World War 3 Watch 04: Indian Defense Equipment strategy

India needs to up its defense game. India is dealing with potential conflicts on two fronts. On both these fronts we have belligerent neighbors engaged in asymmetric multi-dimensional confrontation. Pakistan is more of warfare and China is more of competition. Yet, India must prepare for the potential conflict. And in this we need to improve our preparation substantially.

Airforce

Just cursory look at the Air force in the region will set us back. Pakistan Air Force generally known combat strength is about 500 aircraft. China is about 1600 aircraft. India is about 600. While the numbers are not exactly a way to differentiate - but considering the length of border and our defense requirement India should aim for 2000 combat plane air force.

This means HAL cannot produce 16 aircraft per year. It has to produce 16 aircraft per month. Using private participation we need to improve this number quickly. Second, it appears we need full Rafale deal AND a F16 manufacturing line at the same time.

IAF should also think of getting larger number of combat drones. These drones should be able to manage to fly with manned aircraft. This one manned aircraft (M) -coupled with around 10 drones (D) or more. Thus one mission unit with M-D combination. Then you can add mission units with xM-yD.

These mission units will need to collaborate and coordinate with share intel. That will require a robust ICT interface.

Airforce needs support from ground and space in the form of missiles and information. We should develop mechanism for coordinated launch of missiles controlled by the aircraft pilot herself. We can augment it with coordinator based ground support too.

Army

The future soldier will be an augmented information soldier. 

We need to up our game in terms of equipping the soldier with top-class equipment. AK-203 is a step in the right direction. But we need to lighten the soldier and get every soldier a robo-buddy. The buddies could be in multiple form - carrier mules, terrain mapping drones, communication bots and combat drones (sniper buddy). For this we need very intense development in robotics and again the ICT component will also play a role.

We should experiment with augmenting the soldiers with exoskeletons and other techniques to improve battleground performance.

Air-cover has been neglected part of the army. Apache helicopters in air support is essential. 

Navy

Future of navy is stealth platforms. As the US stealth ship Zumwalt goes for a maiden mission, China is developing aircraft carrier buster missiles. The Chinese missiles are hyper-sonic and thus almost impossible to intercept. In this context any above surface ship will find it difficult to beat the defenses. Hence reliance of submarine platforms should be increased.

Sub-marine drone tech is actually quite interesting. It can be used on sink-and-forget  wait mode. Thus we should be able to plant and move around many depth assets on wait and watch basis. Without humans on board this is (a) easier and (b) safer. It also improves the counter-strike and defense capability. These drones should be easy to manufacture in large numbers and low cost. These drones need not be large they can simply be attachments to ammunition that can help the ammunition to navigate and activate.

Deep sea surveillance and AGAIN ICT is also going to be critical.

So Navy must develop platforms but also develop choking -technologies for anti-ship systems.

Space wars

Space is important front for information wars. The satellites form critical part of the ICT infrastructure we need to deploy across the forces.

Satellites should be able to perform twin functions - jamming enemy satellites and keeping ICT infrastructure working for our forces.

The ability to quickly and rapidly restore downed satellites is very important. We should also explore possibility of smaller satellites that can last only for 5/6 months and then disintegrate. The smaller the satellite the costlier it is to destroy. Also because of size, you can build for redundancy. It is also possible to launch 100 satellites in one launch. These satellites are more relevant for theater coverage rather than country coverage.

Cyber war

Most of modern warfare is quite destructive and hence preventive techniques are more important than remedial measures.Cyber war allows for information and processing delays in enemy retaliation and gives us additional time and information to respond better.

Many times it is better for cyber initiatives to operate in bleeding mode than in crippling mode. Thus, it is better for cyber initiatives to delay the enemy communication rather than cripple it. Thus introducing delays and errors is better than crippling the infrastructure for short time. These cyber initiatives can also provide advanced information about enemy maneuvers. The aim is to destroy combat assets of the enemy.

---

Buy my books "Subverting Capitalism & Democracy" and "Understanding Firms".

