Global trade’s landscape is swiftly evolving, where strategic and economic imperatives intertwine, with technology at their intersection. The role of technology in international negotiations and strategy is increasingly pronounced, serving as a pivotal element in crafting national agendas.
Contentions around technology will be at the core of bilateral and multilateral negotiations and actions. In addition to trade, it is increasingly clear that technology is central to national strategic imperatives. Latest developments show us how technology is already a bargaining chip in international strategies and agreements.
How did we get here? The world’s supply chains were threatened, starting 2020, by two events. The Covid pandemic exposed the reliance that the world had on China as a source of supply over a wide spectrum of areas, from electronics to pharmaceutical ingredients. It was clear that there needed to be diversification to mitigate the risks attendant with a concentrated source of supply; the resilience of supply chains had to be considered alongside costs and efficiencies. Then, two years later, the invasion of Ukraine, exposed new vulnerabilities: European dependence on Russia for energy and the importance of Ukraine for food supply as one of the top three grain exporters.
These threats have led to shaking the faith of many policy makers around the world in the benefits of trade openness and integration. In particular, it is apparent that dependence on single sources for critical and emerging technologies is a vulnerability that countries must alleviate.
The war in Ukraine has highlighted the importance of technology in warfare today. From the use of drones to cyber warfare, this may be one of the most technologically intensive confrontations. The small country of Ukraine has been helped by technology to withstand Russian military strength.
One only must look at the stream of articles in the highly respected Foreign Affairs to be struck by the increased drumbeat on the importance of technology to national strategy and defense.
It is in the context of a world getting wary of an overdependence on China and of the importance of advanced technologies that the conversation between the U.S. and India has placed technology in focus.
In May 2022, President Joe Biden and Prime Minister Narendra Modi announced the US-India Initiative on Critical and Emerging Technology (ICET) “to elevate and expand (our) strategic technology partnership and defense industrial cooperation between the governments, businesses, and academic institutions” of the two countries.
Meetings in January 2023 led by the two countries’ national security advisors and science leaders and a round table including broad academic and industry participation reinforced specific areas of partnership in strengthening innovation ecosystems to expand collaboration, defense innovation and technology cooperation, building resilient semiconductor supply chains, strengthening cooperation in the space domain, enhancing research partnerships between academic institutions, and advancing cooperation in next generation telecommunications technologies.
For the US and India, technology is a natural platform for collaboration. There has been a long history of alignment in this area, including US participation in assisting the establishment of national laboratories in newly independent India, and collaboration in establishing Indian Institutes of Technology. The flow of Indian students for advanced studies in the US and the successes of this diaspora in academia and industry there create a supportive ambience to take collaboration to another level.
Innovation, to be commercially successful, needs appropriate financial mechanisms, none more potent than venture capital that can help bridge the gap between academic research and commercialization. India will benefit from venture capital investors eager to support entrepreneurs in advanced technologies. In my own firm, we have great examples of success in India. IdeaForge, a drone company with entrepreneurs from IIT Bombay, that went public recently, is a textbook example of design and make in India. We are participating in space, another of the identified “critical and emerging” technologies, with our investment in Agnikul, associated with IIT Madras.
Financing itself is not enough. Fledgling enterprises need the benefit of real-world experience to navigate the uncertainties of a business journey and to scale up to capture opportunities on a national and global scale. This is an area where Indian entrepreneurs can benefit from the experience of Silicon Valley which continues to be a world leader in translating innovation into impactful global companies.
The ICET framework creates a broad umbrella for cooperation between the US and India which are clearly natural allies when it comes to technology and talent. The potential of entrepreneurship, and the private sector, to advance US-India synergies was clear at TechSurge India, a conference presented in New Delhi recently. And the power of technology and innovation may indeed be a beacon that illuminates the future of the US-India relationship.
The author is managing partner, Celesta Capital and author of The Global Trade Paradigm (HarperCollins, June 2023. He was formerly assistant secretary of commerce for global markets in the Obama administration.
