Chai & Chips Episode 009: The Infinite Sum Game: Crafting India’s Win-Win Global Tech Strategy
Guest: Dr. Badri Narayanan Gopalakrishnan - Economist & Founder, Infinite Sum Modeling & Fellow - NITI Aayog.
Episode Summary:
How does an economist view the intricacies of the semiconductor supply chain? What macro-level levers must India pull to transition from a service provider to a global technology powerhouse?
In this episode of Chai & Chips, I sat down with Dr. Badri Narayanan Gopalakrishnan, a seasoned economist, former Lead Adviser at NITI Aayog, and founder of Infinite Sum Modeling. With a career spanning advisory roles for the massive global entities like the ultimate semiconductor customer—tech giants—and governments, Badri provides a unique “30,000-foot view” of the industry.
We discuss the critical lessons India can learn from the rise of Taiwan, China, and Vietnam, the symbiotic relationship between AI and chip manufacturing, and the delicate dance of geopolitics in a fractured global supply chain. Badri also offers a candid look at the future of work in an AI-driven world and articulates a vision where India moves beyond “zero-sum” thinking to an “infinite sum” future of shared technological prosperity.
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Key Insights & Takeaways
1. The “Snowball Effect”: India’s Semiconductor Tipping Point
Badri argues that India has passed a critical tipping point. For decades, despite having the talent, the country was “doing nothing” in terms of domestic production capability. However, recent years have seen a “snowball effect” where long-standing operations have aggregated into a massive surge, turning India into a multi-billion dollar exporter of electronics. The challenge now shifts from starting up to scaling up infrastructure and raw material security to sustain this momentum.
2. The Global Classroom: What India Must Adopt (and Adapt)
Badri breaks down specific lessons from global leaders:
Taiwan: It’s not just about manufacturing; it’s about a relentless focus on specialized education and the government actively “championing” its companies (like TSMC) on the global stage.
China: The lesson here is “crowding in” investment. Public investment spurred private capability, focusing heavily on supply chain depth rather than just final assembly.
Vietnam: A masterclass in “Red Carpet” treatment—tax incentives and ease of doing business that welcomes foreign direct investment without friction.
3. The AI-Chip Symbiosis: It’s Not Just About Demand
While most discuss how AI drives demand for chips, Badri highlights the reverse: how AI is revolutionizing chip manufacturing. From defect detection to yield optimization, AI is compressing the R&D commercialization cycle. He warns, however, that India must develop unique “neuro-symbolic” and energy-efficient AI models suitable for its own constraints, rather than simply copying power-hungry Western Large Language Models (LLMs).
4. The “Infinite Sum” Approach to Geopolitics
In a world of trade wars and tariffs, Badri advocates for “Geo-economics” over pure geopolitics. He suggests India must maintain a “Give and Take” relationship, keeping tariffs pragmatic to protect domestic industry while remaining open enough to integrate with global supply chains. He terms this “Infinite Sum Modeling”—moving away from zero-sum competition to a state where mutual cooperation leads to infinite converging benefits for all partner nations.
5. From Service Provider to Technology Architect
The vision for 2047 is for India to transition from a consumer or back-office service provider to a “Global Technology Architect.” Just as India pioneered Digital Public Infrastructure (DPI) like UPI for the masses, Badri believes India has the unique cultural and technical DNA to democratize access to high-tech solutions, creating inclusive technology leadership that benefits the Global South and beyond.
Connect with our Guest:
Badri Narayanan on LinkedIn: https://www.linkedin.com/in/badrinarayanang/
Badri Narayanan on X: https://x.com/badrinarayanang
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Episode transcripts on Medium: https://medium.com/@pmallya2411
Episode Transcript
Speakers:
Prakash Mallya (Host)
Dr. Badri Narayanan Gopalakrishnan (Guest)
Preview: 00:00:00 - 00:01:23
Prakash Mallya 01:24
Hi Everyone! Welcome to Chai & Chips. Today we have with us Dr Badri Narayanan Gopalakrishnan. He’s an economist and founder of Infinite Sum Modeling. He is joining us from Seattle Washington today. He’s an associate faculty member at University of Seattle, Washington, Boston College and Oregon State University. He has written 15 books, 200 research papers, cited 6000 times across periodicals like Financial Times, CNN, BBC and New York Times, several other periodicals as well. He was part of NITI Aayog as a fellow leading the trade and commerce vertical, and now he’s a honorary nonresident fellow. He has advised several ministers around the world and organizations like Amazon, Google, Harvard University, TCS and Aditi Birla group. So welcome to the show, Badri, great to have you on Chai & Chips.
Badri Narayanan 02:25
Thank you, Prakash. Honor to be with you. Thank you.
Prakash Mallya 02:29
So I want to start with you have looked at it from different countries, different economies point of view in your consultations with ministries and economies around the world. So how do you see India’s position in semiconductors and electronics value chain? What could be the opportunities and what might be the pitfalls?
