Friday, February 4, 2011

K Subrahmanyam - A conversation on India and Geopolitics

K Subrahmanyam - A conversation on India and Geopolitics
A conversation with K Subrahmanyam
(July 29, 2009)

Shivanand Kanavi had a wide ranging conversation with K Subrahmanyam on a variety of strategic and geo-political issues: about India’s Nuclear Weapon Program, Indo-US nuclear deal, Af-Pak, India’s global ambitions and so on. Even though KS was already battling Cancer bravely, he gave undivided attention with excellent recall about the topics under discussion.

Krishnswami Subrahmanyam (1929-2011): IAS(1951)Tamil Nadu; Fellow in Strategic Studies, London School of Economics1966-67; Director ,Institute for Defence Studies and Analyses (1st term1968-75, 2nd term 1980-87); Chairman, Joint Intelligence Committee1977-79; Secretary(Defence Production)1979-80; Visiting Professor international relations St.John's Convenor, National Security Advisory Board 1998-2000; Chairman , Kargil Review Committee-1999 

The interview appeared in Rediff in two parts. 
http://www.rediff.com/news/slide-show/slide-show-1-an-interview-with-k-subrahmanyam/20110210.htm
and
http://www.rediff.com/news/slide-show/slide-show-1-part-two-an-interview-with-k-subrahmanyam/20110420.htm

Shivanand Kanavi: I want you to start with an over view of the history of Indian nuclear weapons programme.
K Subrahmanyam: If you go back to Nehru’s writings in the 40s he recognized that it may be used (as a weapon) and then India also must have it. But at the same time he was a man of peace he wanted international peace so essentially he was for development of technology. But he did not overlook the fact that it had a strategic dimension. It comes out very clearly that at one point in time in 1954-55 Homi Bhabha after presiding over the Geneva conference on the peaceful uses of nuclear energy, came back with great enthusiasm and proposed to Nehru that India should amend the constitution and say that it would never go nuclear. Nehru wrote back to Bhabha that he should look after physics and leave the international relations to Nehru. We will think about these things when we reach that stage. So at one point of time it was Bhabha who was a peacenik, but as they saw the two major powers accumulating more and more weapons and developing newer weapons and China going nuclear, I presume that Bhabha got converted to the view that India should also go nuclear. The selection of CANDU reactor which would produce plutonium and deputation of Sethna to France to get reprocessing technology would all show that at least in Bhabha’s mind strategic programme was very much there.

Perkovich says Nehru all the time had it in mind but those who think of Nehru as essentially a man of peace would dispute it but it is difficult to say unless personal papers of Nehru are made available. On the other hand in 1964 a few months before he died, while inaugurating the reprocessing plant he also said “come what may, we shall not make these evil things”. Once the Chinese conducted the test Bhabha was determined that India should go for it. Krishna Menon opposed Bhabha.

Once Shastri took over, he was not familiar with all these things and the first time Bhabha came to Delhi to meet him I was told that he was made to wait three days to get an appointment. He was used to an indulgent treatment by Nehru and so he was a little put off. Then Shastri appealed to UK for a nuclear umbrella against the Chinese threat. In the early 60s there was a discussion in the US whether India should be helped to become a nuclear power to neutralize China. This was even before ‘62 as they realized that China was close to building the bomb. It was supported by Dean Rusk in the State Dept but was opposed by Pentagon and McNamara. In ‘64 Bhabha was able to persuade Shastri to sanction SNEP (Subterranean Nuclear Explosion Project). In early ‘65 there was a AICC session in Durgapur and there was pressure from some Congress members K C Pant who was a young MP who said that India should go nuclear. Shastri did not want to commit himself so finally he said ‘not now’. He did not rule it out. To some extent it helped Bhabha in getting the SNEP project sanctioned and it was under SNEP that Ramanna , Chidambaram, P K Iyengar were brought into Trombay. Then Bhabha died in the accident in 1966. Sarabhai took over.

Sarabhai coming from a Gandhian background was opposed to it. He argued that we did not have enough plutonium at that time and even by ‘67 if we had enough for one test then what would you do after wards. Thus he alienated the Trombay people. The result was they boycotted Sarabhai and did not share any information with him. But Sarabhai was a gentleman and a very astute man and over a period of time he changed his mind. Not many people know about it but he himself told me the last time we met in Aug 1971 while having dinner at Ashoka Hotel five months before he died. Then the Trombay people made Purnima the Fast Pulsed Reactor using plutonium from Candu. In 1967 Indira Gandhi sent Sarabhai and L K Jha on a worldwide mission seeking nuclear security guarantee for India. They went to Russia, France, US and UK. They wanted a joint guarantee. They did not get it. In 1965 when the NPT resolution was moved we were one of the sponsors. We propounded the balancing principle viz. no more proliferation but weapon powers should negotiate give up their weapons. When the matter came up in Geneva in 1967 our delegate V C Trivedi found that something else was going on. They wanted to prevent everybody else from going nuclear but on the other hand they did not want to have any limits on what they were doing. He made powerful arguments against this NPT and they are still quoted today. To some extent the P-5 found that India was a thorn in their flesh in Geneva. In 1968 when the matter came up regarding whether we should accede to NPT (it was not debated much in the cabinet) Mrs Gandhi and her close advisors like G Parthasarathy, P N Haksar were all against it. At that time I was the director of IDSA (Institute of Defence Studies and Analysis) and conducted a crusade against the NPT that India should go nuclear. At that time there were a group of parliamentarians called Young Turks who were leftist Congressmen like Krishan Kant who were for India going nuclear. Because of that we became good friends and I used to give Krishan Kant questions to ask in the parliament.

Sarabhai knew that Kant was asking ‘my’ questions. So in 1971 during dinner he told me “Subbu you can call off your blood hound (Krishan Kant), I am going to Mururoa Atoll to witness a French nuclear test”. The Gandhian of ‘67 had changed enough to go and witness the tests. So I said “Vikram, do I draw conclusions from this”. He said you do what you like.
However till he died there was no reconciliation between him and the Trombay group. Sarabhai anyway will be remembered as the founder of our space programme. Then according to the version given to me by Ramanna in 1972 October during the convocation of IIT Bombay, Mrs Gandhi summoned Sethna and Ramanna and gave the go ahead for testing. Then they started designing the test. Preliminary work had already gone on but Sarabhai had suspended it. But Purnima reactor had given them some ideas about the behavior of neutrons and plutonium etc. Between 1972 and 74 they worked on it. Ramanna has recorded that even in 1974 people like P N Dhar and Haksar got cold feet and it was Mrs Gandhi who told them to go ahead.

SK: Why were they hesitant, because of possible sanctions from US etc.?
KS: Yes. At that time US had become friendly to China and treated us as an ally of Soviet Union so they came down on us very severely.

SK: We already had a treaty with Soviet Union!
KS: Yes and also they could not forgive us for creating Bangladesh, a new country on the map which nobody had done after 1945! The sanctions started. That time we did not know that Pakistan had started its programme and was collecting money among the Islamic states.
When Janata government came in, Morarji Desai did not like nuclear explosion and did not like Ramanna (since he had led the test). He even denied that there was any nuclear test. He continued to hold that tonnes of explosives were buried and exploded!

SK: Is it because he thought Mrs Gandhi did it merely to over awe the domestic opposition and not for any strategic reasons?
KS: Yes. At that time US was trying to persuade us to adopt full scope safe guards—that is everything should come under safe guards. Mr Shankar who was Morarji Desai’s secy was in favour of it. So he told the Americans that we will examine it. So Americans were confident that India would accept it. Sethna was opposed to full scope safe guards. Morarji had said in the parliament that Americans are proposing it and there is nothing wrong in examining it. Actually I discovered through Sethna that the proposal was originated by Shankar and not Americans. So I got a copy of the note from the Americans to Sethna which called it “Mr Shankar’s proposal”. I got a photocopy of it and brought it to the Cabinet Secretary Nirmal Mukherjee that Morarji Desai can be cited for contempt of parliament since he had said in the parliament that it was an American proposal where as it was actually Shankar’s proposal. So the Cabinet Secy took it to Morarji.

SK: Was Shankar’s proposal for the cabinet?
KS: No. It was for Indians to discuss with Americans. Thus it was buried. Then Morarji went and made a speech in the UN General Assembly saying we will not conduct any more explosions. After he had read out that portion of his speech in the cabinet a message was sent through the then president Sanjiva Reddy to drop it from his speech. But inspite of that Morarji said it in the UN and he faced a lot of opposition when he came back. He tried to wriggle out saying I said an explosion and not test etc etc. At that time Ramanna was also taken out of BARC and put in as Scientific Advisor to Defence Ministry. Of course that did a lot of good to the Defence Ministry. But the Trombay team had been dismantled. Then in 1979 I produced a report saying Pakistan is going nuclear.

SK: How did you reach that conclusion?
KS: We got intelligence information. We knew about A Q Khan coming back and starting Uranium enrichment etc. I told the cabinet secretary to take it to the five-member Cabinet Committee on Political Affairs. He did it and there was a discussion. I was not present but Nirmal Mukherjee told me since I had to write the minutes, that the decision to resume the programme was taken but it was not unanimous. Three had voted for it and two had opposed it. He asked me to guess who were the two that had opposed the programme. I said one was Morarji and that was correct but I could not figure out who was the second. It was Atal Bihari Vajpayee! H M Patel, Charan Singh and Jagjivan Ram were for going ahead with our nuclear programme.

