programme requirements when they obtain H-1B workers through a staffing company. Third, statutory changes made to the H-1B programme have, in combination and in effect, increased the pool of H-1B workers beyond the cap and lowered the bar for eligibility, it said.

"Taken together, the multifaceted challenges identified in this report show that the H-1B programme, as currently structured, may not be used to its full potential and may be detrimental in some cases," the GAO report said.

GAO also recommends that the Departments of Homeland Security and Labour take steps to improve efficiency, flexibility and monitoring of the H-1B programme.



In the article titled as above in the latest issue of "Outlook", Saba Naqvi has quoted me as telling her as follows: "“Today the threat from Indian Muslim terror groups and Hindus who have taken to terror is equal in scale.”

2. I did not repeat not say this when she rang me up on January 14.I said that terrorism from the Muslim or Hindu communities should be of EQUAL CONCERN to the investigating agencies.

3.The Malegaon blasts took place on September 8,2006.I wrote as follows on September 10, 2006: "Malegon is a wake-up call to the Indian political leadership as to what could happen on the national scale if the seething Hindu and Muslim anger against each other and against the administration continues to grow by feeding upon each other......While one should not be surprised if the Malegaon blasts also turn out to be the work of jihadi terrorists, one should not rule out at this stage the possibility of the involvement of non-Muslims, keeping in view the long history of tensions between the Muslims and the Hindus in Malegaon.....It also needs to be underlined that any ill-advised actions by angry elements of the Hindu community to give vent to their anger over the continuing acts of terrorism, by indulging in reprisal attacks against innocent members of the Muslim community would be detrimental to our national interests and could contribute to an unbridgeable divide between the two communities. The Government should act with equal firmness against whoever indulges in acts of terrorism/, irrespective of the community---Muslim or Hindu--to which he or she belongs. There cannot be one law for the Muslims and another for non-Muslims . (http://www.southasiaanalysis.org/%5Cpapers20%5Cpaper1945.html )

4.Since then, my views have been consistent as could be seen from over a dozen articles on the subject and my observations in my book "Terrorism---Yesterday, Today & Tomorrow" published in 2008. Those views were partly based on my discussions with a Muslim IPS officer. He and I respect each other. Practically all these articles were also carried by you.

5.I notice that Saba Naqvi had given some of the points mentioned by me during her telephonic conversation with me as her own views and attributed to me by name a view which had not been expressed by me.





China has made a seemingly interesting move on Arunachal Pradesh, the meaning and message of which has to be carefully analysed instead of treating it with suspicion as another anti-Indian move or as connected to the recent change in its policy relating to Jammu & Kashmir (J&K). An interaction on this subject between the officials of the two countries would add value to the analysis.

2. Arunachal Pradesh in our North-East is an integral part of India, but China does not recognize it to be so. It calls it southern Tibet and has been insisting that historically this area belonged to China and hence should revert to China. The border dispute between the two countries arising from the conflicting claims of the two sides has been under negotiation between designated special representatives of the two Prime Ministers. There has been no transparency either from Beijing or from New Delhi as to how the negotiations are going on. The general impression in the community of non-governmental analysts is that there has been no forward movement.

3. In the meanwhile, the two sides have been strengthening their strategic infrastructure in their territories in this area---- China in its so-called Tibet Autonomous Region and India in Arunachal Pradesh. China has made better progress in this regard than India. It has constructed a railway line to Lhasa from Qinghai and has now undertaken its extension towards the Arunachal border. There is an unconfirmed report that it is planning to construct a second line from Qinghai to Lhasa to be dedicated to freight movement. It has strengthened its civil aviation infrastructure in Tibet. It has built more airports and is trying to make Tibet the hub of aviation traffic in Western China.

4. Simultaneously, there has been a departure from Beijing’s past practice of avoiding any major military exercise in Tibet in order not to create unnecessary alarm in India. The first pan-China exercise (Stride--2009) conducted by the People’s Liberation Army (PLA) in August 2009 did not include the Chengdu Military Region whose jurisdiction covers Tibet. For the first time, one saw three military exercises relating to Tibet in 2010---- two by the PLA (Air Force) in Tibet itself and one by the Army involving the Chengdu and Lanzhou Military Regions and co-ordinated by the Beijing Military Region. The Chengdu and Lanzhou Military regions share the responsibility for the defence of Tibet and Xinjiang. Any anxiety over causing concern in India is no longer an inhibiting factor influencing the timing and nature of China’s military exercises relating to Tibet.