Badri Narayanan 02:49
Yeah, thank you again. Prakash, India’s current positioning in the global semiconductor industry is, I would say, relatively speaking, strong. But of course, it faces major international competition, so one of the focus areas for me in the last few years has been to develop policies for India, to develop capability in manufacturing in general, and electronics, in particular, so India can move to being considered as a hub in the electronics value chain. So the main contributors for India to be successful, you know, in the future, or a lot of long standing operations that have been happening, I would say, since 1980s and early 90s, and 2000s in places like Bangalore, where you are sitting now, in Gujarat, In Chennai, in Hyderabad, these days, there has been a lot of activity happening, and all these things have aggregated over time and kind of snowball and now led to where we are today. Furthermore, we should also not forget about the multinational and global partnerships that the Indian firms have been having with others. One recent example is Micron’s collaboration with Tata, Tata Group in Gujarat, and this can actually accelerate India’s capacity in the industry. And then these are all some positives. I distinctly remember in from 2019 to let’s go to 2021-22 and today, so the India’s electronic exports to the world have increased multiple times. It’s actually difficult to even. To quantify, you know, in terms of factors, because we were pretty much doing nothing in the late even in the late 2010s but suddenly we started exporting billions, so that that kind of tipping point happened in the last few years, all these developments that happened over time, and they kind of snowballed, and we got, got to such a pretty strong situation now, but yeah, you may, you may think that I’m being too positive and optimistic. Yes, India does face a lot of challenges. You know, one is lack of domestic production capability, particularly for the inputs used in semiconductors. I can look at some of the fossil fuels, the gas and so on, and all the you know, these inputs that are used in semiconductors are imported. And of course, if you are heavily reliant on imports, particularly from a few countries, not so much diversified this can, you know, weaken a lot of projects. Definitely, infrastructure is another major challenge. You know, we all know that we have come a long way in terms of infrastructure developments over the years, but, but that is when you compare our own time series data. If you look at over time, we are doing better before what you are earlier. But if you compare India with other competitors, infrastructure has been a major challenge. So, you know that the industrial zones are not, you know, very common across the country. You have some industrial zones where infrastructure is good, but it is not. They are not very common everywhere. So this is a major challenge. I remember having a discussion with the senior executive from Apple here in Bay Area. And he was actually talking about a similar kind of challenges, like particularly infrastructure. Given the given the sensitive, time sensitive nature of operations, the infrastructural constraint can be a problem. But as I mentioned, we are doing much better than before, and hopefully we will do even better in the future. But these are the heavy challenges we have, you know, in terms of being able to develop areas for semiconductors and electronics value chain.
Prakash Mallya 07:35
So that’s a great context Badri and I wanted to double click on the element you mentioned in terms of components and the value addition locally, and you would have seen the ecosystems evolve like China, Taiwan, even US, right? So are there any similarities or learnings we can draw on as we build the ecosystem here in India?
Badri Narayanan 08:04
Absolutely, Prakash, we have a lot of great lessons to learn from these other countries. You know, broadly speaking, the lessons are about investment into infrastructure development, policies of the government and effort taken by the government to diversify the operations, these are some aspects particularly India, should focus on leveraging strength in high technology industry hubs and also government programs that align national and state incentives. That’s an important point. In fact, one of the major functions of NITI Aayog been associated is mainly about coordinating between the different ministries in the central government or the union government, and aligning the incentives and priorities of national state governments. So these are, these are very important, like programs to promote semiconductors, wherein we consider the incentives across the states and national level, then one major thing that is missing is huge investments in research through universities. So that we all already know that India’s investments in research are very limited, you know, both from a public sector and a private sector point of view. But of course, we all also know, if you take ISRO as an example, we our efficiency of research expenditure is also very high. We can accomplish a lot with limited expenditure, but that cannot be generalized. That cannot be generalized, and that also cannot be used as a kind of an excuse to not invest in R&D. So those are some lessons. Let me. Go a little deep dive into the specific countries, maybe Taiwan, for example. In Taiwan, they have a well-established system for training and educating engineers and technicians involved in the semiconductor industry. Education has been given a lot of importance. I’ve been, you know, collaborating with a lot of colleagues in National Taiwan University, for example, and they are extremely good, and they are pretty high on world rankings and so on. So, the training and education component is very, very important, and particularly focusing on engineers and technicians. The second thing is, the government has established policy and programs aimed at developing the industry in a major way. So, they have things like five plus two innovative industries plan, and they have particularly focused on promoting high tech industries as well. In fact, I had an opportunity to meet one of the cabinet ministers from Taiwan. She had come to Seattle few years ago. She gave a speech, and in the speech, she spoke a lot about TSMC. You know, she was championing, pretty much. She was championing TSMC, and they were establishing some research ecosystem in the US, as you probably know, there has been some collaboration going on. And she was making so highly of TSMC and that kind of promotion, heavy promotion, not just in terms of promoting the industries to grow, but also championing those industries globally. This kind of initiatives have been done by Taiwan. And if you compare these two points I mentioned, over education, training and promotion, we are definitely lagging behind. Education of course, we have a lot of here in a lot of engineers graduating every year. We have probably the best in the world, even largest mass of people coming out every year with engineering degrees, even Masters and PhD also a lot of people are doing. But then the quality, and, even more importantly, the practical knowhow, the technical practical knowhow is lagging. So that is something we can learn from Taiwanese ecosystem. The second thing is the promotion that I talked about promotion, not only promoting industries locally, but also, whenever they go abroad, they don’t shy away from talking about major companies, and which, in India generally, if you do that, it’s, it’s being it’s kind of a taboo kind of thing, right? People don’t talk about specific industries because then, then there may