Then the Morarji govt fell and Charan Singh came. Sethna said he can manage the whole programme himself. In fact he was trying to fill up director’s post in BARC so that Ramanna will not be able to get back but that was prevented. But when Mrs Gandhi came back she posted Ramanna back to Barc and he held both the posts. Then the programme was restarted by 1983 we were again ready.

SK: Was it for weapon testing?
KS: Yes for weapons. The shafts were sunk in Pokharan but at the last moment the Americans found out through satellites and put pressure on us. Mrs Gandhi told them to stop it at the last minute. In fact it was those shafts of 1983 that were used for tests in 1998!
In 1984 we got involved in “six nation five continents” initiative.

SK: With Rajiv Gandhi..
KS: It started with Indira Gandhi and after her assassination it continued with Rajiv Gandhi. Essentially we ourselves were advocating CTBT.

SK: But it also involved some graduated disarmament along with ban on testing.
KS: Yes. We were in the fore front of it. When Rajiv took over, in 1985 Rajiv had a very intensive discussion with a group of us and I was also involved in it. He was at that time very much opposed to our going nuclear and he was very much in tune with the 6 nation initiative.

SK: Why was he opposed to it? Was it for economic reasons of sanctions etc.?
KS: No. He was new to politics and I think he was temperamentally a man of peaceful intent. He genuinely believed that if we can avoid it then we should avoid it. For one year I had arguments with him and at one point in time I told him that “PM sir, if you won’t take this decision, one day your defence expenditure will go through the roof”. So he asked the others present about it. Some agreed and others did not. Adm. Tahiliani was also present representing the Chiefs of Staff. He said we will give you a very serious quantified answer to this. PM said OK. The committee consisted of Abdul Kalam, R Chidambaram, Gen K Sunderji (Chmn) Adm Nayyar, Air Marshal Green. That group produced a report and for the first time it said a minimum credible deterrent of about 100 war heads can be developed in about 7 years and it will cost about Rs7000 crores. Only one copy of the report was prepared and delivered to Rajiv personally by Sunderji. We don’t know what happened to it afterwards.

SK: By that time were there no reports of Pakistani programme?
KS: Yes they were there but I was not in the government so I did not know about them. Thus he essentially stopped it. For some reason his relations with Raja Ramanna also deteriorated and he did not accept Ramanna’s recommendation of making P K Iyengar his successor. He selected M R Srinivasan, who had nothing to do with the weapons programme. So at that stage it was obvious that Rajiv was not interested in pursuing the weapons programme. He went to US he had a successful meeting with Reagan there was an agreement on science and technology but I do not think he was given any promise regarding civilian nuclear reactors. He was hoping for reactors from Russia and at that time Koodunkulam was under discussion.

However I am told that research went on and Rajiv did not stop it and then in 1988 he came out with his disarmament plan and put it before the UN and then to his horror he discovered that no one took any notice of it. He came back a disillusioned man and on the day of Air Force demo at Tilpat outside Delhi he said let us go ahead. Thus in ‘89 March or so he sanctioned the weapons programme.

SK: There is also a rumour about Operation Brass tacks and some message delivered by Pakistan during that exercise that they have the bomb etc..
KS: I will come to that. Even though the weapons programme was sanctioned only in 1989 the missile programme was sanctioned in 1984-85. In fact Indira Gandhi had sanctioned it and Kalam had been brought in specially from the space programme. In 1987 when the Operation Brass tacks took place, A Q Khan gave an interview to Kuldeep Nayyar and said, “you people be careful, we have got the bomb”. During the Kargil committee hearing Mr S K Singh who was the High Commissioner in Pakistan in the 80’s told me that in Jan ‘87, he was summoned by the Minister of State of Defence of Pakistan, who told him that if India takes any action then ‘we are in a position to inflict unacceptable damage’, which is a code to say we have the nuclear weapon. Rajiv knew all that but he still tried very hard and finally in ‘89 the same man sanctioned the weapons programme. By 1990 we had not assembled many weapons but Americans came to us and said that Pakistan is threatening to use nuclear weapons against India. This was in May 1990 but in Feb ‘90 Gen Yakub Khan came to India when Kashmir was on the boil and he told I K Gujral, “if you people use too much of force in Kashmir, there will be fire from the sky and rivers of blood will flow”. I K Gujral took him to V P Singh and he repeated the same thing. He would not look people in the eye but recite it as if he has been instructed to recite it. It was interpreted by India as a nuclear threat. In May US sent a mission led by Robert Gates, the present Defence Secretary to Pakistan and they told the Pakistanis ‘be careful do not try any adventure’ (according to US version) then they came to India. Here they did not say anything but to the rest of the world they said, “we diffused a nuclear crisis between India and Pakistan”.

However in a new book two American scientists have claimed that on 26th of May, 1990 actually the Chinese conducted a nuclear test for Pakistan. So they had come to dissuade Pakistan from doing it. Instead they put out the story about India-Pakistan. So Pakistan actually had a tested nuclear weapon by 1990 and not in 1998.

SK: That test was done in Lop Nor?
KS: Yes in Lop Nor. P V Narasimha Rao continued the programme. During NPT review conference in 1995, NPT was extended indefinitely and unconditionally. PV knew that we will be left out so he wanted to conduct a test. Preparations were all made but again the Americans discovered it and they put pressure to stop it. That is a fact.

SK: How did they find it?
KS: Through satellites. So PV could not conduct the test. When Vajpayee took over PV sent him a note saying ‘I could not do it, you do it’. Vajpayee acknowledged it after PV died. In 1998 however we were able to hide it. Both sides conducted the test.

SK: There is a claim that in 1998 we conducted a thermo-nuclear test as well.
KS: That is what R Chidambaram says. The problem is 1998 tests were done in shafts that were sunk in 1983. They were capable of taking only 60-70 kilo tons. It is also right in Rajasthan which may be sparsely populated compared to rest of India but it is still populated. So there is no way you can conduct a megaton test. Chidambaram says he did at 45 kilo ton but there are lots of people who question it.

SK: Post 1998 how did this inclusion of India into the club take place? The French have claimed that they were responsible for it.
KS: Within two years even the Americans started being friendly to us. We realized that US was not hostile to us during the Kargil war, when Clinton did not side with Pakistan but sided with us. Then in 2000, Clinton had a very popular visit to India. To that extent the relationship with US started improving.

There was always a feeling among the major powers of the world, excepting China, that India was not an irresponsible power that it had already conducted a nuclear test in 1974 and had not rushed to build a nuclear arsenal. The Russians, French and even the Americans knew the China-Pakistan connection. How China had helped Pakistan develop nuclear weapons etc. The Indian compulsions were known.

The French president’s advisor did tell me that they took the initiative but that was after George Bush took office. Chirac rang him up. Russians have always been well disposed towards India. I have a feeling that during Bush—Vajpayee interaction they had already started developing the Next Steps in Strategic Partnership. We were asking the Americans to show progress in three things: nuclear, space and hitech. Those discussions were going on. The American administration at that time, with Colin Powell as Secretary of State, were not so favourably inclined to take such a major quantum jump. That came about in Bush’s second term, when Condoleezza Rice became Secretary of State. They had in mind China’s dominance in Asia and the need to have some balance in Asia so when Man Mohan Singh met George W Bush in Oct 2004 during UNGA, they had a discussion but it is not quite clear whether Man Mohan Singh made any request regarding this or not. But definitely by 2005 March when Condi Rice came to India the Americans had made up their mind that they would help us in this respect. I would give a lot of credit for this to Bush and to a lesser extent to Condi Rice. These two really brought this about. Personally they were influenced by their idea of balance of power in Asia. They were not doing it because they liked us, but they were doing it for their own purposes. They could of course count on the help of France, Russia and Britain.

SK: Did Russia help us in the nuclear submarine? After all we have not designed even a conventional submarine so far.
KS: Yes they helped us with the design of compact nuclear reactor that was necessary. They are also giving us a hunter-killer nuclear sub on lease. Earlier they leased another one during Rajiv’s time. So there is no doubt there is Russian help. The PM has also publicly acknowledged it.
Our nuclear establishment is very small compared to other major powers. The Indian approach can be characterized as what we say in Tamil Nadu as that of Tirupati barber. When people take their children for tonsure at Tirupati, the barber clips a few locks of one child and goes to the next one because now he has “booked” this child…Then he will take his own time to do all the things. So whether we design aircraft at HAL or this, it is the same. The only people who are a little different are the space department. Everybody else say yes to everything when they have one design team.

SK: Even the missile programme has not delivered what it promised…
KS: Yes in 1985 I asked Kalam, “with the number of people you have, will you be able to deliver this in this time frame?” He said yes, yes we will.