5. In the diplomatic field, China lost no opportunity of asserting its claim to Arunachal Pradesh. It continued with its policy of not recognizing the Indian passports of the residents of Arunachal Pradesh and not issuing them visas---- regular or stapled--- to visit China for official or non-official purposes. It protested every time an Indian dignitary or His Holiness the Dalai Lama visited Arunachal Pradesh---particularly Tawang. It strongly opposed the Asian Development Bank funding electric power projects in Arunachal Pradesh.

6. At a time, when it appeared to be becoming increasingly rigid in its attitude on Arunachal Pradesh, it has shown a seeming ray of flexibility by issuing stapled visas on Indian passports to two sports officials of Arunachal Pradesh to enable them to attend a sports-related event in China. Indian Weightlifting Federation's Joint Secretary Abraham K Techi and a weightlifter, both residents of Arunachal Pradesh, were stopped recently by the Immigration at the New Delhi airport because their Indian passports had Chinese visas on plain papers stapled to their passports. They were going to Fujian in China at the invitation of the Chinese Weightlifting Association President Menguang to attend a weight-lifting contest from January 15 to17. The immigration did not allow them to board the flight in accordance with the practice of not allowing Indian citizens to travel to China with stapled and not regular Chinese visas.

7. The media has quoted a spokesman of the Ministry of External Affairs (MEA) as stating that India considers Arunachal Pradesh as an integral part of India and has conveyed to the Chinese side that a uniform process of issue of visas to Indian citizens be followed regardless of the applicant's ethnicity or place of domicile.

8. According to the Press Trust of India (PTI), an unidentified official of the Chinese Embassy in New Delhi, when contacted by it on this subject, stated as follows on January 13: "There is no change in our visa policy for residents of Arunachal Pradesh. China does not issue visas to officials from that state and will still not do it. For non-officials, we only issue stapled visas,"

9. It is not clear whether the agency has quoted the Chinese official correctly. It is unusual for a Chinese official to refer to the state as Arunachal Pradesh. Normally, he would have said so-called Arunachal Pradesh. His comments indicate that the issue of stapled visas to two residents of the State was a deliberate act and not the result of any mistake committed by the visa officer of the Chinese Embassy. The instructions to issue the stapled visas must have come from the Chinese Foreign Office in Beijing whose prior clearance is necessary for the issue of visas to persons traveling to China in response to a local invitation. Only for tourists no prior clearance is required.

10. In the past, Beijing did not recognize the legality of the Indian passports of the residents of Arunachal Pradesh. That was why it was refusing to issue them any visa----regular on the passport or on a stapled plain piece of paper. By issuing the stapled visas to the two sports personalities of Arunachal Pradesh holding Indian passports, it has implicitly recognized the validity of their Indian passports. This does not mean any change in its claim of sovereignty over the territory. It only means it is trying to adopt a more flexible line in asserting its sovereignty.

11. How should India react to it: Reject the stapled visas even in respect of the residents of Arunachal Pradesh as it has been doing in respect of the residents of J&K? Or adopt a more flexible line in respect of the residents of Arunachal Pradesh without linking them to the residents of J&K? Encourage the Chinese to continue with their flexibility and expand it? These questions should be carefully considered by the Government of India before deciding on its response.

12. In an interesting dispatch in the “Times of India” of January 14, its Beijing correspondent Saibal Dasgupta has said as follows: “China's decision to issue stapled visas to Arunachal Pradesh residents is a good omen, observers of India-China border negotiations said. It means China accepts people of Arunachal to be Indian citizens, which is major policy change for a country that describes it as its own province of "South Tibet". "If this news is correct, it is a setback for our stand. Or, a major concession given to India," Hu Shisheng, deputy director in the State-run Institute of South and Southeast Asian Studies, told TNN. Some Indian observers have taken a different view claiming that stapled visas were continuation of China's policy of putting up obstacles in the way of a negotiated settlement of the boundary problem. But there are signs that the Indian government is secretly happy over the new development as China did not give any visas to residents of Arunachal earlier. "We have been saying that people of Arunachal Pradesh do not need any visa as it is part of China. If stapled visa has been given, there must be a mutual agreement between the two countries," he said. There was a "slim chance" of stapled visas being issued by mistake by some official because it is a sensitive issue. "There must have been a change in policy for such a thing to happen" Hu said. He said the case of Arunachal should not be linked with Kashmir. Residents of Jammu and Kashmir are being given stapled visa because of the dispute between India and Pakistan. "China has said it is ready to change its policies and even redraw the border around Kashmir once India and Pakistan settle their disputes," Hu said.”