be some suspicions, but I think we should go beyond that and definitely take some of our major winners, major companies global, to the global scale. Let me move to China for a little bit. China invested heavily in manufacturing equipment to strengthen its supply chain. So, I mean to your audience and to yourself, I don’t have to mention about how China has long away from its low-cost labor and advantage kind of perception. So that was actually the entry point some 20 years ago. They did that. But once they got in, they captured lot of markets. They started going up the value chain, and they invested heavily in manufacturing and supply chain strengthening. That is something that the investments, the public investments and the private sector investments that are what you call as crowding-in in economics, so that that has really played out well for them. And secondly, they really focused on localization. They have a lot of locally produced equipment, and even those equipment that are produced locally, they have very high localization rates. Definitely, rely on many other countries for some of the intermediate inputs and raw materials, but then they do make a lot out of them, and the value created is much more than what they’re importing. And this is exactly opposite of what we are facing in India. We’re importing a lot of materials. We still haven’t indigenized a lot, and the investments are also going on, but not to the scale of what China did in the past. Those are two lessons from China. Going to Vietnam, I want to talk a little bit about Vietnam because Vietnam, I always think of Vietnam as a country which we can look at without getting, you know, comments like, oh, they are far ahead of us, because Vietnam is quite similar a small economy, and then quite similar in terms of many of the per capita indicators. You know, they have lower cost of living, which attracts more professional talent and workers. This is actually something we also have. Vietnam and India are quite similar in terms of cost of living and per capita income and so on. So we don’t, you know, we have a similar advantage that Vietnam. The second major thing is, they do promote investments. They offer tax incentives to companies that set up operations in the country. They really give a red carpet welcome whenever people are going to invest in Vietnam. I heard a lot about that. I’ve not been to Vietnam myself, but I’ve heard a lot from other colleagues and friends that, you know, for example, the Japanese mission in Delhi, when they reached out to me, when I was at NITI Aayog, they said, you know, they kind of mentioned that whenever they have to, you know, they even mildly propose some investments in Vietnam, they are just being
Badri Narayanan 16:24
given such a warm welcome and given whatever is needed to come in. You just got to put in the money, invest and get in. They take care of the rest, whereas in India, even now, because despite a lot of initiatives by the honorable Prime Minister and commerce minister and finance minister and all other ministers and my colleagues in the bureaucracy, we still have a long way to go compared to these other countries, like the lack of coordination between the center and state governments, state and local governments, and the land acquisition. Lot of these things are really difficult, but that, again, is something that happens in democracies like India. But then, if you compare to the US, which you also mentioned as one of the countries, those things are pretty streamlined, despite you can say that, you know, Taiwan has a small country right now, is a small country and also a centralized economy. China has a centralized economy. India doesn’t have that luxury. But, yeah, you have US, which is again, very democratic. You have federal system and very large, you know, population MERS economy, but US has been able to do that so that, you know, those kind of comparisons we have to see, and in the US, it’s all because there is things have got quite streamlined, like, if you want to get into some investment projects, the government’s actually come and cooperate with you, same as what Vietnam does. And Vietnam also has invested heavily in research and education, very similar to what Taiwan has done. So anyway, Vietnam is actually following the footsteps of what Taiwan has done and even what China has done, and so on. And then US has done all this, you know, long time ago, like research, investments in the US are huge and tremendous, and that is why, even today, US is dominating. And these other countries, like Taiwan, China, Vietnam, they do, of course, lot of reverse engineering. And in the past, that’s what they did. But now, particularly China, has more into original research. A lot of Chinese universities have really been leading locally. So I think, these are some of the aspects, as I mentioned earlier, you know, investments into infrastructure development and government policies to incentivize and diversify operations. You know, education, research investments and aligning the incentives of various different parts of the government. So, I think these are the key things that we can learn from these countries that have done pretty well or increasingly doing pretty well in this area.
Prakash Mallya 19:14
Understand. So you talked about different contexts across different countries and what we can learn from them, Badri. One thing I wanted to ask you is about execution. There are several policies in motion, National Semiconductor Mission, PLI, DLI, different refinements of that have been implemented. Prime Minister recently announced RDI fund for research and development, which I thought was pretty big deal. So how do you look at the execution so far of the policies in motion, and what could we do to make it better?
Badri Narayanan 19:51
Yeah, thank you, Prakash. Yeah, definitely, all these policies are in the right direction in terms of you know, their intention, and they’re already making a dent on the ground. We can see a lot of expansion happening in the semiconductor conductor industry. But I would also like to point out some desirable things. You know, they already helped us accomplish a lot of things, but what more can be done? So, we have to improve the coordination between the national, state and the startups and the research efforts. And so, all the different policies that we discussed, you mentioned how to have some kind of coordination. Coordination is very important. And secondly, the R&D focus has to improve tremendously, increase tremendously and also, like the national education policy is one of the things that should come in this come into picture here. It has improved the applied, application orientedness of research, okay, that’s very important in this context. So, the research has to be more applied, and we are getting there and basically we also have to foster collaboration and cooperation with other countries, including the countries with whom we may see as not a very dependable partner. But we have to, you know, collaborate with them, like China, kind of countries. But then we shouldn’t just collaborate on one or two countries. We have to have a diverse set of partners. And we have to have a pretty complex and interconnected supply chain so that we don’t collapse if the country with whom we are collaborating more collapses. So we have to have a diversified approach and we also have to welcome investments from all countries and we had to strike a balance between protecting the domestic industry’s interest and improving competitiveness of the domestic industry through collaborations and foreign direct investments and so on. So, I hope that answers your question.