Urban Development problem in India - the lack of proper Development Plan

Recently, I had the opportunity to examine the Draft Development Plan released by Maharashtra State Road Development Corporation (MSRDC). The plan is quite badly designed. Yet, what hurt me more was the fact that this plan was developed for Special Planning Area (SPA) which is not developed as much so the development is almost green-field urbanization. And yet, even when we are given a clean slate we make such primary mistakes in planning. I wrote about the shortcomings in an Article in Moneylife.in titled "How can smart cities be built on dumb development plans?"

I have looked at the population, water demand estimation, power demand estimation, waste estimation, transportation planning etc. On every parameter this plan falls short. Have a read and leave comments.

---

 Buy my books "Subverting Capitalism & Democracy" and "Understanding Firms".

Is India still rising?

I came across this superb talk by David Mulford, former US Ambassador to India given in October 2016. Some positive highlights (I paraphrase):

1. India is a genuine democracy unlike China or such other countries. The data is more dependable and governance is more transparent, unlike non-democratic countries.
2. India has leapfrogged the fixed line telecom revolution by going to mobile directly.
3. India is also likely to leapfrog the credit card system.
4. India had the best monsoon 1954 this year.
5. The way to look at India is not to compare it with China, Singapore and others but to think of India as 19th Century America with robber barons. 
6. India has a service-oriented economy but Modi is pushing for manufacturing. Many of these projects particularly in defence and technology will materialise sooner.
7. By the enhanced transfer of funds to State Modi is trying to create competition between States for growth. Young people are joining the state politics and the political climate is likely to see a drastic change. India constitution is explicit as to the division of powers between State and Center and that helps the political leadership in the states to set correct goals.
8. Religious stability is high in India. Despite having about 250 million Muslims, Indian Islam seems to be softer and therefore radicalisation is much lower.
9. Cooperation between US and India increased after the 26/11 attacks (hotel attacks as he calls them). FBI teams from US helped Mumbai police. Some cooperation as to how to coordinate intelligence between local-central agencies is being shared.
10. India's Nuclear disaster liability law is not correctly worded which has prevented capital from coming into the country for nuclear power. The liability currently is on the suppliers and not the operators.

It is a must watch.

---

Buy my books "Subverting Capitalism & Democracy" and "Understanding Firms".

The smart cards in smart cities

Everyone is familiar with the oyster card in London and similar cards world over. Singapore has its own ez-link card. Yet, I carry few debit cards, few credit cards, School Access card (for parents), the Museum passes, Office access card, home access card and the works. There are simply too many cards.

Too many cards that I carry SIGH!

How about just 3?

Is it difficult? Not at all. Let us imagine 3 cards. One is your all-in-one Government ID. Second is high-security-access card (HS Card)— used for all debit card / credit card processing/home access and the like. Third is a lower security card (LS Card) — pre-paid cash card, travel, office access and the like.

Well, this system is in fact easier and more cost effective to setup. The service provider (say a bank, home security system) need to do is to add the card number and details present on the face of the card itself to their system and bingo your card can now function as a Citibank, HSBC or Chase or whatever card you prefer. On the back of the card they can stick a little sticker so that I remember what cards option I have. By limiting its access you can control what data the “swiping device” can collect. So one way could be to use photo of the card. Other way would be to simply tap that card — this would allow basic data for shopping say upto $2000/-. A swipe would let you swipe more than $2000 till your limit. A house access would require a tap and pin (say).

Same goes for the LS Card too. In fact all the shops who want to give you “points” and reward your “loyalty” can do so with this LS Card. Anyone wants you to give access can enter this card number in his system and you will have access to it. This could be transport systems including taxis and buses, boats and the works. It could also be your office door etc.

The government ID card can be kept separate because of the legal issues that result in case of mishandling of the card. If some vendor makes a mistake you may lose access to your insurance or something far worse — you may no longer be a citizen. The redundancy allows for the system to be more stable than depending on simply the transaction card.

Who mentioned Apple Wallet or Android Pay?

At its best I would have Apple, Android and mobile phone manufacturers do this. Just by getting my mobile number all the companies can give me access using the phone. I should be able to share basic data with companies wanting to reward me for my “loyalty” just by sharing my phone number and a sms based pin and then it should be easy for the companies to keep rewarding me.