SK: There is one project which has never been talked about openly called “Surya”, which is an ICBM, what is its status?
KS: People have been mentioning it, but does India require an ICBM? India needs a missile which reaches Beijing and Tientsin. That is about 4000-5000 km missile. If you start designing an ICBM beyond that range, you will make the Americans wary. Are we likely to go to war with Americans? Our people talk about our submarines going to the Pacific to target China. But there is no need for it. Your submarines can be in the Bay of Bengal and with a missile of 4000-5000 km range you easily target Beijing and China.

SK: After the cold war, the Russian weapon supplies have become uncertain. Then there is objection to American end user arrangements etc. Should we focus on domestic defence production rather than imports?
KS: People should be realistic. Even the LCA has an American engine. In short the answer is: in the world’s arms market the demand is shrinking since the cold war ended. There is not going to be a war between major powers of the world. There may be wars between say US and Iraq or Afghanistan etc even they would be only after a short duration. Therefore the armaments demand has come down. There are only three centres of armament production: US, Russia and Europe. They can incur the R&D cost and production costs only if they have a market. The right thing would be to get into co-production arrangements with Russian companies etc. The Chinese do not have access to US market, we have an advantage. Chinese can have only Russian weapons. So why don’t we build up on this advantage. To build up defence R&D and production capacities like them, would take us many years and decades and resources. We have so many other demands for resources. So commentators should have balanced idea of these things.

SK: Now that Obama administration has many non-proliferationists what do you think India should do with NPT review conference and CTBT and FMCT coming up?
KS: NPT review conference coming up. We are not going to be invited since we are not members of NPT. You might get everybody into non-proliferation regime as El Baradei has been talking about but not in the treaty, otherwise it will unravel. Others will say you are rewarding India, Pakistan and Israel for not signing up. If Obama succeeds in signing CTBT then we will be under pressure to sign it.

SK: Was it wise for Vajpayee to say in the UN that if US, China etc sign it then India will not come in the way?
KS: He had to as he was under pressure. I have a question. Under what circumstances would we need to resume the tests? If there is such a grave deterioration in the international situation at some point in future then anyway before you others would have resumed testing.

SK: Or if your weapons become obsolete..
KS: There is not much chance of weapons becoming obsolete. The scenario of you alone being called upon to resume testing while the rest of the world does not is farfetched. I cannot visualize it.

SK: There is also computer simulation and sub-kilo ton tests to improve weapon design. Do we have the capacity for it?
KS: If we do not have it then we should develop it. You have to look at your man power and how many weapons you need. You should be prepared to sign up if finally US and China ratify it first. That is not going to be tomorrow or day after. With regard to FMCT we have said we will agree provided you have a verifiable agreement. That is going to take quite some time. Are we short of plutonium? Or is the constraint in reprocessing and fabrication? In which case don’t blame the FMCT for that.

SK: We have stockpile for another 80-100 weapons.
KS: Yes we do. Americans and Russians are planning to bring down theirs to 1500. Then what do we need? So we have to have clear ideas on that.

SK: What is your view of what is happening in Afghanistan and Pakistan?
KS: There is no way Americans can leave Afghanistan and Pakistan.

SK: Don’t you think the current Af-Pak policy is actually an exit policy?
KS: Yes but the main problem is they are trying to make Pakistanis fight the war in their own country.

SK: Some people say US is outsourcing IT to India and war to Pakistan…
KS: Yes but Pakistanis are also trying to play all sorts of smart games. In the process what is going to happen to Pakistan and US-Pakistan relations is very difficult to predict. When Hillary Clinton was here she made a statement which was not picked up by media. She said in the interview to NDTV that 9/11 plot was hatched in Pakistan. And the plotters are still there. All that Obama has said is that we will go after them. Pakistanis may think, like many others that Americans will tire out and go away and then they can resume their games. What they do not understand is if Americans start tightening up saying if you fight there will be money and if you don’t fight then there will be no money then what will happen, we have to see. Their economy is in shambles. So the question is how Americans will manage that aspect. Secondly Pakistanis are finding that the chaps who they raised are turning against them. It is the nature of these Jihadi organizations that they have to be against somebody or the other. They will say that Pakistani state is on the side of the Americans. So Pakistanis will have to face that too. So they cannot play a double game for too long.

SK: You think they have made the choice?
KS: They are trying not to make the choice. At present they have taken on the Pakistani Taliban and even in that there are serious questions regarding the seriousness of the fighting. They go on saying we have killed so many and still they have not got any leaders. They seem to have displaced a lot of civilians and how long can that continue? They have been very short sighted. Americans have already arranged an alternative supply line with the Russians and they are listening to the conversations of these people quietly, just as they did during 26/11. So they know what is going on. The question is who is going to outsmart whom.

SK: What do you think about what Man Mohan Singh has started?
KS: I have a feeling that you might have peace and stability with all other states: Bangaldesh and others and even with China but I doubt very much you will be able to do that with Pakistan. They are not a rational state. For them hatred of India is over powering.

SK: Don’t you think that at least in a section of people; youth, businessmen etc in Pakistan that there is feeling that peace will mean sharing prosperity on both sides etc.?
KS: That kind of middle class is not very large in Pakistan, neither has it been allowed to grow.

SK: Musharraf’s proposals looked actually reasonable.
KS: Musharraf’s proposals can be looked at even though his idea of joint management is vague, through which he wanted to tell his people that now he can control Indian Kashmir also etc. On the other hand we would say we will also have say on your side and between the two systems let us see where Kashmiris on both sides would go. But the main point is still even among the middle class the hatred of India is still very strong. So they are not ready to condemn LeT. They have subliminal sympathy.

SK: Is that because of Kashmir?
KS: No that is not because of Kashmir, in fact Kashmir is because of two-nation theory, jihadi mentality etc. I have also interacted with Pakistanis. Javed Jabbar who used to be a minister who was born in Madras, (his father was commissioner of police). He once told me, there will be no peace in South Asia till India breaks up into constituents. First of all they convinced themselves that Islam alone will unify and Hinduism cannot. It is a difficult and troubled state.

SK: If India has to become a major power it has to have economic strength and reasonable relations with its neighbours. Even China has not achieved reasonable relations with neighbours yet.
KS: What is our problem with the neighbours? So long as our relations with China and US were troubled, our neighbours took advantage of it. If you improve relations with China and US you will find that all your neighbours will adjust themselves.

SK: But is that possible? Chinese look at us as some sort of surrogates of US.
KS: It is possible. China is going to grow unless there are problems internally in China and the system changes. India will also grow. China will catch up with US in over all GDP even though they may not have per capita income. Americans want to keep up their pre-eminence in terms of military, economic and technological power. China is an aging country. US and India are not yet aging, at least for another 30 years.

SK: The issue however is: America can continue its pre-eminence only if it aligns strongly with India. Only then it will have access to man power, innovation, technology etc.
KS: You are quite right. That is why US needs India and India needs US. What would be the Chinese reaction to this alliance? China and US are not going to fight with each other. It is a rivalry for the top position in the world. I have seen many people say, why should we choose Americans why not Chinese after all we have a 5000 year old relationship etc etc. So I tell them, “Don’t worry about yourself but ask your son and grandson where they want to go to China or US and you will have the answer!”

Some say Harvard or Beijing. I would go even a step further. Where would you be able to build a Balaji temple or a Meenakshi temple in China, which you can in US. Democratic, English speaking and so on. Regarding China, it should be ‘if you are not friendly to us we will intensify our relationship with US. We are prepared to balance our relationship with both of you. But if you are not going to be civil to us we will intensify our collaboration with them’. So ultimately it has to be a three power game in the world. After all Russia, Japan, Europe are all aging. Even Chinese are now thinking of authorizing a second child. The kind of stupidities they have done are amazing! India does not have to worry about its rise.

Whether it is Obama or George Bush, US is not giving up ambition to build up an unrivalled military force in the world, which no single power or a combination of powers can challenge. They will always have that goal. Today 50% of the world’s military expenditure is incurred by the US and more than 50% of R&D expenditure of the world. On that I don’t think there will be any slack. I think Obama feels that dealing with all these nations, engaging them is a better strategy than confronting them. It is a sensible strategy. He is not doing it because US is overstretched. After all the reserve currency of the world is dollar. Rouble was never the reserve currency of the world!
The Americans rightly claim that they are also a soft power.

SK: Some say, perhaps the only other country that can rival US in soft power in terms of culture, movies, religions etc is India.
KS: In due course. You have the potential that is the reason why the two countries getting together is an event that is long overdue and is taking place now. It has nothing to do with Obama or anybody else, it is a natural process.

SK: So far Indian military has been quite defensive but it looks like it is modernizing now for force projection into Indian Ocean, Africa etc to defend Indian investments abroad.
KS: The Americans do not send their expeditionary force into all those countries where they own property or have business interests. They try to do it by influencing various groups in those countries. Therefore when we talk of our expansion etc we should also expand our ability to influence events in those countries. We should be able to befriend various parties, groups and interests in most of those countries. In future force projection by way of going and occupying a country is going to be less and less. Because you can defeat an army but the real problem is how do you occupy a country, as Iraq and Afghanistan show its futility. You could do it in 18th and 19th century, you could do it upto Hitler but not after that. Therefore people who talk about force projection don’t know what they are talking about. We are expanding our Navy for the security of shipping lanes, maritime terrorism, piracy etc it is not to threaten anybody.