Prakash Mallya 22:13
Yeah, it does. It does. So, shifting gears a bit, right? I also wanted to bring in AI, because it’s very close to each other, right? So, one question I had was, how does semiconductor and AI, from a policy point of view, overlap, right? Does one fuel the other or the other way around? How do you see it as both are evolving simultaneously in the industry,
Badri Narayanan 22:43
AI can significantly accelerate chip manufacturing. It can increase the efficiency in production processing. It can also automate tasks such as defect detection. These improvements that can happen because of AI can lead to higher chip quality and a fast turnaround time between production and market. So, these are all important factors where AI is going to demand more chips manufacturing, but AI also can improve the processes and increase the efficiencies and also improve the qualities, quality of chips. So now AI focused processes, they are going to leverage semiconductor technology with integrated chips. And these chips are designed for specific AI functions such as NLP and recognition and so on. They are also optimized for speed. So, basically, if you take, for example, AI data centers, the kind of components that are needed, the kind of semiconductors that are needed, are going to be tremendously different and advanced compared to the existing ones. So basically, the growth of AI is going to increase the demand for semiconductors and also energy efficiency, because we are, we have, of course, achieved electricity for everyone, energy for everyone, but we still are not energy surplus country, so we still have some shortages. And if AI demands so much energy, we have to be prepared for that. So, which also means that we have to look for energy efficient semiconductors. So that is another important thing. Advancements in semiconductor design, such as system on chip architectures, these kind of, you know, new advancements can actually help shape AI to be more scalable. And in fact, just recently, we did some research on, you know, the AI data centers and the energy needs and the economic impact and so on. So, broadly speaking, you know, like, these are going to like that. AI is going to really increase the growth in semiconductors, but then the energy efficiency is a problem to be solved. So, one thing that is not much talked about, I’ll very briefly mention, is this evolution of neuro symbolic context-based AI. So, I’ve been working with some colleagues in the Bay area or doing some research on developing this kind of framework, and that attacks two issues. One is energy efficiency, and the second thing is also, you know, reducing the problems that we face in LLMs today in terms of hallucination and so on. So, they are very context based and focused. So, what I’m thinking is India should adopt those kind of cutting edge, you know, aspects of AI, not just what the, you know, the major big tech companies are doing, we also have to take, you know, take a unique path. And I think that can actually also, you know, promote the ambitions that we have. Promote the ability to achieve the ambitions that we have on semiconductors.
Prakash Mallya 26:24
So, I have a related question, and correct me if I’m thinking it wrong, right? Semiconductors have existed for a long period of time. India is 20% of the global chip designers, but we still don’t have world beating chip companies coming out of India just yet. AI is more recent. The research has evolved far more rapidly in the recent past, we have one of the largest footprints of software talent around the world, but we still don’t have world beating frontier models coming out of India just yet. So if you look at these two, there are parallels you can draw. And my question is, two or three related ones. One, what are the common causes you can cite in these two parallels? What could be the single most important policy lever to change the status quo, and how could you execute on them in the short, medium and long term?
Badri Narayanan 27:30
Yeah, I’ve done some research on this broad area of how the future of jobs, future of work, is going to play out, and what kind of policies the government should take. So I’ll just outline that in a couple of sentences first, and then come to the specifics, right? So, the future of work is typically going to be like greater demand for highly skilled labor and lower, I would say excess demand for highly skilled labor and excess supply of low skilled labor. So if you leave it as it is, if you leave it as status quo, the gap between the rich and poor is going to increase, and that’s going to have a lot of socio-economic implications, inequity and so on. Now, okay, that is a very general aspect. Now coming to a specific question.
Badri Narayanan 28:18
India’s job market has been the foundation of India software development
Badri Narayanan 28:26
employment, right? So now this has to be reshaped. So, this need not be eliminated. The automation coming from AI is going to offer newer roles, which the potential employees in India will need to relearn, along with the previous knowledge of software development and code. So, there is a lot of scope, or more than scope, requirement for the Indian workers, you know, experts, or whatever you talk about, depending on the level they have to, you know, learn, relearn, recalibrate what they’re doing. So, roles such as a model integration will be rising. Prompt engineering, those kind of roles are going to increase. Now, policy intervention can actually support startups to create software tools, investment in academic research and regulated policies that protect the income of employees whose jobs will be transitioning. So, some kind of, you know, I also thought about the something like the universal basic income kind of thing, where, when the job losses are happening en masse in the lower end of the spectrum, government can consider some social security options. So, it’s a combination of all these things. So, policy has to support increasing the supply of these ultra-high skilled workers and basically reduce the supply of or, yeah, two things, reduce the supply of the low skill workers and, and, to some extent, also increase their demand. So that way you can calibrate the supply demand equation. So definitely, you know, like all the different revolutions we have seen so far, different industrial revolutions we have seen so far, AI is going to disrupt the job market, but we have to be ready to take advantage of this, rather than get affected by this.