However, I am wary of putting ever more power at the hands of these companies. For one, it seems difficult for these systems to work together at least till now. Therefore, we have cards that are not Apple pay compliant or the shops don’t have terminal for Apple pay. These problems are easily solveable — we simply need a will to do it. It would be beneficial if these companies adopt a universal standard for such operations.

This otta make cities Smart

Now I am not a fan of smart cities focussing on useless tech without convenience. But the smart card concept we discussed above seems to be practical and it should make cities smarter, peoples lives easier.

A city state like Singapore should initiate experiment in this direction. Singapore already has its own payment standard called NETS, formed by collaboration between various banks and adopted by monetary authority of Singapore. Now all cards should be NETS compatible — debit cards, credit cards and yes access cards, transport cards etc. With this in place we will take the first step towards card utopia.

---

Buy my books "Subverting Capitalism & Democracy" and "Understanding Firms".

Its not a Chinese sell-off!

For the past week, global markets have taken a fancy to the slowing of Chinese economy. It could be envy of watching a defiant surge in Chinese markets without any hiccup what so ever. This story, it appears, has nothing to do with China and more to do with Yellen. China somehow was an opportune discovery. 

The American economy, its size, and its global linkages make it core factor in asset price calculations. The US is a primary exporter of capital to most of the important markets of the world. It is also usually the most important sizeable end-consumer for many including China. Comparatively China is less inter-connected.

A US asset price rerating will affect everyone.

There is a risk hierarchy of assets explicit or implicit in the mind of the investor.  When other central banks do such a thing their Government bonds move along the asset risk-hierarchy but other assets do not get impacted. When the Fed modifies the interest rates the whole hierarchy moves up - it affects all the asset classes. With the impending rate hike by one of the biggest economies in the world we are looking at asset price rerating across the world. 

Hike pushes investors into action

Generally a reduction in rates allows existing investor more room as prices tend to increase in case of the rate cut. However, when the Fed hikes the interest rates, the riskier asset prices depreciate. This effect tends to push marginal investors into selling thereby creating an opportunity for broader sell off. 

The current sell-off seems more likely to be such a sell-off. It is unlikely that this sell-off has anything to do with China. China unfortunately slowed down at that very time and to top it off indulged into some anti-market moves that further spooked the markets. Naturally that has prolonged and aggravated the current sell-off.

Meaning of slowing China

China is highly export driven economy. The GDP contribution from investments was growing substantially. Post the 2008 crises two things happened - China increased the investment spending - investment to GDP ratio was ~ 40%, and did it in face of tapering consumption demand. The underlying assumption being that China hoped developed market demand will take-off in coming years.

Had demand returned China GDP would still look robust. It means developed world demand has not returned - despite reasonable GDP growth in developed economies. THAT to my mind is a bigger scare than simply China slowing down. 

---

Buy my books "Subverting Capitalism & Democracy" and "Understanding Firms". 

Types of Investment and India's low-hanging fruit

I think India is much better placed at the moment primarily because there is lot of low hanging fruit. I attempt to list a few. When it comes to investment we have two kinds of investment. 

1. The first represents fairly well understood investments where there is ample evidence of cost and benefit and technology is available from the experience of the first world countries. The road-map for development of such infrastructure, its costs, pay-off timelines etc. is well known.
• Agricultural productivity
• Basic Infrastructure - roads, power
• Second-level infrastructure like cold chains, transportation hubs etc.
2. The second is complicated and more like venture capital where risks are higher. Here the objective is to invest in areas that will value-drivers of the future. Here we are breaking new ground and the pay-offs are not clear. US and first world countries are required to invest in such type of infrastructure.
• Alternate energy
• New types of infrastructure including 4G telecom and other related such as NFC payments
• High-end infrastructure e.g. intelligent Highways etc.

  

For India, substantial opportunities exists in the first part. This is what makes India an attractive destination. Starting around 1995, a lot of attempts have been made in estimating this demand. Most have been unsuccessful, but a substantial body of knowledge has emerged in this process. Today is the best time of all for companies to undertake massive infrastructure building projects. The question really is, will government facilitate the process balancing protection of citizen's rights and goals of developments.

---

My book "Subverting Capitalism & Democracy" is available on Amazon and Kindle.