But your economic power, your technological power commercial power those are things that make up real power. When the depression happened and America collapsed, it did not matter to China or Japan but today when American banks fail the Chinese are seriously affected. If the dollar goes down Chinese are worried. Not only that even if somebody catches flu in the US, the world has to be put on alert! That was not the case before.

There is no doubt that Americans are not only dominant but they think they are a power that can dictate terms to the rest of the world and that is objectionable. Of course that is not working. Increasingly countries are defying the Americans. We should not try to copy the “ugly American”. Already we have a reputation of doing that in our neighbourhood. That needs to be corrected. A day should come when Nepal. Bhutan, Bangladesh, Sri Lanka (I am still leaving out Pakistan) would be able to have a common market even something like European Union.

SK: In fact one country which seems to be neglected in that respect is Bangladesh. In fact it is very crucial for the development of North east, Burma and our whole Look East policy.
KS: That is right but they were very nasty to us. Only now we have a new government and we should also not forget that basically it is still East Pakistan. It will take time. Most importantly India should look after her people their food security, health and education then India will automatically become a major power.

SK: Thank you very much for giving me such a lot of time despite your health. You should write books. Why should we read Stephen Cohen or George Perkovich etc as authoritative accounts on Indian affairs?
KS: Unfortunately our government does not declassify archives like Americans do, moreover when these guys come here, all our politicians, bureaucrats etc talk to them. They get much greater access to people in power than us. Besides, they also have access to the American declassified documents.

SK: Thanks for your valuable time and insights.


Tuesday, November 9, 2010

Desh Deshpande Interview


“Innovation and entrepreneurship in India and US are complementary”,
Serial entrepreneur, hitech innovator and philanthropist Gururaj ‘Desh’ Deshpande has been recently appointed as Co-Chair of National Advisory Council on Innovation and Entrepreneurship to US president Obama’s administration. He conversed with Shivanand Kanavi on the raison d’etre for the council and his recent entrepreneurial and philanthropic activities.
Excerpts of this conversation were published in Business India of Nov 1-14, 2010.

SK: Tell us something about your appointment as co-chair of the advisory council to President Obama on Innovation and Employment. What does the council do?

Desh: US has always been the most flexible economy that has led the world because it is driven by entrepreneurship and innovation. But there is increasing pressure for it to be even better. It is a global market and jobs move out of US. So the only way the US can maintain its standard of living, is to do things in a more productive way or more innovative way. So you need to have new mechanisms to drive the innovation economy. I joined the board of MIT about ten years ago. MIT is as good as it gets in the world but even there things can be done better. So we started the Deshpande centre for Technology and Innovation at MIT.
Every innovator has no lack of desire to have impact on the world but if you go and talk to the same professors and graduate students a few months later they will have ten more ideas. That is there business, the business of ideas. The real thing is to pick and choose which idea to pursue. Left to themselves they pick an idea based on their peers, whether it is Department of Defence or National Institutes of Health. They have their own criteria of publishability, elegance etc. The peer review mechanism gets them trapped into doing things that somehow gets them disconnected from the impact on the world. So the basic principle of ‘innovation plus relevance is equal to impact’, is what this centre is all about. It is a way to connect the professors at MIT with the real world. That is working really well.
The best innovation today is like what engineering was 50 years ago. Engineers designed the product and then went to the market and tried to peddle it. So the best of Universities invent something and the best among them patent it and then they try to peddle that patent. The new mechanism tries to do concurrent innovation. By the time the person finishes the innovation there is already pull in the market place. As a result you can create a more innovative economy.
You cannot mandate innovation but you can try to string them in a sequence where they have economic or societal impact then you will have a self-sustaining innovative economy. US spent $70-80 billion of public funds a year on research. The idea behind this council is to see if it can be done in a better way. Connect the thinkers to the market place. Thinkers very quickly get into the business of talking to only other thinkers and trying to impress each other and get trapped.
US is really having hard time maintaining the jobs and creating new jobs. So unless the country finds a way to accelerate the process it will find it hard to sustain its economic prowess. That is why they got this council together. It has entrepreneurs, venture capitalists and university presidents. It is a nice group of people and I hope we will come up with some good policies.

SK: Many times universities are in search of a market for their inventions and this is also another trap. They develop something without knowing what the market is looking for and then they try to peddle it rather unsuccessfully most of the times, whereas it is market intelligence that should set the agenda for R&D. Is that one of the ‘connects’ that you are looking for?

Desh: Absolutely! It is having a huge impact on the whole education system. The graduate students that come out of MIT are more likely to become entrepreneurs and innovators because they are connected to the market.
For example the very first company that came out of this centre at MIT Doug Hart is a micro fluid scientist. He creates turbulence, puts these particles and studies how they move. For this study he created a 3-D camera, which is a very simple camera that you can buy in a store with an off-centre hole and which goes round and round. His magic is in his algorithm that puts all these photographs together and creates a 3-D image. He was able to do so with 9 micron resolution. When he applied to the centre he said I can modify this and use it for Home Land Security. That did not make sense. We connected him up with a couple of MBA students. They looked at a couple of different markets and finally it got funded for dental imaging, because it is $4 billion market it he US and the only good source of dental imaging is to buy on that gooey stuff and take the impressions. Within a year and half they had a product which looks like a tooth brush and they got bought out. After that we created a course called IT-Innovation Team, where we put two engineers and two business guys together in a course. Each batch had 5-6 teams. They do not work on a business plan but on the route to market for a technology.

SK: Who are the other co-chairs in the council?

Desh: Steve Case who did AOL and Mary Sue Coleman who is President of University of Michigan.

SK: What do you think of Indo-US partnership in innovation and technology?

Desh: Both the countries are democracies and have a large number of entrepreneurs. But the innovation in both the countries will be of different nature. In India innovation is driven by scale and affordability. A lot of the solutions that India will come up with will have application in US as well. The US comes up with very innovative, very hitech but expensive solutions.
Look at software companies in India, it is amazing how good they are in recruiting people based on aptitude and after last mile education turn them productive in six months. That is done on large scale. There is no reason why US should not be able to do this. In the US every ten years the technology changes and the question comes of retraining people who have become unemployed. But US comes up with solutions which $100,000 per person. They do not look at $100 dollar aptitude search and $2000 dollar training programme.
I am quite excited about what we are doing in India as a foundation.

SK: Tell us something about it.

Desh: Five years ago, I and Jayashree asked, what should we do in India. Since we both went to IIT Madras, we thought perhaps we should do in IIT Madras what we have been doing in MIT, but somehow doing nano technology in India sounded too limiting. We thought why can’t we encourage innovation about simple problems in India. So we started this social entrepreneurship sand box.

The sand box is limited to 5 districts; to get critical mass, in which we fund 60 non-profits working in all kinds of fields: agriculture, livelihood, education, health. We have ten young men and women who spend a whole year here. In the summer time about 60 students come from MIT, Berkley, USC and so on. They do projects, say how to create 24 X 7 water supply in Hubli. It is a new kind of peace corp. However the biggest contribution comes from local leadership after all anyone who comes from outside can only be a catalyst. First we thought we should excite the college students. We started a programme called Lead. Today we have 8000 students doing this programme doing some 2000 projects. This is a massive outreach.
Then we have DFP (Deshpande Fellows Programme). These are rural kids between 23-25 and they go through 6 months of training. It leads to amazing transformation they get very confident in English and computers etc. When they graduate each one of them has 3-4 jobs, some with salaries anywhere between Rs 14000 to 22000! This year we have 50 of them. Some of them take jobs, some of them start their own businesses.
We also started a programme called Hubli Champions. They are 30-40 years old professionals, doctors engineers, businessmen etc. They spend one Sunday a month for six months. It is grooming leaders. We are on the third batch at Hubli and we are starting the first batch in Dharwad.

Now we have also started TIE (The Indus Entrepreneurs), Hubli. A lot of local businesses are between Rs 10-100 crores. But they have a boring life working hard 7 days a week. They make good 20% bottom lines. We have got them to think about how to hire people, how to delegate etc. We just had a CEO retreat and had one person coming from Boston to give lectures. I am trying get them hooked up with local MBA colleges, which do not have good faculty. They should have good local case studies rather than Harvard Business School case studies. In fact we have a professor from Harvard Business School right now, spending a week here, who wants to take this magic back to Harvard.
What we are drilling is nonprofit starts with a heart, whereas for-profit is Darwinian. However if we can bring the execution excellence of for-profit into nonprofit, then it can be amazing. The nonprofit should focus on one idea. If it fails it is OK, we won’t punish them. But if they succeed, then they have to scale up. Ones that have scaled are: Akshaya Patra, for mid-day meals to school children. The biggest kitchen is in Hubli. They do 1.2 million meals a day in Karnataka. You should go and see the kitchen in Hubli, it looks like a refinery and they have the best supply chain, best procurement and so on. For Rs 5-6 they give a good meal. Here in Hubli from one kitchen they do 1,85, 000 meals a day.
Then we have a programme called Agastya which is teaching science to rural children. They put 150 science experiments on a van. It goes and stops in front of a village school, till evening. To sustain it in the school, we find 5-10 young scholars in each school. Last year this organization taught 700,000 kids and next year they are signing an MOU with Karnataka Government to bring it to 7 million children.
We should bring the same discipline of a start-up to non-profit. Whether you scale a business in Hubli or a non-profit anywhere it is the same story. Non-profit is not non-performance. The non-performing assets in non-profits in US itself is quite huge.
We are thinking of taking this idea back to US starting in Lowell, MA. I am quite excited about this innovation and entrepreneurship cycle.