Prakash Mallya 30:33
Yeah, agree. And, and there are opportunities, there are challenges, as is always the case, yeah. And you think there are countries around the world who are looking at it actively and pursuing some interventions to minimize the job impact if that happens?
Badri Narayanan 30:56
Other countries are, you know, the most productive countries are the European countries. They have very, as you know, they have very stringent regulations, and they have pretty strong focus on Social Security and so on. So basically, they have, definitely, you know, done some of these initiatives, but then it’s just happening right now, right? So, the future preparedness is something that countries are, all you know, thinking about and working on. You know the EUA Act, which you might have seen, has a lot of aspects, both related to supply side of AI and the demand side of AI, in terms of, you know, privacy and so on, but also in terms of, you know, job related stuff. So, there are some lessons to learn from them. But I also have a strong feeling that we shouldn’t go too strong on regulating the innovators. So, we do definitely have to regulate them, but then the regulation has to be confined to situations where they are kind of exploiting and so on. Not like, we shouldn’t overregulate, basically. So, our model should be somewhere between the EU and the US. US is too, you know, liberal. So, of course the companies prosper, but then the people don’t have much say after over their privacy and so on. And even workers like you see a lot of layoffs happening as you speak here, where I live in Seattle, Bay Area and so on. So, we don’t want that kind of situation. We also don’t want the kind of situation the EU where there are no major large AI players because of the same reason. We have to be somewhere in the middle, is what I’m thinking. I don’t think we are in this aspect, you know, we are really in a bad position. We are already somewhere in the middle. Probably we should continue to stay there and be more proactive in the labor market interventions.
Prakash Mallya 33:10
Understand, fair point. It’s always going to be a balance versus over regulation. I agree with you. And in terms of balance, you have worked, been part of NITI Aayog and continuing to be, you have worked with other ministries, as well as looked at organizations around the world. What is an example of an evidence-based policy that got implemented and was wildly successful? Or it could also be another instance where it was not at all successful. Can you give us an example that the audience can relate to?
Badri Narayanan 33:46
It’s a great question. The evidence
Badri Narayanan 33:57
based policy is where I usually come in, and that’s, that’s the approach that I usually propose to many governments across the world. And the thing is, you know, like some of the statistical experts say, there are unknown knowns, known unknowns and unknown unknowns, right? So we are mostly in policy. In our circles we are mostly trading the unknown unknowns. So we have to minimize the unknowns by, you know, looking at the data, doing some analysis, talking to people and so on. But definitely, there has to be a human element there. It’s not just numbers but also interacting the stakeholders and so on. So, in terms of examples, I can say, I can talk about some very general, high level examples, right, like I can just give some examples from India. Lot of reforms that happened in India, like, starting from the 1991 you know, opening up of the markets and the recent free trade agreements. In fact, I was very actively contributing to the negotiations of free trade agreements of India with many countries. So, these are all evidence based, because if you are negotiating these kind of agreements, you cannot just be a free trade advocate or protectionist. You have to be very pragmatic. You have to look at a particular commodity. There are some 8000 commodities you are negotiating about. In these 8000 commodities, you have to go deeper and see which of those commodities are being produced by the domestic industry and they’re going to be endangered because of opening up of the market by reducing the tariffs, which ones will not at all be affected, and who are we negotiating with? Let’s say, for example, we did an FTA with EFTA, European Free Trade Area countries. These countries are, like, high-cost economies, like, you know, Switzerland, Iceland, those kind of countries. So these countries are not going to compete with, let’s say, Indian textile industry, or Indian farmers and so on. So now that has to be taken into consideration. What are the commodities that are going to be endangered? What are the commodities that are going to benefit? So maybe there are certain products which it’s better to import from these countries rather than trying to produce domestically. So, we have to look at all these different permutations and combinations, using real data and also conducting stakeholder discussions, talking to the industries, and then come up with outcomes. And this really, the government of India did a great job in doing all these things in a short span of time, in within like, a couple of years, we signed like four trade agreements, starting with UAE, then Australia and EFTA and UK and EU is going on at very advanced stage. Of course, the US trade is going on. So all these trade policies happen very quickly, but then the groundwork has been happening over time, and lot of evidence-based policies are happening. Okay, this is a positive thing, and we are already seeing some positive signs from these, starting from the 91 reforms, and today. There can be pitfalls, and whatever research and analysis we do, evidence based policy making we do, whomever you know whatever kind of stakeholders we are going to engage, there are going to be blind spots, and there are also going to be things that we cannot anticipate right now about what is going to happen in the future. For this, I can come to US, if you take NAFTA, North American Free Trade Agreement. It happened in the early 90s. President Bill Clinton was pushing for it, and at that point, Mexico was almost a non-entity. Mexico was not producing much. So, all the policymakers and the economists, they all concluded that NAFTA is going to benefit the US tremendously, particularly in terms of industries, because US is going to export a lot to Mexico. Mexico was a closed economy. So, once you open up, Mexico is going to import a lot from the US. But what people forgot to capture was the possibility that Mexico can become a manufacturing powerhouse, which is what happened. So once that happened, then US started running trade deficit with Mexico, and rest is history, and that’s why President Trump came and renegotiated, and lot of things are happening. So, there can be these blind spots. We have to be cognizant of that in in our discussions here in chips and semiconductors, we have to be very cognizant of what we know today, what can potentially happen tomorrow. So if the people who did those policies then had taken into consideration one scenario where Mexico could have produced a lot, then all these confusions may not have happened. So in the same way, we have to look at multiple scenarios in the future so that can actually shield us from the pitfalls of evidence-based policymaking.