13, Unless there has been a mistake somewhere in the Chinese visa-issuing hierarchy, this action of the Chinese Embassy is significant and needs an imaginative response from the Government of India. (16-1-11)

( The writer is Additional Secretary (retd), Cabinet Secretariat,Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai, and Associate of the Chennai Centre For China Studies. E-mail: seventyone2@gmail.com )


IAMO Fo­rum 2011

23-​24 Ju­ne 2011 | Hal­le (Saa­le), Ger­ma­ny

The Leib­niz In­sti­tu­te of Agri­cul­tu­ral De­ve­lop­ment in Cen­tral and Eas­tern Eu­ro­pe (IAMO), the Kiel In­sti­tu­te for the World Eco­no­my (IfW) and the GI­GA Ger­man In­sti­tu­te of Glo­bal and Area Stu­dies an­noun­ce the up­com­ing IAMO Fo­rum 2011. The con­fe­rence will fo­cus on growth and tra­de in the world’s lea­ding emer­ging eco­no­mies Bra­zil, Rus­sia, In­dia, and Chi­na (BRICs) and the re­per­cus­sions on the world eco­no­my.



The on­go­ing glo­ba­liza­ti­on pro­cess ma­kes ques­ti­ons of tra­de and growth vi­tal­ly im­portant for all ac­tors in the world eco­no­my. The IAMO Fo­rum 2011 aims to ta­ke stock of cur­rent re­se­arch on the con­se­quen­ces of the ri­se of new eco­no­mic powers for the world eco­no­my. Be­si­des macroeco­no­mic ques­ti­ons the Fo­rum 2011 will fo­cus on agri­cul­ture, glo­bal food se­cu­ri­ty, and the sta­bi­li­sa­ti­on of high­ly er­ra­tic in­ter­na­tio­nal com­mo­di­ty mar­kets.

Whi­le glo­bal growth in­cre­a­sin­gly de­pends on the BRICs per­for­mance it is un­cle­ar how suc­cess­ful the BRICs will be in ac­ce­le­ra­ting tech­no­lo­gi­cal chan­ge and sta­bi­li­zing the world eco­no­my. In ad­di­ti­on, the on­go­ing ra­ce for pri­ma­ry pro­ducts and food re­sour­ces, the in­cre­a­sing vo­la­ti­li­ty of food and pri­ma­ry com­mo­di­ty mar­kets as well as the end­an­ge­ring of our na­tu­ral re­sour­ces call for in­ten­si­fied re­se­arch on the in­ter­ac­tions bet­ween growth and tra­de in emer­ging eco­no­mies.

Even though the eco­no­mic suc­cess of all the BRIC sta­tes is cha­rac­te­ri­zed by an ex­port-​led stra­te­gy, lar­ge dif­fe­ren­ces in their paths of de­ve­lop­ment exist. For ex­amp­le, their de­gree of open­ness and ex­tent of sta­te in­ter­ven­ti­ons dif­fer si­gni­fi­cant­ly. This is es­pe­cial­ly true for agri­cul­ture. Thus, the com­pre­hen­si­ve com­pa­ra­ti­ve ana­ly­sis is ne­cessa­ry to un­der­stand the noti­ce­able dif­fe­ren­ces in the sour­ces of growth among the BRICs. In this con­text the up­com­ing IAMO Fo­rum 2011 will al­so ex­ami­ne the BRICs’ agri­cul­tu­ral growth po­ten­ti­al and their in­flu­ence on agri­cul­tu­ral mar­kets and tra­de.


  • Growth pro­s­pects of the BRICs
  • The BRICs and the cur­rent world eco­no­mic cri­sis
  • In­ter­na­tio­nal tra­de and the BRICs
  • Eco­no­mic chan­ge and the ar­chi­tec­ture of po­li­ti­cal power: the ca­se of the BRICs
  • Agri­cul­tu­ral po­ten­ti­al of the BRICs
  • Glo­bal food se­cu­ri­ty and the BRICs
  • Agri­cul­tu­ral mar­ket po­li­cy of the BRICs
  • Glo­bal agri­cul­tu­ral mar­ket vo­la­ti­li­ty and the BRICs

Paper submission

Par­ti­ci­pants who would li­ke to pre­sent pa­pers should sub­mit a full pa­per, in Eng­lish, by 28 Fe­bru­ary 2011 (ex­ten­ded). In or­der to be con­s­ide­red pa­pers must not ex­ceed 7.000 words and fol­low the for­mat­ting gui­de­lines. A selec­tion of the best pa­pers will be publis­hed in a re­now­ned, peer-​re­view­ed jour­nal fo­cu­sing on in­ter­na­tio­nal eco­no­mics or agri­cul­tu­ral eco­no­mics. In or­der to fa­ci­li­ta­te the par­ti­ci­pa­ti­on of ta­len­ted young re­se­ar­chers we of­fer a li­mit­ed num­ber of tra­vel/acom­mo­da­ti­on grants.