SK: Tell us about the Sycamore Networks’ experience. It entered Nasdaq with a huge bang and then the market collapsed in 2001. What are the learnings?

Desh: Cascade Communications hit the market and kept going. When we did Sycamore Networks, there was a big dearth of bandwidth. Bandwidth on demand was the cry. It was a hugely successful idea. The core technology was lasers, fibre optics and so on. Wall Street valued it so highly and every corporations started putting money into it. Because of this we all started doing 200-300 laser beams on one fibre, whereas the customer wanted perhaps 5.
There was an overshoot and margins collapsed and then it was not necessary to do such complex things. Sycamore did a very good job of getting out of it. We did not see it as a cyclical thing but an overshoot of technology from which there is no way of coming back. We got out of hardware and optical technology and stuck with switching and software. Most of the other companies that started with Sycamore are gone. The margins dropped to 30-35% at that rate you cannot survive in the US where the R&D costs are very high. You can only survive in India and China. But we retained the money. We still have a billion dollars and we are giving back some of that to the shareholders.

The new business that we have launched is to make wireless businesses more profitable by caching very close to the starting point. Dan Smith navigated through the whole thing. After 2000, I became the chairman and assumed the role of a coach rather than handle operations. After that I have done one profit and one non-profit every year totally six of each.

The other exciting thing has been Tejas that we did here in India. They do back bones for wireless networks. We have products which can convert current wireless networks into broadband networks using Ethernet. They are probably number one in that segment. We did about 650 crores last year.

The big difference in building companies in India and in US is that in US the opportunity is always because of your technology. You should be ten times better than the competition and keep it up year after year and quickly reach a billion dollars. It is like a sprint.

In India, it is long term play. Tejas has really established itself. Initially the carriers could not believe that an Indian company could do any good. But now there is no doubt. Whether it is Knowledge Network or Defence Network or carriers they have huge respect for Tejas. They are positioned nicely for the next ten years because India is going to build many large networks in the coming years. Tejas has an opportunity to lead that. They are internationalizing quite a bit. They just bought a company in Israel.

SK: Are they planning to go public here or on Nasdaq?

Desh: It will be in India rather than Nasdaq but all in good time. It is not that the founders want to cash out.
The other exciting company is A123. It started in 2002.

The idea was that energy would be a great opportunity. Technology in the area of storing energy has gone from lead acid, to Ni-Cad to Lithium. Lithium was the last good idea. But Lithium explodes if you put a lot of energy into it. So an MIT professor came with an idea called Lithium Ferrous Phosphate, which charges very fast and discharges very fast. It is light weight.
A123 is a very hitech company with 80 PhDs and 200 Masters in Boston. We manufacture these batteries and sell them to handheld power tools and so on. Black and Decker could redesign their whole range since our batteries provide more power than mains.
It has application in transportation like buses, cars, hybrids. We do 200-300 Hybrid buses every month. Then there is electric grid, especially during peak hours. We have these 18 wheelers with our batteries, which can store 2 megawatts. We just went public and raised $400 million. Then the Obama government gave 250 million dollars as a green initiative for building factories as grants and another 250 million as loans. Michigan government also gave 100 million as loan.

Another company we did was Airvana, which built 3G networks for Verizon, Sprint etc. It went public and now recently got bought out by private equity. It was very hitech and had a 200 people R&D centre in Bengaluru.

I have also put together a Hedge Fund called Sand Stone, based in Mumbai to bring money from US into India mostly into public equity but also some in private companies.

Thursday, November 4, 2010

Video Interviews-Shivanand and D Murali

Recently visited The Hindu office in Chennai. D Murali a prolific writer and web savy senior jouranlist at Hindu Business Line recorded a few conversations with me and put them up on his blog:

http://muralilistening.blogspot.com/2010/10/shivanand-kanavi.html

He has titled them:
1) Ancient Indian wisdom about atomic principles
2)Mysteries of Indian history from 1000AD to 1800AD
3)Observations about Indian philosophy
4) Impact of IT on India
5)Anything you do in India is a global sized project

If you have a normal broadband connection then you would be able to see them uninterrupted.

Tuesday, September 21, 2010

India-China civilizational interactions: Madhavi Thampi

From: Ghadar Jari Hai, Vol 4, No 1&2, Jan-June, 2010

Peepul ke Neeche—Conversations

History of India-China Interactions
In this conversation, Madhavi Thampi unravels the history of India-China interactions to Shivanand Kanavi
Shivanand Kanavi: What we would like to discuss with you today is the contact between the Indian civilization and the Chinese civilization. What did it lead to? What did they learn from each other? These are two great civilizations that are divided by the Himalayas, but I glanced through a very interesting paper where the author said China and India are united by the Himalayas. We have heard of some names such as Hiuen Tsang and Fa Hien. And we have heard of exchange of knowledge and of the technology of silk production, gun powder, so on and so forth. Can you give a perspective on the interaction of these two civilisations?

Madhavi Thampi: Perspectives on ancient India-China contacts have been dominated by the Buddhist interactions, from about the 1st century CE to about the 10th-11th centuries CE. This is not to say that there were no interactions based on Buddhism after that, but they were no longer the main content of Sino-Indian exchanges. China itself became a centre of Buddhism after that. Still, there is one school which has focused on the Buddhist relationship and tended to not see anything else.

But there is another approach which I think is more contemporary. This sees that the relationship was much more than that based on Buddhism alone. It ante-dated Buddhism and continued afterwards. It may not have been so culturally significant or uplifting but it is also important in order to establish that there was a continuity of the relations. The debate still goes on, about what really was the character of the India-China relationship in pre-modern times.

The first recorded evidence of contact is contained in a story, which has many variations: in the Han period in China, around the 1st century CE, the emperor sent an envoy to what they called the Western Region, in order to form an alliance against the nomadic people who were troubling the Han empire. They wanted to outflank them by going over to the west. When this envoy, Zhang Qian, got there he found some products from China. At that time there were no known trading relations between Bactria (now part of Afghanistan, Tajikistan, Uzbekistan, and, as a smaller part, Turkmenistan. The region was once host to religions like Zoroastrianism and Buddhism—Ed) and China. He recognized them as products of the Sichuan region of China. So he asked where they got these goods from and they said it came through India. So, this shows that there was a trade route from south western China into India through the North East, (from Sichuan to Yunnan region of China, Myanmar, Assam and into India).

This is a story that is recorded in Chinese histories. People have tried to document it in archaeological terms, but not very successfully. But it is still possible that there was this trade route as early as the 1st century B.C. The key point here is that probably relations began with trade.

On the other hand, in India we have references to China in the Arthashastra, and also in the Mahabharata to things like Cheena patta—silk. That is taken as evidence that special products of China were known in India. Similarly, the word cheeni quite likely originates in the fact that sugar making technology came from China. This is not really my area of expertise, but there are people who have documented these things very carefully.

Very soon, Buddhism became a major factor in Sino-Indian interaction. The connection was not just at the level of ideas; it was also linked to trade and the kind of products that were exchanged between China and India. In the later Han period, two monks were supposed to have come from India. This has also become a legend. There are many stories about how this happened. The most famous story is that the Han emperor had a dream of some deity in the western region and sent his envoys there. He brought back these two monks on white horses carrying a lot of Buddhist scriptures. He made a monastery for them which is known today as the ‘white horse monastery’. The Indian government today is rebuilding a white horse monastery in the city of Luoyang, the old Han capital of China.

SK: Many scholars refer a lot to Buddhist scriptures preserved in Tibetan language.

MT: That could be, and it could also be a different kind of Buddhism. From the 1st to 4th century CE, the main problem was of translation. Appropriate techniques had not been developed. It was not just that the two cultures and value systems were different, as you know, the whole script is different. The Chinese script is ideographic so you cannot just spell out things and leave it like that. Even more difficult than the script was dealing with an entirely different set of concepts. The indigenous Chinese philosophical and ethical concepts were a far cry from Indian philosophical concepts. If the idea itself did not exist in China, how do you find the matching word to translate it? After the first two monks, more and more started to come from India. The one to crack the translation technique was Kumarajiva, a monk. He was not actually an Indian; he came from Kucha, one of the oasis states from the region of Chinese Central Asia known today as Xinjiang. The fact is that Buddhism did not really go to China directly from India. It came through intermediary states. Each of these oases was a little principality or state that thrived mainly on trade, on what came to be known as the silk route. Thus, Buddhism spread especially from Kashmir, which was a big centre of Buddhism, into Central Asia. From there it went on into China. Of course there were monks who went straight from India to China also.

SK: Were these monks representing any royalty or state?