Prakash Mallya 39:27
So, it’s a lot of game theory, strategy and second and third order effects.
Badri Narayanan 39:34
Absolutely! These are all in action, a combination of these theories, numbers, human elements and so on. So we had to really take all these things into consideration in the negotiation.
Prakash Mallya 39:48
Yeah. So, on that note, let’s take a quick break to do a bunch of lightning round questions, Badri. I can ask you as an economist and as a person who is doing engagements around the world, a bunch of fun questions. You’re okay with that? My first question to you, if you add a magic wand to remove one regulatory hurdle for Indian innovators, what would it be?
Badri Narayanan 40:20
I think it would be the intellectual property rights. So, since it’s a short answer, I’ll keep it at that. So we have to give the innovators more control over the innovations that you’re producing. So they have to, they have to be able to preserve it and serve it for benefiting from it.
Prakash Mallya 40:45
Biggest misconception people have about economists?
Badri Narayanan 40:52
Yeah, that is the, you know, the fact that economists disagree with each other, I would say the disagreement happens in the details. But if you look at some of the things that matter for industries, particularly, if you take if you look at a government at a country level, there can be disagreements. But if you’re looking at a particular company or what are the strategies they can do, there are not a microeconomic strategies which can be very helpful and useful. So I would say microeconomics is not so much like not so much prone to disagreements. Macroeconomics can be. And also, I have tended to agree with economists from different schools of thought, depending on the situation. So, if economists are more pragmatic and function like engineers in a way that they focus on solving problems rather than justifying their ideology, that can be very productive. So economics should be treated like a tool for coming up with solutions for problems rather than ideological, you know, powerhouses imposing different ideologies on all problems one size, fit all approach is what creates trouble.
Prakash Mallya 42:25
Agree! The one innovation from India you wish the world talked more about?
Badri Narayanan 42:34
Of course, I can go to ancient India and say zero, right? So, innovation of zero was from us and, you know, and also the whole concepts of algebra and a lot of things actually originally came from India. And even a couple of days ago, I saw some historical accounts of even economics and mathematics and so on, and everywhere they start from Greek and Egyptian civilizations, but we don’t get enough credit. But then that should not stop us from innovating. So, I’m just saying that we should be proud of what we achieved in the past, and we should do more today, so that, you know the world can work. And imagine that Indians could have done that in the past. So you cannot just cherish your past glories but it is important to be proud of our past glories.
Prakash Mallya 43:28
Your most prized book, or author recommendation for ambitious students today?
Badri Narayanan 43:36
You’re talking about books authored by people in general, right?
Prakash Mallya 43:40
In general.
Badri Narayanan 43:41
You’re not asking my books?
Prakash Mallya 43:43
No, in general.
Badri Narayanan 43:46
General, yeah. So, in general in economics, right? In general in economics, I would, you know if people want to understand the basics of economics and then start implementing it in their day to day stuff, I would say should go through, you know, Paul Samuelson’s Introduction to Economics, Principles of Economics. So I think that would be a great starting point. And it’s not just a starting point. It can be a sufficient guide for anyone who is really wanting to get some value out of economics. But there are many other books I can think of, but this is what comes to my mind immediately. And if you are interested in getting a historical perspective of economics, a lot of books written about different strands of economics, schools of economic thought and so on. But I would also suggest some readings on Indian vision of economics, Indian Kautilya, Arthashastra kind of things. There are a few authors. One of them happens to be my friend, Sriram Balasubramanian, he has written a couple of books recently on Kautilyanomics and Dharmanomics. So these are very interesting which basically shed light on the India’s economic policies that actually worked in ancient India and medieval India, and how, what can learn from them in today’s situation. Yeah, so those are, like the first one I said, is the classic, neo classical economics that we can learn from one of the Nobel laureates, Paul Samuelson. And the second set of literature is about India’s approach to economics.
Prakash Mallya 45:40
Got you. If we have to teach one skill to every young professional today, what would it be?
Badri Narayanan 45:50
I would say logical reasoning, and you know, mathematics, right? So mathematical skills are going to be, you know, needed irrespective of how AI is developing. So these two, I think, logical reasoning, mathematical skills, and I think based on this decision-making skills, I think these are the three different things I would say everyone should learn about in the future, so they won’t be affected by any area.
Prakash Mallya 46:28
Good point. One word to describe Indian semiconductor ecosystem now, one word?
Badri Narayanan 46:38
Awesome!
Prakash Mallya 46:39
Very nice. Yeah, agree. So let me come back to geopolitics. You talked about geopolitics in your previous comments as well, and we are navigating, every country is navigating through a situation where they have to balance the trade and tariffs to building the local ecosystem and India from a semiconductor and electronics value chain point of view, how do you think we can have that balance? What kind of policies you could implement to maintaining that balance?
