China supplies over 90% of the magnets globally, said to control 69% of the production. I had written about how the Dragon wins in business in 2020.
Why the Chinese Dragon wins in Business
Bajaj Auto and I am sure many other automakers, others are equally affected by the shortage of these rare earth magnets which they import from China. As per reports, 69% of the global production and 90% of the supplies to the world are controlled by China. Did this happen in the last 24 hrs ? No, this was growing steadily and swiftly and with each increase in scale, volume, control, the Chinese gave discounts and typical of Indian industry they were in a perpetual wet dreams mode. Not one CEO am sure has ever asked his supply chain team – what is your derisking strategy – when you depend 100% on one country. They were I am sure dreaming of the fat bonuses, dividends, villas in Dubai and London by buying more from China. To be fair even the rest of the world did the same mistake but the western world was closely involved while the Indian private sector turned into traders.
My question - what clarity is this industry leader seeking from the Govt ? Does he think India still follows the pre 1991 system where everybody needed to go to the DGFT before taking any decision? Did any India Govt post 1991 prevent such folks from derisking their business/ supply chains ? At best one can argue that the Indian Govt has not pursued a policy of promoting the rare earth/ mining industry in India - but to demand clarity as here betrays the REAL thinking - "we will import ONLY from China, and unless we have clarity from the Govt we will be hurt".
25 years back I recall attending a board meeting and proudly presenting about how we had developed a major customer/ revenues, the Chairman commented that at around 50%+ I was creating a huge risk for the company and instead of celebrating, I should be presenting to the board my derisking strategy to bring this customer's share to less than 30%. Big lesson learnt by me but not by the Indian or even global industry it seems.
Way back in the 90’s when India liberalised, the same Bajaj group was against that decision but 34 years later, reports indicate that upto 40% and even 70% of an EV scooter is based on imported components with majority parts from China. Has even one Indian manufacturer worked on a second/ third vendor development plan on hand. Willing to bet - slim and none.
As a part of the manufacturing industry in a customer facing role, I do not recall even one offering a level playing field to Indian vendors as compared to the Chinese. But wait, wasn’t that exactly the argument of the infamous Bombay club led by Rahul Bajaj where he rightly argued that Indian industry must be given a level playing field compared to the foreigners ?
Today, a Chinese manufacturer will demand numbers, commitments, and offer a low price and the Indian buyer accepts those without a murmur. An Indian vendor for the same item, is rarely if ever given the same terms and yet the buyers demand the same Chinese price. I don’t just blame the buyer, I equally blame the vendors who will not think big, execute big and when faced with a commercial challenge will take the first flight to Shanghai and before one can blink, will transform into traders. I don’t blame them either, for centuries, Indian reputation and DNA is that of traders.
That the Finance Minister of India - after having been in that role for 9 years - signalling continuity in thought process and in a government that is in power for 12 years, signalling continuity in policy - has to make such statement is a slap on the face of the Indian Private sector.
But the world is changing. The trade deals referred above create opportunities for Indian manufacturing to spread its wings globally, to a plan. The big question is – will they or once again in a lazy manner surrender to the Chinese from Vietnam, Thailand instead. The Prime Minister was on target when he mentioned that reforms in India were always in a duress situation. Indian industry needs to wake up and change failing which AI and other technology will drown the nation into becoming yet again a colonised nation like in the past.
Indian Infotech/ service industry:
This recent post on X caught my attention and while my reaction is NOT about Infosys, it is about my tirade on the laziness of the Indian industry.
7 Indian software/infotech companies with a global footprint have a total of around 60 Billion $ in reserves as per public reports.
We have heard of Global brands/products that we identify with daily – Microsoft, Facebook, Instagram, Twitter, LinkedIn, Google, Amazon, Apple etc and each are aspirational for Indians.
Till 2026 I do not recall a single global Product/ Brand created/acquired by an Indian company that is used globally. Each of the above products/brands have significant Indian infotech talent creating and building them, even leading them – but not one has ever been inspired to create something or even acquire something.
Flipkart one would have thought as an Indian competitor to Amazon could have gone global, the Indian infotech giants could have given them wings to fly high, but instead they stumbled and were acquired by Walmart, USA for just 16 Billion. Today the top of the mind recall even in India is Amazon, not Flipkart even though Flipkart can claim a higher marketshare. Walmart has invested to increase stake but very little in business as compared to Amazon.
In a changing world where each one of us is constantly online, our lives merged online to a terrifying degree, cybersecurity is key and is anyone in India working to create a solution for the world or get acclaimed as the Cybersecurity experts? Nyah. Heck I am unsure if the Indian infotech industry even has folks who can hack into global systems as a part of Indian Defence Deterrance, while China, Pakistan, North Korea and others seem able to hack into global systems and wreak havoc on economies.
Wars are changing at a fast pace and drones that cost a few hundred dollars can bring down a nation economically or optionally create deterrence that can protect its cities and citizens. These involve a combination of hardware/software and cutting edge technology – again is this activity getting prominence within the Infotech industry in India to go global? Nyah. Drones are for Pre wedding and wedding shoots !!
Folks will argue of how something was done in India, but my argument is not about doing something in India, it is about doing something for the world, from India. That is when we truly become global and find a seat at the high table. Not as the colonised hangers on being given scraps from the table and feeling proud but being the host at the table. That is when we would have truly arrived.
Comments
Product development, like Google or Microsoft, requires massive, patient capital and a tolerance for failure, which is scarce in the Indian ecosystem – in short risk averse Indian IT industry, focusing on shareholder returns than investment in product R&D.
Vishal Sikka represented a rare, forward-looking visionary in the Indian IT sector, specifically regarding early artificial intelligence adoption, which often clashed with the industry's traditional, service-oriented, and cautious growth mindset. At a time when there was no ChatGPT, Gemini, or self-driving cars, Vishal Sikka gave a presentation on AI before NITI Aayog at the PM’s request, where officials of 20 Union Ministries were gathered. Nobody in India understood in 2019 what Sikka was saying. He is back in 2026 and many are listening to him. Sikka’s Advice to IT Services Companies: You have to shift the delivery model from labour arbitrage to “Labour + AI” arbitrage. It means, the AI component (AI platform, LLM models, AI applications) must be your own proprietary technology, and not rented from others.
Having said this, Nandan Nilekani is a foundational thinker in digital public infrastructure who, unlike traditional IT managers, designed massive technological platforms, thanks to Aadhaar and Open Network for Digital Commerce. FC Kohli championed early investment in computing hardware to drive India's IT revolution, in the mid-1990s, but his word was not heard much in North block. After nearly 3 decades, India is waking up to setting up semi-conductor chip factories. Better late than never.
India has 18% of the world’s population. We have to build our own foundation models, our own large-scale AI systems, and our own world-class applications on top of them. “Skill Gap” is a Loser’s Excuse: Out of 8 billion people in the world, only about 1.5 million are able to build AI applications. The number of people who can deploy AI in production is just a few hundred thousand.