Mar­lies Lohr
Leib­niz In­sti­tu­te of Agri­cul­tu­ral De­ve­lop­ment in Cen­tral and Eas­tern Eu­ro­pe (IAMO)
De­part­ment Agri­cul­tu­ral Mar­kets, Mar­ke­ting and World Agri­cul­tu­ral Tra­de
Theo­dor-​Lie­ser-​Stra­├če 2, 06120 Hal­le (Saa­le), Ger­ma­ny
Pho­ne: +49(0)345 2928 210
E-​mail: fo­rum2011(at)iamo.de

FDI and Income Inequality

Evidence From Europe

This paper examines the relationship between foreign direct investment (FDI) and income inequality for a sample of ten European countries over the period 1980 to 2000. Using panel co-integration and robust causality techniques the authors found that: (1) FDI has a positive short-run effect on income inequality in Europe, (2) the long-run effect of FDI on inequality, however, is negative on average, (3) long-run causality runs in both directions and (4) there are large differences in the long-run effect of FDI on income inequality, with two countries exhibiting a positive relationship between FDI and income inequality.

© 2011 Kiel Institute for the World Economy



Dierk Herzer, Peter Nunnenkamp





India’s Military Modernisation Programme

Indian Military Modernisation

Defence Minister A K Antony unveiled a Defence Production Policy that, in an implicit admission of public sector inadequacy, seeks “to build up a robust indigenous defence industrial base by proactively encouraging larger involvement of the Indian private sector”. The industry has reacted differently to the production policy. Khutub Hai of Mahindra Defence Systems had this to say“As a statement of intent, the new policy is a welcome step. But the government must create an effective framework that will clearly facilitate the private sector in developing and manufacturing defence equipment. The first test case that will define the new policy will be the FICV project.” Others have also articulated their responses starting a debate on the efficacy of the policy to their respective sectors.

FICCI while welcoming the new policy,articulated that it was “concerned about the implementation of the policy on the ground, because even the existing policies have not been implemented. It further hoped that MoD would take this initiative forward by also providing a level playing field to the private sector by eliminating any price preference for Defence PSUs and doing away with the practice of nomination.”

The policy aims at achieving “substantive self-reliance in the design, development and production

Joint Ventures

of (equipment) required for defence in as early a time frame as possible” by creating “an ecosystem conducive for the private industry to take an active role, particularly for small and medium enterprises (SMEs).”

Ajai Shukla articulas that the MoD is also challenged in having to balance the Defence Production Policy between its key objectives of indigenisation on the one hand; and on the other, having to keep the forces supplied with high-tech weaponry, little of which is produced in India.

Some basic issues need to be deliberated to comprehend the nuances of this initiative. Somehow the debate is about infusing confidence in the Indian Industry and providing a level playing field to the private sector when compared with the public sector and foreign companies.

There have been no comments from the military as yet. There is also no mention of how the needs of the military need to be met by a simplistic system of articulating the need and fulfilling it. Some larger issues merit consideration here beyond the policy.

Basics of Modernising the Military

As an ancient civilisation but a young nation that is still in the process of nation building, India faces many threats and challenges to its external and internal security. The foremost among these are the long-festering dispute over Jammu and Kashmir (J&K) with Pakistan and the unresolved territorial and boundary dispute with China. Since its independence from the British on August 15, 1947, India has been forced to fight four wars with Pakistan (1947-48, 1965, 1971 and 1999) and one with China (1962).

India’s internal security environment has been vitiated by a ‘proxy war’ through which Pakistan has fuelled an uprising in J&K since 1988-89. Various militant movements in India’s north-eastern states and the rising tide of Maoist terrorism in large parts of Central India have also contributed to internal instability. India’s regional security is marked by instability in Afghanistan, Bangladesh, Myanmar, Nepal, Pakistan and Sri Lanka.