MT: From the Chinese side you often had pilgrims being sent by the ruler. Hiuen Tsang himself went without the permission of the Tang emperor, which was a risky thing to do. However, he was pardoned for this lapse after he came back to China! From the Indian side they mainly came on their own, probably with the encouragement of their own sect. Generally when these Indian monks came, they were well received by the Chinese rulers and were set up in monasteries, given a place and support for translations etc. Kumarajiva’s translations were supposed to have filled a whole room!

Buddhism came into China during the period of the unified empire. However, after the fall of the Han dynasty, there were a series of nomadic incursions into north China. China broke up into different states, and a kind of north-south divide came into being in China. The northern principalities were much more of a mix, a hybrid of the Chinese and nomadic cultures, while the culture in the south was more like the original Chinese. Still Buddhism continued to flourish in this period on both sides. This is considered the period when it is said to have really spread among all strata of the population.

SK: What attracted Chinese to Buddhism, when they already had Taoism and Confucianism?

MT: Definitely the principal philosophical system was Confucianism, but it was associated with the unified, imperial state from the Han period. It was a doctrine that prioritised service to the emperor and to the state. The collapse of the Han empire, roughly contemporaneous with the fall of the Roman Empire in Europe, was a traumatic development that naturally affected the credibility of Confucianism itself.

SK: Can we say that Confucianism was more of a social and ethical philosophy than spiritual?

MT: Exactly, it had very little to do with spirituality. For example there is this famous passage in the Analects of Confucius when a disciple asked him about his views on God and he said that he didn’t know anything about it! So, the whole question of the afterlife and God, while not denied outright, was hardly addressed. In a period of great political anarchy and chaos and a lot of violence, when there were a series of repeated raids and incursions from outside China, it was hard to adhere to a philosophy which said that one’s primary objective should be to develop the quality of being a good official. Whom are you going to serve? It was in this period that issues of suffering and of the meaning of life and death, which Buddhism addressed, would have preoccupied people’s minds more. In the south, Buddhism addressed many of the spiritual questions of people who had been dislocated and uprooted in the great waves of migration to the south that followed the nomadic incursions into the north. In the north, where the rulers were fully or semi nomadic, they were particularly receptive to Buddhism because it was a foreign religion. In China, the bodhisattva concept particularly was very attractive, because it stood for the one who postpones his own salvation for the sake of saving the people. So, you have Indian bodhisattvas getting transposed into the Chinese system changing their names and forms. For instance the bodhisattva AvalokiteÅ›vara took the form of a woman, a goddess in China called Guan Yin (representing compassion, mercy).

Generally speaking, the way Chinese have practiced their religion, it has never been exclusive. They can follow different belief systems at the same time, that’s not a problem for them.

At this time the Tantric form of Buddhism developed in Tibet. It didn’t spread much in China. China also developed its own schools of Buddhism, one is very well known, and it is called Chan, from the Sanskrit word Dhyana, meditation, which in Japan is known as Zen.

Here I want to mention something that the Chinese did, which is very much part of the Chinese genius. At different times different things were attributed to the Buddha. Some of them were almost contradictory with each other. This was quite confusing to the Chinese. So, one of their sects, Tian Tai, systematized and categorized the teachings of Buddha according to certain periods in his life and certain stages in his enlightenment. Once they had done this, they were able to accept the variations.

SK: Did the early teachings of Buddha have more of an influence on the Chinese rather than the later Madhyamika schools?

MT: By and large the later form of Buddhism, Mahayana Buddhism, had a greater influence on China than the Hinayana. After the reunification of China in the later 6th century CE, the Tang period (7th to 10th centuries) is considered the high watermark of Buddhism in China. Despite Confucianism making a comeback, the Tang rulers were also patrons of Buddhism. This again shows the eclectic nature of the Chinese tradition. In this period, the Buddhist sangha became very strong. The only time you could talk of real persecution of Buddhism in China was in this period. But it was not like the Inquisition in Europe where it was an ideological persecution. In China, the emperors would either close down the monasteries or reduce their size in order to reduce their power. Though the Tang emperors favored Buddhism as a religion, they did not like anything that challenged the power of their state. They always wanted the right to control some of the appointments in the sangha. They would sometimes leave them alone. But they never gave up that right to control.

Many of the Chinese pilgrims spent a lot of time in India and went back. The Chinese came, collected the materials, learnt the doctrines and went back to China. But the Indian monks who went to China rarely came back. They mostly stayed there doing translation and teaching. So, the aim of both was basically the same, to take the doctrine there. They went by sea or by the land route through mountains and deserts. However, the sea route was no less dangerous. Generally speaking, sea routes became dominant after about 8th-9th century CE

We have two excellent scholarly works on Sino-Indian interactions in the pre-modern period. One is by a Chinese scholar, Liu Xinru; she had studied Sino-Indian exchanges in the 1st to the 7th or 8th centuries CE, which is really the Buddhist phase. She showed how the trade in this period was very much linked with the products required for use in the practice of religion. The other work by an Indian scholar, Tansen Sen picks up from where Liu Xinru leaves off. He has shown that Sino-Indian relations didn’t decline with the decline of Buddhism in India, but continued vigorously even after on the basis of trade, especially from 11th-12th century onwards. Relations based on Buddhism did not die out. In fact, monks and pilgrims continued to go back and forth, but the doctrinal inputs from India were no longer vital to Chinese Buddhism.

This kind of work is really important to establish what continued and what did not continue in Sino-Indian relations. Otherwise, there has been this pervasive view that because Buddhism declined in India, relations with China declined; and then next thing one jumps to the 20th century, and what happened in between is just left out!

SK: I saw a reference that in Tipu Sultan’s time that there was an emissary from China, which led to the establishment of sericulture in Mysore.

MT: New research is showing the importance of trade in this period. We know that in the nineteenth century, painters and artists from China also were present in the court of Mysore and other princely states.

SK: The so called xenophobia of the Chinese, is there some truth to it?

MT: I think this xenophobia is an invention of the Westerners. China has been very much open to other societies and cultures, even while they always had a high sense of self worth. They never thought of themselves as inferior and they were not xenophobic either. It has been seen that they were open to Buddhism coming from India. Of course, few cultures around them could be compared to the Chinese civilization. The only thing comparable was the Indian civilization, and where they could learn something from it, they did so. Only a very secure civilization can be like that. At the same time the Chinese have their own terms and words for people who are non-Chinese, who don’t have the same culture as them. The western way of translating all those terms is the single word – barbarian. But actually it means someone who is not culturally like them. They didn’t have just one term for foreigners in China, they had several, depending on where they came from. As for India, they had much more respectful terms. Once Buddhism went there, India became the Heavenly Kingdom in the West for them.

The way we look at China today is unfortunately colored by 19th and 20th century western historiography.

SK: Tell us something about technological exchanges between the two countries

MT: Apart from possible transmission of things like sugar-making and sericulture in the ancient period, the Song period in China (10th to 13th century) saw several great inventions: printing, the compass, gunpowder, etc. We don’t know exactly if they were transmitted to India, but we know that there was a great increase of Chinese navigation in the waters of South East Asia and the Indian Ocean for some centuries after that. There were flourishing sea ports on the southern and south eastern coasts, some of which had whole colonies of foreign traders. The port of Quanzhou in the 14th century had a colony of Indians living there. Archaeological remains of Saivite temples with Tamil inscriptions have been found there. The Chola rulers had relations with Song China. So the Chinese had some knowledge of places in India, and there are detailed accounts by them about Malabar, Kanchivaram and such places.

The Song empire was defeated by the Mongols. For a land based people, the Mongols were very open to maritime trade. But the high watermark of China’s venture into the Indian Ocean was in the early 15th century. The Ming ruler at that time launched several huge maritime expeditions which went all the way from the Chinese coast into the South East Asian waters, through the Malacca Straits, touching various ports along the Indian peninsula and going right across the Indian Ocean as far as East Africa. These were the expeditions commanded by Admiral Zheng He. Each ship – and there were dozens on each voyage – carried 2000-3000 men and weaponry, and the tonnage exceeded anything floating on the sea at that time. Historians are still debating about the purpose. It wasn’t really necessary to send expeditions like that for trade alone. And there were at least 5 major expeditions between 1405 and 1433. There are Chinese records of this expedition and what they saw, including the economy, government and culture of the places they visited. Of course, it is from their own perspective, but these are surprisingly detailed accounts.

In the pre-modern period, I would say this was one of the last major dramatic encounters between China and India.

SK: Where did they touch India?

MT: The whole peninsular region, including the Malabar Coast and the east coast, as well as Sri Lanka.

SK: I wonder if they had any other contact with Kerala. Around the same time some extraordinary mathematical treatises were written in Kerala, and these relate to calculus related to navigation. This is actually calculus which was developed in India and is now being called the Kerala School of Mathematics. This precedes Newton by 200 years. They have also now found navigational instruments linked to this. Whether the Chinese knew about it we don’t know. But they say Vasco Da Gama was lost and in Madagascar he found an Indian, (they just called him a dark man), who then guided him to the coast of Kerala.

MT: They may have learnt from each other. It may not have been from just one expedition, but they did have contacts.

SK: It is interesting that the European expeditions were state funded, even stock market funded, because they were looking for things they didn’t have. However, China is said to have claimed at one point that they had nothing they wanted from Europe or elsewhere. So unless it is purely for exploratory reasons, or for purely vain or egoistic reasons on the part of the ruler, why would they send such huge expeditions?

