Year ender 2023: Here's a look at top critical tech deals between India, US

Visiting heads of US-based companies in India are often surprised at how rapidly they get a return call from New Delhi to meet them. Usually held with the highest levels of the government, the discussions now rarely focus on the size of the foreign direct investment but on the technology content of a deal.

“Our CEO was already at the New Delhi airport, ready to fly out when we got a call from Raisina Hill, asking if he could extend his stay till the next morning”, said a person in one of the key technology company, who handled the visit.

Without a doubt, 2024 will be the year when the two countries shall put the most investment into this technology relationship. The list of technologies they have decided to share includes some that are not even commercially viable as of now. For instance, the US—India Civil Space Joint Working Group will focus on “Space Commerce”, a totally frontier area, for which they plan to hold a partnership-building event early in FY24. Those, of course, will be after the general elections in India, which do not get over before early June.

Politically, the sharing is made easy by the fact that after plenty of years, both nations will have governments that will have their mandate in the same year at the same time. In 2009, there was a similar chance when Obama (first term) and Manmohan Singh (second term) came in together, but it wasn’t the best term for the latter. So, technology cooperation between India and the USA, which was talked about then in the wake of the India-USA nuclear accord, did not take off.

This time, it promises to be different. The vote on account for India’s financial year FY25 to be presented by Finance Minister Nirmala Sitharaman is expected to okay spending plans by key departments for these technology relationships.

“Aggressive national competition over high technology might produce nonlinear breakthroughs this decade. The literature on national innovation suggests that a nation-state’s net negative balance of security concerns (termed creative insecurity) helps explain why only some nation-states focus on innovation”, write Pranay Kotashane and Abhiram Manchi in their recently released book, “When the Chips are Down: A Deep Dive Into a Global Crisis”.

Possibly the most unexpected beneficiary of the uptick in the relationship is the fortunes of government-run Hindustan Aeronautics Limited (HAL). The company, long a laggard in the list of PSU stocks, had to split its share this year to increase liquidity in the market.

Announcements like that of the commencement of negotiations for a commercial agreement between General Electric (GE) Aerospace and HAL to manufacture GE F-414 jet engines in India will further push the price of the stock that has already generated a 112.7 per cent upside in this calendar year. The fifth Annual U.S.-India 2+2 Ministerial Dialogue in 2023 in November has confirmed the trend.

Technology was not the focus of Indian liberalisation till recently. Successive governments were keen that money as foreign direct investment or at least as an institutional investment should pour into the stock markets. The technological changes till some years ago were all hand-me-down stuff as far as India was concerned.

The GE-HAL deal, for instance, includes the manufacturing of high-fidelity glass parts, whose rejection rates are astronomical. These are the terrain the Indian industry has not walked before. The proposed Innovation Bridge to connect US and Indian defence start-ups aims to make this walk easier.

Even then, there are very few Indian industry groups which have a demonstrated capacity to work on the shared commitments that include work on dual technologies such as AI, quantum technologies and semiconductors, strengthening supply chain technologies, innovation ecosystem, defence cooperation and next-generation communications.

An example is the plan to facilitate the deployment and adoption of Open RAN in India and foster global economies of scale within the sector. Open RAN means telecom service providers can source equipment from a variety of vendors to create their mobile networks. It is a huge opportunity for small-scale and medium-sized vendors to offer tech goods to the leaders in the telecom sector but it means all the work those leaders have put in to develop committed suppliers have gone. The service providers will depend on the use of non-proprietary subcomponents from a variety of vendors. This can hugely change the technological map of the sector as the quality of service becomes important.

Key elements of cooperation:

1. Indian language content in large language models: Among US companies, the necessity of developing foundational models relevant to India's diverse linguistic landscape and then deploying those elsewhere on a vast, continental scale could start becoming operational soon. Already at the Kashi Tamil Sangam, Prime Minister Narendra Modi showcased some of this, getting his Hindi speech simultaneously translated into  Tamil in real-time. As general elections come around, this could be a killer. “India has the opportunity to present this to the rest of the world as an alternative; it is an opportunity really to demonstrate leadership across the world,” S. Krishnan, secretary, Meity said at a recent event organised by Ficci. “The one thing that we try to do certainly is to use the language of the people and use it in a way, which is simplified, and in a way that everybody can understand”. The business opportunities that flow from this AI-based initiative are massive, developing connectivity for people, where everyone can talk and listen in various languages.

2. Climate change and technology: Every US tech initiative is laced with climate commitments. This underlays even multilateral initiatives like the UN Climate Change Technology Executive Committee (TEC), which has launched the AI Innovation Grand Challenge to identify and support the development of AI-powered solutions for climate action in developing countries. A Capgemini Research Institute report noted that 74 per cent of Indian executives said that their organisations will not be able to achieve their sustainability goals without the usage of climate technology. This is why 65 per cent of those surveyed said their organisation plans to increase investment in climate technology in the next two years. In each of these, it is the US model most companies will adopt since the markets are also on that side of the globe.

3. Energy markets: The USA exports oil and gas, and India is one of the largest markets for them. This is why India will be pushing harder to get tech breakthroughs to make those costs cheaper. The US carrot is an Indian member of the International Energy Agency. “US Secretary Blinken has pledged to continue working… toward IEA membership for India in accordance with provisions of the Agreement on an International Energy Program”, but just as India will wish for more freedom to solve the energy costs. Part of this will be the ambitious carbon capture technology in which European interest is positively lukewarm. World Resources Institute, for instance, notes, “the COP28 deal fails to address limitations of carbon capture technology when the reality is it can only play a very small role in our fight against climate change”. Having already given the green light to carbon market in December, India will hope to push with USA, substantial measures to fight against this perception.

And finally:

4.   Deepening of the joint task force for STEM talent. It has been established between the Association of American Universities and leading Indian educational institutions under the IIT Council of India. The aim is to advance collaborations in the fields of sustainable energy and agriculture, health and pandemic preparedness, semiconductor technology and manufacturing, advanced materials, telecommunications, artificial intelligence, quantum science and critical and emerging technologies. To make these possible the task force will recommend research and university partnerships for students and young tech professionals. It will also support the building of the capacity of individuals and institutions in emerging tech areas to research, produce results and collaborate.