Too Little Too Late

Military strength is a pre-requisite for peace and stability on the Indian Sub-continent. India’s socioeconomic development, and that of its neighbours, can continue unhindered only in a secure environment. No nation can afford to be complacent about and to take unmanageable risks with its security. In the rapidly changing geo-strategic environment, comprehensive national strength hinges around modern armed forces that strive constantly to keep pace with the ongoing technological revolution.

The rapidly changing nature of warfare, the existential threat from India’s nuclear-armed military adversaries and new threats like terrorism spawned by radical extremism, require a quantum jump in the Indian army’s operational capabilities.

Despite all the tensions confronting it, India has maintained its coherence and its GDP is now growing at an annual rate in excess of eight per cent, except for the dip suffered during the financial crisis. Growth at such a rapid rate would not have been possible but for the sustained vigilance maintained by the Indian armed forces and their many sacrifices in the service of the nation over the last six decades. The Indian army has fulfilled its multifarious roles with admirable valour and in a spirit of sacrifice and selfless devotion to duty. This is good but this needs to change in favour of a modernised armed force.

The COAS General V.K. Singh accepted in New Delhi earlier this month that the modernization of military hardware, particularly artillery, has been hampered in the past both by the men in uniform and civilian authorities, but the situation is being “amended”.”There have been faults, some in uniform and some out of uniform. Now we are on track to ensure that this mismatch that has happened over a period of time is amended.”

In order to successfully defeat future threats and challenges, the Armed Forces must modernise their weapons and equipment and upgrade their combat potential by an order of magnitude. The shape and size of the Indian Army’s force structure a few decades hence merits detailed deliberation and quick decisions as capabilities take several decades to create, test and experiment with till they finally mature. It has been well said that there are no prizes for the runners up in war. Merely upgrading equipment with inept HR and logistic infrastructure would not suffice. These essential components, especially of managing thought need to be upgraded by a buoyant modernization plan in all dimensions of combat.

Changing Thought

The discourse of military modernization of India always invariably gets mired in its tardy procurement processes and blinkered thinking on managing its periphery on the back of the spirit of the Indian soldier. From 1948 till date, the Indian Armed Forces have delivered despite strategic restraint, a confused politico military mechanism to articulate policy as also a strategic and operational bankruptcy in staying ahead of times in arming and modernizing its defence forces.

As per Defence Minister, “we are 15 years behind” while the COAS attributes this to faulty civilian and military oversight in ensuring the armed forces are always a step ahead of the changed threat scenarios.

There are few major weaknesses of the Indian Defence modernisation process.

The first is the absence of a clear and unambiguous relation matrix for the country’s highest security structure. The higher defence organization is conspicuous by incoherence in its very being. Since we lack formal structure at the apex with suitable participation by the armed forces, inexperienced administrators and political masters make short sighted policy decisions. In protecting their turf they do not permit entry of the armed forces in the decision making apparatus. On the other hand, in their quest to be transparent, the political class has pushed back the equipment modernization plan by more than two decades. As a result the strategic restraint theory gains currency and the modernization plans of the armed forces remain buried in files. There is an urgent need to modernize and energise this vital component of National Security Structure to articulate the needs of the defence forces in guarding the national interest by hard power.

Only a future-ready army can march into the coming decades with confidence, well prepared to tackle the new challenges looming over the horizon. As a first step, the Government of India must appoint a bipartisan National Military Commission to go into the whole gamut of restructuring and modernisation. The commission should comprise eminent political leaders, armed forces veterans, civilian administrators, diplomats and scholars who are capable of dispassionate reasoning and are familiar with the current military discourse. It should be given no more than six months to complete its work so that the restructuring exercise can begin early and be completed by 2020-25. Simultaneously, the higher defence organisaton of the nation needs to be urgently revamped.

Arming without Aiming

Secondly, the nation may not only be arming without aiming to a large extent in its approach towards handling the live and potential threats to its security but failing to make judicious use of what it has. There is a need to think ahead and procure that which would alter the battlefield geometry.

Thirdly, the armed forces spend little or no energy in modernizing the military thought at the operational and tactical levels while it lacks cogent strategic culture to articulate and innovate new methods of war fighting. Beating status quo is a tough ask. One cannot learn strategy or operational art based on rank structure alone. There has to be a conscious effort to groom the military leadership all along to refine their thoughts. This crucial component of war fighting has to receive the desired impetus when we argue to modernize ourselves. Think tanks apart, the armed forces have to put structured arrangements for developing strategic thought and culture in earnest. The next step would be to articulate these thoughts to the political class to convince them of the short, mid and long term needs of the armed forces. The current arrangement of deranged bipolar advice is just not working.