MT: The jury is still out on this. People go on discussing this – what was really the motive. But we do know that the whole venture suddenly stopped. The later Ming rulers started to follow a policy of seclusion. About this also, we don’t know why exactly. Various reasons are given –financial or other reasons. That was the last major effort of the Chinese to come out of their own part of the world and be adventurous in maritime terms, but trade still continued. The goods came in Chinese ships thereafter only up to South East Asia and were exchanged there, in places like Malacca and other points.

Meanwhile there is a completely different aspect of Sino-Indian interactions, with Indian merchants who went into the region of western China and Central Asia. There was a small yet very widespread Indian merchant diaspora which in the Mughal period went as far as Iran, Russia, Chinese Turkistan, Afghanistan, etc. Thus, when you talk of China-India relations in the later period, you can’t talk of only the sea contacts . For centuries, Indian merchants, traders and money-lenders were going there – mainly from Punjab, Sind and Kashmir. There were several routes. There was also trade with Tibet from Kashmir. Places like Leh were points at which goods were exchanged, also Yarkand in Chinese Turkestan (today’s Xinjiang) was one place where Indian traders went with their goods. Basically there is no point of discontinuity, no point at which they stopped contact.

SK: Which also means that they didn’t see each other as threats?

MT: I don’t think that they ever viewed each other as a threat. Remember, for much of the time after the 10th century, there were various states in India and not only one big empire.

SK: What did they call India? West Asians called it Hindustan or the land East of the Sindhu (Indus).

MT: Actually in the earlier Buddhist period they gave names like ‘Heavenly Land to the West’, ‘Heavenly Bamboo’, or the ‘western region’. This word ‘Yindu’, which is the current name in Chinese for India, was given during the Tang period, may be because of the Arabs calling it Indu. Chinese accounts in the 19th century about India are very vague. They start knowing about places called Bombay or Madras, but you can see that initially they don’t know exactly where it is. There are even references to the “five Indias”!

The Chinese tradition of writing about foreign peoples was like this. After someone wrote something -- like this official in the Song period who compiled a work based on the accounts of foreign traders in Quanzhou -- that account gets repeated in subsequent works many times, till another person comes along who has some original material, like those who went on the great Ming expeditions. This becomes a new set of data, and then that version would get repeated again and again. In the 19th century they found that they had to find out again about India. With the arrival of the British in China and the trade in opium from India, again they wanted to know about India, mainly coming out of wanting to know what the British were up to. They updated their information about India in this period largely from Western accounts.

So, the point is that the image of India in China is not one. The image of India keeps changing.

SK: How did European colonialism in Asia affect this?

MT: There was a substantial change in the relationship. India got caught up in the trade of Britain and European countries with China, which was driven by the ever increasing demand for tea. Britain started looking unsuccessfully for things it could sell China in exchange for tea. Then they realized that whereas there was not much that they could sell directly to China, India had items the Chinese wanted.

First they realised that there was a market for raw cotton from India in China. Thus the cotton trade took off in a big way. Then, when the cotton trade started to stagnate in the 2nd decade of the 19th century, the British took to pushing opium in a big way.

SK: I thought the growth of cotton in India started only after the American civil war.

MT: It was much earlier. Indian textiles were a big commodity in the intra-Asian trade in the early period. But from the late 18th century raw cotton from India going directly to China became the mainstay of that trade. Then opium starts to figure in a big way. Opium was exported to China for a long time, but it did not become a big item till about 1820s. Earlier it was imported mainly for medicinal purposes and in small quantities. There were only say 2000 chests imported into China a year. But from the 1820s it becomes more than 20,000 and then later, 40,000 chests. Unlike cotton, opium is a self expanding commodity because the more you get addicted the more you need it. The import as well as the sale and production of opium were banned in China. So, the British East India Company would grow the opium in India, and it would be sold under license to private traders who would smuggle it to China. BEIC having a monopoly over the trade with China at Canton didn’t want to be caught carrying the opium. This way both made profits. That was Patna opium grown in the Bengal Presidency. Then they started selling Malwa opium, whose outlet was Bombay, which was cheaper than Patna opium. So the sales went up in a big way. Unlike Patna opium it was not grown under BEIC licence, but was grown in the interior regions and brought to Bombay by private British and Indian traders. By the 1830’s the opium imports started to affect the whole society in China. At one point about 80 to 90% of their armed forces and their bureaucracy was addicted. From having a favourable balance of trade with Britain, China started to pay massive quantities of silver to pay for the opum. That affected the currency rate, taxation procedures, and so on.

The British went to war in 1839 when the Chinese finally tried to enforce the ban on the opium trade. The Chinese were defeated and that begins the whole era of uneven treaties and repeated humiliation of China that lasted for more than 100 years. So India became in instrument for British economic and political domination of China. Indian soldiers and policemen were also used by the British and Europeans for nearly one century in China.

SK: That phase of conflict between Britain and China in which Indians also played a role as opium traders and soldiers, is that what started creating a negative image of India as a tool of British imperialism among the Chinese?

MT: Exactly, plus the Chinese were well aware of what had happened to India at the hands of the British. They knew that Indians had lost their independence and been conquered.

SK: Did they follow the Ghadar of 1857?

MT: They knew what was going on. In fact the term they had for countries like India means a lost or ruined country. Very often this was expressed as: “we don’t want to become like India, Turkey or Poland”. These were considered negative models. At the same time I have also seen references that the Chinese were sensitive to the fact that Indians were being forced to do all this. There is an account left by a Chinese official who traveled in India in 1870’s. He traveled to Calcutta, Shimla, and Western India. About the Indians he commented that they were conquered and dominated by foreigners, but that no one here seemed to think it was a terrible thing. “What a pity, what a shame!” he lamented

However, under the impact of the anti-colonial struggle here and the anti-imperialist movement in China, sympathy for each other becomes more evident. The Hindustani Ghadar Party started working actively in China, and had a lot influence among the Punjabi soldiers and people in those areas. A very interesting phase in relations between Indians and Chinese began. Around 1925-27 there was a huge tide of revolutionary nationalist upsurge in China, which directly threatened British and other imperialist interests in China. Indian security forces were used to shoot down Chinese, but because of the active mobilisation done by the Ghadar Party and others, you began to have cases when Indian soldiers and policemen – sometimes whole battalions – refused to fire on Chinese. In one case in Canton one detachment of Indian policemen deserted and landed in front of the governor of the province and said they wanted to join the Chinese side. The governor was at first a little suspicious -- after all, these were the same people who were on the other side. When they saw his hesitation, they said forthrightly – “look, we have burnt our boats. There is no going back for us, so you either take us, or you kill us”. So he recruited them and paid them more than what they were getting under the British!

During World War II, the Indian National Army had a major contingent in China and had a dominant influence in the Indian community there. That turned out to be unfortunate for India-China relations, because China was occupied by Japan, which was helping Subhash Chandra Bose. Indians were not at all against China and even Subhash Chandra Bose never condoned Japan’s occupation of China. But he had his own dealings. So, when the war ended, all those in the INA were considered collaborators, and there was no sympathy for Indians, even though they were in a bad state at the end of the war. Most Indians in China were uprooted and repatriated, almost forcibly, at that time.

SK: A final question -- was Tibet historically a part of China as is claimed by them?

MT: The Chinese did not directly administer Tibet and other outlying regions, in the same way that they ruled the rest of China. Under the last imperial dynasty, they had a kind of alliance or loose administration under a Chinese Resident, and the Tibetans were more or less autonomous. My view is that you cannot look at history and say categorically whether Tibet is a part of China or not part of China. Depending on how strongly you feel about it, there is a case on both sides. You cannot say that just because China sent expeditions to Lhasa to assert the rule of the emperor, that Tibet is part of China. But Chinese give this as the reason. The Tibetans continued to follow their own Dalai Lama and other lamas. However, these lamas were recognized by the Chinese emperors.

When the Revolution of 1911 broke out in China, ending the Chinese empire, many outlying regions and even provinces of China proper declared their independence. So did Tibet. Britain at this time supported the Tibetan claim to independence. While the Tibetans may have wanted their freedom, Britain was playing a geopolitical game, trying to detach it from China which was weak.

In the Shimla convention in 1912-13. Britain called a meeting of the Tibetan representative and the Chinese delegate in Calcutta and their own delegate, to settle the border, not between India and China, but between ‘inner Tibet’ and ‘outer Tibet’. This is what was known as the McMahon Line. From what accounts I have seen, the Chinese envoy in India was put under tremendous pressure, they practically confined him to a room, and he initialed an agreement. But when this came before the national assembly in China, they refused to ratify it. Under international law it doesn’t have validity if it is not ratified by the sovereign body of a country. But the British went ahead and said look, the Tibetans and we agree, so it doesn’t matter if China doesn’t recognize it.