Badri Narayanan 47:17
So, if you take the Prime Minister’s coinage of wisdom Atmanirbhar Bharat, right. So, lot of people started thinking that we are going back to pre 1991 era, where you’re emphasizing on self sufficiency and so on. But self-reliance, or Atmanirbharta is slightly different. So we have to develop domestic capabilities, but then we also have to be a major part of the global supply chain. So we have to plug into the global supply chains. So that, I think, is a guiding light for domestic and international collaboration. So, we have to leverage the international collaboration to strengthen domestic ability. We have to develop domestic infrastructure, learn from others, invite others to come and invest in terms of manufacturing, infrastructure and so on and talent also, you know, we have to invite, be inviting to foreign and highly skilled, talented people to come here, work for some time, get some capabilities domestically. So, all these things we have to do, and the schemes like PLI and DLI are going to go a long way to develop this domestic strength, and this will reduce our reliance on any country for the framework and functionality of semiconductors and the electronics industries. So, we have to, like if you just for a moment, if you think about the US, the Trump administration one and two, they have been heavily promoting the domestic industry by increasing tariffs. Of course, the uniform increase in tariffs can affect them as well but the intention is to protect the domestic industry, whereas the Biden administration looked at industrial policy to develop private subsidies and so on. So what we are doing is kind of a combination. So, we are keeping our tariffs high and unless and until we have a free trade agreement and get market access to those countries. So we have to keep our cards alive. So, we have to make sure that we have something to negotiate with other countries. And at the same time, we have to be friendly with everyone and do a lot of give and take in terms of exports, imports, investments going out, investments coming in, and so on. So diversification of imports is really important. We may have to go beyond just East Asia, or particularly China. And definitely, you know, these trade agreements are helping us to do that. So if you see the trade agreement, the free trade agreements we have had recently, compared to the trade agreements we had like some 15-20 years ago, the new trade agreements are mostly focusing on the countries which can be complementary to India, who can be great markets for us, who can provide great inputs for us, like from Australia, we can get a lot of minerals. We can export pretty much anything to Australia. So these kind of things. So I think we have to have a very pragmatic approach to the geo economics.
Prakash Mallya 50:35
Fair point. So, it’s like a win-win relationship, is what you’re saying, where both prosper as a part of the relationship.
Badri Narayanan 50:43
Exactly, exactly. So, like the term I used to you know, like name our company, Infinite Sum. So, we should not get into the zero-sum thinking, but go for this infinite sum thinking, where the sum of benefits for the partner countries, both the partner countries will converge to infinity over time.
Prakash Mallya 51:04
Very nice. So in that role of building or journey of building self-reliance, how do you see the role of universities? You talked a bit about collaboration and consistency in terms of execution across state, federal, startup ecosystem, and educational institutions included, what role specifically can universities play in that?
Badri Narayanan 51:29
So, the universities, if you take in the US, you have been here too. So, in the US, most of the industries are influenced by university research. The university research actually dictates the future agenda of the industry, whereas in India until now, or maybe until recent past, I would say that the universities were mostly taking the best research done outside India, and just end of copying, copycatting to Indian context. So, but then what we need is much more than that. We have to do some original research. And secondly, we have to work on, if you’re not doing original fundamental research, we have to collaborate and partner on commercializing some you know, research breakthroughs that are happening outside India. Let’s say, of course, there are different parts, different steps in the path of research finding to commercialization. Indian universities can play the intermediate steps. So, you take some really great breakthrough that is happening in, let’s say, Stanford or MIT, one of our IITs, can collaborate with them to see how to, you know, make that scientific development and bring it to scale. So, they can focus on that kind of innovation. How do we make sure that the costs are reduced to implement that. So we can have that research commercialization kind of niche that we can do, and that is what ISRO has done a lot like, in addition to fundamental research, they have done a lot of cost optimization, right? So that, I think, is important. So, we have to identify our comparative advantage and use that to position ourselves with the foreign universities. I think that is one, one important thing so the university-to-university collaborations can happen. India already has some beautiful schemes like I myself have participated in that before, even before joining the government. There’s one scheme called Global Initiative for Academic Network, where the foreign people working in foreign universities, leading experts, they come to India, spend a week or two teaching a course which is never taught in India, some very innovative new course. And then that is opened up to young researchers, PhD scholars, postdocs and so on. I’ve done it couple of times on various topics. And that is one scheme which has been tremendously successful. And the second scheme is also, and it’s called Spark. It is to attract the foreign academics to come and stay in an Indian institution and do some joint research for a period of time, like six months or so on. This has become pretty, you know, prominent in many institutions across the country, and they’re also longer-term research positions offered in different institutions. So, these things are really good. And the same thing should also happen for Indian academics going out and so this kind of, you know, people to people contact, like academics to academics, individual contact, and also institution to institution collaboration, and also institution to industry. So why not, you know, IITs collaborate with Micron or Nvidia, so those kind of, you know, collaborations between the top industries and Indian academia also should be promoted. And I think, as I told you just in the beginning of this discussion, universities play a very important role globally. They don’t play that much of a role in India apart from the top institutions. That has to change so and it’s a chicken & egg problem because academics think that they are not heard enough by the industry, and industry thinks that the academics are too theoretical. That has to change. There has to be more interaction, even within the country, between the academia and industry. And some of these global interactions can help do some of these ice breakers. So if, for example, an Indian student is collaborating with MIT or Stanford or any US university, and also with Nvidia so on, then the Indian industry also will take note of that. Say, okay, why don’t we also collaborate with this institution? So yeah, these things can be, of course, you know, done by the government can play an important role. I already told you some other schemes, but even the private institutions, but academic institutions can take some efforts on this.