Fourthly, we have to give a serious thought to optimization of our effort by suitable integration shorn of the prorata mindsets to develop new strategies and operational plans to keep ahead of the enemy’s OODA cycle in peace and war. This calls for synergy in operations between the three services and amongst the services by mission based command and control structure. This calls for serious up gradation of our logistics and communication capabilities. It also calls upon laying out suitable communication, kinetic and non kinetic grids including a responsive logistic system to operationalise the proactive strategy.

Fifthly, The nation’s internal security, counter-insurgency and counterterrorism capabilities also need to be modernised as most of the emerging challenges will lie in the domain of sub-conventional conflict and operations other than war. The time has come to seriously consider a ‘third force’ for internal security operations. Doctrinal concepts, organisations structures and training methodologies must keep pace with technological advancements. The Army must train its personnel for certainty and educate them for uncertainty.The need to understand insurgencies and apply psychological corrections through a range of media driven solutions must be an are to be looked into. Our modernization must permit seeping in History to develop non kinetic means of tackling insurgencies and terrorism. A tall order though.

Finally, the Indian Army of the future must be light, lethal and wired; ready to fight and win India’s future wars jointly with the Indian Navy and Indian Air Force over the full spectrum of conflict, from sub-conventional conflict and operations other than war to an all-out conventional war; so as to ensure regional stability and internal security. The nation must get a modern force that can fight and win India’s future battles with the least number of casualties and minimum collateral damage through surgical strikes.

The Indian Army should be a force capable of carrying the battle into an enemy territory, from where terror or military attacks are launched or might originate.

Only then will the nation get a peaceful environment for socioeconomic development. The aim should be to ensure peace through conventional deterrence so that India can achieve all round prosperity and join the ranks of the world’s developed nations.

Does the new policy help meet these ends? Do the armed forces, apart from the industry, have to mend their ways?

Times of India has this to say in its editorial coinciding with the release of the policy.

It’s wrong to say that our defence industry will be deterred by the ministry of defence’s new offsets policy; rather it will introduce market efficiencies to an insulated sector by terminating the right of defence manufacturers to exclusively benefit from all defence offsets liabilities – the deal sweeteners offered by sellers to buyers. Industrial sectors such as aerospace and internal security may now also compete for defence offsets. With more players in the running, allocation will not be a foregone conclusion. And since distinctions between defence and civilian manufacturing are fallacious, the former may replicate the latter’s success since it was opened to international competition. Tejas demonstrates why our defence-manufacturing sector requires competition. After 27 years and a ballooning budget, 40% of the aircraft’s components, including its engine, remain imports. Implementing a permissive offsets policy earlier could have made all the difference and resulted in a truly indigenous fighter, and on time.

However, a competitive offsets policy will be undermined if defence negotiators continue negotiating as they have. The Gorshkov saga wasn’t unique. India inexplicably did not include, in a deal for Lockheed Martin aircraft, the trainer. A component crucial to getting the aircraft airborne, which should have been included in the original deal, is now being offered as offsets. Meanwhile, dependence on a handful of suppliers leaves us open to their arbitrary post-negotiation price hikes. Russia is doing so with a 2006 multi-ship contract. Making offsets reform truly effective requires reproducing its logic throughout the defence contracting process by broadening our supplier base. Involving qualified private players in international defence negotiations, since the private sector now has a direct stake, is also worth considering. This will further offsets reform.


Restructuring and modernising the armed forces will require political courage, military astuteness, a non parochial approach and a singularity of purpose.

With India’s defence budget now pegged at less than 2.0 per cent of the GDP, the funds available for modernisation of the armed forces are grossly inadequate.

The only other alternative of undertaking quantitative reduction in force levels so as to save funds for modernisation cannot be resorted to due to large-scale manpower intensive operational commitments of the Army. The Army is not only deployed along or stationed close to a long border with China and along the LoC with Pakistan on a permanent basis but is also engaged extensively in manpower-intensive counter-insurgency operations and, hence, finds it difficult to reduce its manpower.

As the availability of funds remains low, India’s military modernisation is likely to continue at a slow pace in the foreseeable future. First off, we need to correct this anomaly. Thereafter the complee process of what we need and what can be made available, by whatever processes needs to be addressed.

Indegenisation is important but more important are timely introduction of cutting edge technologies to help the armed forces meet the complex threats that face it to fight todays wars with todays weaponry.

Procedures should not over ride the need to modernise in tune with time. Transparency,which has seriously affected the military’s modernisation, should not cost the country and the armed forces dear in a battle field.