(Dr Madhavi Thampi, is a scholar in Chinese history and teaches in the Department of East Asian Studies of Delhi University. Besides many research papers she has authored books like, India and China in the colonial world, Indians in China (1800-1949), and China in the making of Bombay )

Wednesday, July 14, 2010

Venture Capital; Arjun Gupta

Business India, Oct 1-14, 2001,

A peak in the Valley

In the gloom and doom of the economic downturn, is Arjun Gupta another Vinod Khosla in the making?
Shivanand Kanavi

Brief Bio
Born: 1960
1977-80: BA Economics St Stephens College, Delhi
1980-82: BS 1982-84 MS Computer Science, Washington State University, Pullman
1984-87: System Soft Ware Engineer at Tektronix
1987-89: MBA Stanford University
1989-93: McKinsey & Co
1993-94: Kleiner Perkins
1994-97: The Chatterjee Group
1997-present: Founded Telesoft Partners


Arjun Gupta is a climber. He’s climbed with three major Himalayan expeditions to Thalaysagar, Arjuna and Trishul, all peaks above 20,000 feet, when he was hardly 18. Today at 41, he is climbing some new peaks in a place as far removed from the Himalayas as you can get — Silicon Valley.

Does a valley have peaks? It sounds like an oxymoron from a school grammar book. For with the gut wrenching dip in the tech business, there are, amazingly, a few bright spots and smiling faces left. Gupta is one. While many of his ilk have seen large parts of their portfolios vapourise, he’s laughing all the way to the bank, alongwith his partners in the Venture Capital firm, Telesoft Partners. He has successfully made deals worth almost $1.5 billion in the past few months, when there was a bloodbath in the markets, even before the terrorist attacks.

The broadband chip start-up Vxtel was sold in February 2001 to Intel for $550 million (all cash). Another chipmaker, Catamaran, was sold to Infineon – a semiconductor spin-off from Siemens – for $250 million in May 2001. Lara Networks was sold to Cypress Semiconductors in June 2001 for $225 million and Versatile, another chip startup, was sold to another chipmaker, Vitesse Semiconductors, for $267 million a week later. In August, Kyamata, an optical solutions firm, was acquired by Alcatel Optronics for $117 million. All this frenzied deal-making adds up to a cool $1.5 billion. Telesoft partners funded all these companies. Also, Vxtel, Lara, Catamaran and Versatile happen to have Indian founders.

Gupta grew up in Delhi and studied economics at St Stephens. He did not want to be an engineer or a doctor – the traditional career paths for bright teenagers in India. But the events that followed have made him believe in karma. After landing in Washington on a student exchange programme, he ended up doing BS in Computer Science in ’82 from Washington State University at Pullman and an MS in ’84. He then signed up for a PhD at the same University. As part of his MS, Gupta was converting peripherals into network resources. At the PhD level he took up the problem of Utopia that is load sharing—use whichever machine is available on the network. However, his doctoral ambitions were short-circuited by an offer at Tectronix, famous for their oscilloscopes.

“I got an opportunity to implement my thesis on their new digital Oscilloscope. Tectronix was ahead of the game from HP, they grew up to $1.5 billion and then went flat, but HP became a $ 40 billion company.

Tectronix did not take the risks. Silicon Graphics came to them to sell the idea of graphical workstations for $25 million, but they were not interested,” recalls Arjun of his engineering experience.

But Arjun was too much of an entrepreneur-techie. “I was a software engineer at Tectronix. We created a company called Computer Based Instruments, funded by Tectronix. But right after commercialisation they decided that the opportunity was too large to be left to “inexperienced hands” and brought it back into the parent company,” says Arjun. But the disappointment at Tectronix did not deter Arjun. He thought he should get a good grounding in business and hence armed himself with an MBA. He joined Stanford in 1987 and spent a summer at Morgan Stanley, in New York.

Investment banking did not excite Arjun. “It was interesting, but there were hardly half-a-dozen concepts in debt and equity and everything else was a permutation and a combination. It became repetitive,” he recalls. So, after his MBA, he joined McKinsey & Co. They started a new programme to enter the Silicon Valley. But the basic problem was their approach, which was that of a generalist. As a McKinsey consultant, one could do pharmaceuticals today, automobiles tomorrow and so on. Which is fine in mature industries where you apply basic business principles, but in a sector like technology, which is changing at a fantastic rate, it did not make sense. During those four years, Arjun worked full time for two years at Apple Computers and two years at Pactel, a wireless company. Qualcomm’s Irvin Jacob was then hanging around trying to convince Pactel that CDMA is the way to go, and Arjun wrote the first justification for Pactel to fund CDMA.

It did and Qualcomm took off.

Today, some people in the industry are saying that Arjun is another Vinod Khosla in the making. But Arjun himself suddenly turns reverential when you mention Khosla’s name: “Any comparison to Vinod is a total mischaracterisation. He is a giant with a mega firm (Kleiner Perkins). We are merely neophytes that are passionate about helping build great companies. At TeleSoft, I have certainly tried to apply the best practices I learnt from Purnendu Chatterjee, George Soros; Vinod Khosla and John Doerr at KP; Rajat Gupta and others at McKinsey; Bill Ford and Frank Quatrone at Morgan Stanley; and Atiq Raza and Raj Singh, who are friends and serial entrepreneurs.”

So, what are the lessons he picked up from the great and the good? “One definitive thing I learnt from Vinod is that if you really believe in something, then do it,” says he. Arjun’s passion was to start a Next Generation Communications fund and manage it himself. So, he decided to raise money on his own. He knew that without $75 million nobody would take him seriously. But that was a big sum to be raised for someone who was not known. Arjun did not give up. He announced a closing date for the fund and pursued investors relentlessly. “I talked to everybody: Philadelphia Teachers Association, PC, old clients, friends and family. I also found in those desperate days that almost every government in the world has a loan programme for small business, so we looked into that.” Arjun, unlike most Americans, was not deterred by bureaucracy and managed to get $40 million, and he finally ended up with $150 million instead of $75 million.

Thus, Telesoft-I raised $150 million, which returned a 450 per cent IRR! Having built a reputation and success rate raising $500 million for Telesoft-II was not very difficult in 2000. Today, Telesoft Partners has Alltel, Mannesmann and Vivendi investing in it and several institutions as well. “You have got to be smart and work hard but you need the network. If Vinod Khosla wants to get smart about a deal, he makes five calls. And at the end of three days, he will know everything there is to know about a particular technology. But because he has done it for many years, he will have a framework on how to fit it in. I wanted to create a network of Telecom companies. So we wanted carriers, corporate partners like Intel or Spectra Physics, and Institutions. We have proactively gone to semiconductor vendors, carriers and systems guys, and given a presentation on our companies. They choose the startup and we ask the startup people to make a presentation. If they like it, there will be a commercial agreement, an investment or even an acquisition. You don’t need investment bankers to sell a company,” says Arjun, networker par excellence. There are many VCs who talk about the keiretsu model, eco-system and so on, but few are actually able to implement it.

Today, Arjun is not cold calling any one. He has 500 individual investors. They know this is a new fund with fire in our belly. Telesoft’s managing fee is 2.5 per cent and carried interest is 25 per cent. The most reputed funds like Kleiner Perkins, have about 3 per cent managing fees and 30 per cent carried interest, while newcomers charge 2 per cent and 20 per cent respectively. Telesoft has already paid back the government and again took $100 million in Telesoft II. The government recognised that even though Telesoft is not small, it invests in small companies. Now many VC funds have realised it and are using government funds.

Arjun is probably the only VC who prints his successes and failures in his personal CV and in his company’s brochure. It boldly says there have been six write-offs recently and the fund has lost $20 million in those startups. “The probability of failure is very real, so let us get real. What used to take three calls for raising funds now takes seven calls. Today we would rather consolidate than do new investments,” says Arjun.

Arjun’s idealism has not gone unnoticed. Says Atiq Raza of Raza Foundries: “I have found Arjun to be focused, full of confidence and energy, working hard to understand the intersection of business and technology. He is thorough in his business practices. In addition, he is a great salesperson. He is also steeped in idealism. One day, he called me on my cell phone and described a project conducted by Stanford University to reduce military tension and nuclear risk between India and Pakistan. He also told me that he was going to provide 50 per cent of the funding and was inviting me to pick up the remaining 50 per cent. He thought it would be good if the project was funded jointly by an Indian expatriate and a Pakistani expatriate. I did not fully understand the project until later, but I had enough faith in Arjun’s values and judgement that I signed up.” That is tall praise coming from Atiq, a pioneering entrepreneur in the chip industry.

Rajvir Singh, founder of StratumOne, Sierra Networks and Cerent (acquired later by PMC Sierra, Redback Networks and Cisco respectively for a valuation of $12 billion) says: “Arjun will go places. I know him for a long time. He has built a very nifty organisation that is tightly managed by him as CEO. This style has some advantages and some disadvantages as well. He is very hard working and truthful and well connected with telecom carriers. His partner and MD, Yatin Mundukar, provides him great field support.”

Truly, Arjun Gupta is climbing new peaks even when the rest of the industry is in a valley. How has this been possible in a serious economic downturn? Is Arjun a hustler, just a smart deal maker? Obviously, Arjun is a very good networker, but that is not all. He has absorbed what he learnt at the Himalayan Mountaineering Federation in his teen years. After all, mountaineering involves strategic daring and tactical caution, long-term planning of details and short-term flexibility, ability to not only reach the summit but to get back to the base camp safely. And above all, grit and determination.