Prakash Mallya 56:25
Yeah, and you have specifically talked about the R&D commercialization piece, and this is something that you have mentioned in your past conversations also that I was listening to as a prep to this dialog. What is R&D commercialization? If you can explain to our audience, in the absence of local innovation as a stop gap, what you are, what my understanding is, you are commercializing R&D being done in another country until the local R&D picks up. Am I right? Am I getting it right?
Badri Narayanan 57:02
Yeah. I think I would agree with you partly. What you’re saying is one scenario, you can say that, okay, let’s develop our own R&D, but until then, let’s do this collaboration, R&D commercialization kind of collaboration. So that is what you’re saying is something that is pretty close to what some of the East Asian countries did, right, like they did slightly different. They did more like reverse engineering and so on. But here it is more, more explicit collaboration. So explicitly the scientists who are coming up with some path breaking inventions, they go, come to the Indian institutions and say that, please help us to make it more practically achievable, right? So, then there are two pathways from that, right? One is what you said, like you do that, and you also learn how to do research, and you also become research powerhouse that would be highly desirable. I agree with you. But I also think that this can also become a long-term equilibrium. You can always be a great partner with any country that is looking for R&D commercialization, right? So, and then also, there is also another point here, like I was talking about the steps from R&D to commercial implementation, right? So, to manufacture these R&D based products at scale, you need the cost advantages and so on that is there in India. So, these research institutions can eventually lead to that, eventually lead for India to develop a manufacturing base for these new products, right? So that is ultimate thing. So, what I’m saying is that this lack of expenditure we have in R&D, which, of course, in our vision 2047, we have some ambitious targets we want to achieve. But, given the pace at which it’s growing, we may not achieve that. So, like you’re talking, use the word of use the word stop gap, right? Until then, we can do this. If that never happens, this can even be a long-term equilibrium. The longer term, we can still keep doing this R&D commercialization, where we benefit from one part of the innovations in R&D, which is like conversion, converting that into commercial viability.
Prakash Mallya 59:29
Fair point. So, we have come a long way, Badri. So, I have a last question that I ask all my guests, and it is as follows, India’s journey in semiconductors and deep tech is not only about domestic growth, it’s about our place on the global map when it comes to technology and innovation. So, if you look ahead 10,15,20 years, where do you see India’s position at that time and what needs to happen today to make that vision a reality?
Badri Narayanan 1:00:01
So, one of the, I would say, you know, really ambitious goal that we can, we can have by 2047, the Viksit Bharat, or Developed India goal that we have is technology sovereignty and inclusive AI leadership, right? So how India can become a global technology architect, not just a consumer or service provider? So, this is basically the manifestation of self-reliance or Atmanirbhar Bharat, right? Particularly in technologies, these technologies we are talking about semiconductors, electronics, high end equipment, special materials and so on. So, this is to integrate technology with sustainable development and see innovations, not only you know, lead to prosperity, which we all know it’s going to happen, but also reduce inequalities, linking directly to the crosscutting the theme that we have in our broader vision, which is inclusive growth. So, we don’t want just to become great, developed country purely by increasing the per capita income. We also want that growth to be evenly redistributed like we wanted to be inclusive. So that is the thing. So, yeah, we have to produce a major share of global semiconductors, and this inclusivity that I mentioned now, we already made a lot of progress in the broader digital development, digital technology oriented development like UPI or, you know, digital public infrastructure, these are all great examples where we have made use of technology to reach the masses. So, I think that has become kind of like our DNA when it comes to digital deliveries and so on. So, if we can keep this and take it to a different level, where we can tell the world. Right now, I’ve been part of a lot of initiatives of the government, where I would talk to other countries and say that, you know, this is something we have done. You guys can also do this. And usually, we’ll talk about these things to the poorer countries. But in the future, we can do that even to the entire world. So, I think that, I would say, is a goal that is really, you know, desirable to achieve, and very, very challenging as well, but we have already made some baby steps in that direction.
Prakash Mallya 1:02:39
Fantastic! So that’s a great place to close the conversation. But is there anything that you wanted to cover that we didn’t cover?
Badri Narayanan 1:02:49
I think this was wonderful, Prakash. I really learned a lot from these thought-provoking questions, while I was making these points, I also had a lot of thoughts going in my mind. So, thanks for this, and thoroughly enjoy the conversation and looking forward to more interactions, thank you!
Prakash Mallya 1:03:14
Looking forward to it, Badri. Thank you! Thank you for your time and for our audience, do follow us, do like, subscribe to our channels. We are available on YouTube, Spotify, Apple podcasts and several other channels that you can find us. If you like a channel episode, please share with your family and friends, because that helps us to get the word out. And on that note, thank you very much for logging in to Chai & Chips.