#339 Divergence and Assimilation

D.R. Nagaraj's Views on the Ambedkar-Gandhi Debate, India's Response to China's Supply Chain Warfare, and a Call for Negative Results of Supply Chain Weaponisation

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India Policy Watch: Gandhi-Ambedkar Debate & Finding D.R. Nagaraj

Insights on current policy issues in India

—RSJ

I am taking a break from writing about war in this edition. Why? Because Trump also seems to be taking one. In an apparent move that suggests Trump coming to terms with the permanence of the Islamic state in Iran, he extended the deadline for some kind of negotiated end to the conflict with Tehran to ten days.

I continue with my view that this war will have a longer tail than expected. Trump will arbitrarily declare victory and withdraw, leaving his allies to figure out their terms of engagement with Iran. Netanyahu will follow Trump’s lead while keeping the operations in simmer mode both in Iran and Lebanon till the elections are done. The conflict will continue in a sporadic fashion until July or August, before normalcy is restored in West Asia and the Strait of Hormuz is back in business as before.

Iran has seen the benefits of its war on the global economy through this blockade succeed beyond its expectations. They will use this playbook again in future. This will have long-term ramifications on nations rethinking their energy security policy and it will further exacerbate protectionist trade tendencies. All negative for global trade in the medium run. Who knows what next week shall bring to us? Right now, all I can say is that Q1 of FY27 for the Indian economy will take a 2-3 per cent growth hit at a minimum.

Anyway, away from the war, I was reading Rama Bhima Soma - cultural investigations into modern Karnataka by Srikar Raghavan, earlier this week. This is a remarkable book that traces the emergence of modern Karnataka through its cultural and literary traditions, interweaving the narrative with biographical details of some of the state's greatest cultural icons.

And among them was the scholar and literary critic, D.R. Nagaraj, a name that I hadn’t come across before. In the book, Raghavan extols Nagaraj as among the most original thinkers of post-independent India, “who to quote his good friend Ramachandra Guha, had accomplished a lifetime of work by the time he reached forty”. There was an extract from Nagaraj’s interview with Lankesh Patrike in the mid-90s, in which he contrasts his defence of swadeshi and Indic thought with that of the RSS. I have reproduced it here:

“When we are talking about any philosophical matters, these complications arise naturally. Just because it is swadeshi thought does not mean it should be restricted to the Sangh. I am talking about the language of Gandhi, Ambedkar and Lohia. A culture really blooms only when it reignites the multifaceted strains within itself. This is, in fact, a means to stop the dangerous cultural nationalism of the Sangh Parivar…. Cultural memory is a great asset of desi socialists. If we give that up to Sangh too, then we will be weaponless, that’s all.”

That was quite prescient. The socialists did indeed give up cultural memory for a kind of cosmopolitan rootlessness over the last three decades. The vacuum has been filled with all kinds of charlatans.

I was in the middle of the book on Wednesday as I boarded a flight back home. Just before taking off, I downloaded the latest episode of Amit Varma’s The Seen and the Unseen that had him in conversation with Ramachandra Guha (Episode 440: Ram and Friends). Consider my surprise, then, that in mid-flight, as I was listening to the podcast, Ram Guha brings up D.R. Nagaraj and spends considerable time discussing his background, his deep-rooted understanding of Kannada society, and his originality in thinking and writing about caste and culture.

Clearly, the universe was sending me a signal to go deeper with D.R. Nagaraj. Which is what I did after I landed. I bought Nagaraj’s seminal work of essays titled The Flaming Feet and Other Essays: The Dalit Movement in India, which has sixteen essays on the history and intellectual basis for the Dalit movement, including what it lacks that makes it difficult for it to achieve its ultimate objectives.

It is possibly the best anthology of essays I have read about India. Scratch that. It is the best anthology of essays I have ever read. I will strongly recommend this to you, especially the title essay that contrasts the Gandhian and Ambedkarite views on Dalit emancipation and then argues that they complement each other. In my view, The Flaming Feet is an absolute must for anyone who thinks of Gandhi and Ambedkar as the two opposite poles of Dalit political thought, with Gandhi losing relevance in the past half a century or so.

As Nagaraj writes:

”I am referring to the complex yet fascinating Gandhiji-Ambedkar encounter of the nineteen thirties. It is true, though each continued to refer to the other as a fool and heretic (not necessarily using these very words), till the end of their respective lives. This ferocity was more true, however, in the case of Babasaheb. But I suspect that this was only for the sake of form; it was for the consumption of those who laid a great deal of emphasis on the continuity of form. By the end of the mid-thirties both Ambedkar and Gandhiji were not the same persons they were when they had set out on a journey of profound engagement with each other. They were deeply affected and transformed by each other.”

According to Nagaraj, the Gandhi-Ambedkar debate isn’t or shouldn’t be viewed as a binary, as is the norm, that is, Gandhi, standing for the self-purification of the oppressor, while Ambedkar rooting for the self-respect of the oppressed. Nagaraj argues that this is historically false, though rather convenient. It is true that Gandhi considered untouchability as an abhorrent moral sin of the Hindu society, and it was the responsibility of the caste Hindus to get rid of it through reform and repentance.

Of course, Ambedkar saw it differently as a Dalit who had borne the burden of untouchability through first-hand experience. For him, this wasn’t just a design flaw in Hindu society; instead, this was what it rested on. Therefore, his call for the total annihilation of caste. But through the 1930s, as the two vigorously debate and disagree with one another, Nagaraj contends, with evidence, that the two subtly strengthen their arguments because of the influence of the other.

Through the 1920s, Gandhi, in his writings on untouchability and indeed in his terming of Dalits as “Harijans”, betrays a sense of upper caste paternalism towards them. His core thesis during this period is that true independence of Indian society will mean not just getting rid of colonialism but also freeing up the society of other forms of oppression, especially those that are linked to caste.

In framing the independence movement thus, Gandhi made untouchability a political issue, which then had greater acceptance than it being seen as a social reform. To Gandhi, this was a cultural problem which needed work and reform from within rather than legally induced from outside. However, this form of moral suasion of the upper caste Hindus, with its focus on atonement, worked only for the core group of Gandhians. It barely made a dent in the lives of ordinary Dalits through the reform of society.

Ambedkar, in the meantime, had arrived at a more radical and perhaps accurate diagnosis of the issue. For him, this wasn’t a case of personal choices and individual atonement. Untouchability was a system of institutionalised injustice and those benefitting from the system would be hardly expected to demolish it on their own. It needed the assertion of the oppressed to challenge this structure through legal and economic means. Caste for Ambedkar was unjust and criminal and it had to be dismantled through law and reason. But Ambedkar realised through the 1930s that merely using reason and legal tools to confront caste had its limitations. Caste was a deeply ingrained cultural phenomenon, a belief system that sustained social order. Even those who could escape its clutches through access to education and political power (as it happened with the success of the non-Brahmin Justice Party in Madras province) could easily succumb to practising it on others once they were free from it. Ambedkar realised the necessity of a mindset change needed through moral persuasion for overcoming this centuries-old bias that was deeply embedded in the Hindu psyche. He could see the merit of the Gandhian argument.

Nagaraj goes for a synthesis of these thoughts and champions the view that the debates between Gandhi and Ambedkar influence and transform them. It allowed them to find a more holistic approach to address the centrality of caste in Indian society. Nagaraj ends his essay with the concern that the Dalit movement in privileging Ambedkar and deriding and abandoning Gandhi in recent times (Nagaraj wrote this in 1993) is making a fundamental error - that of ignoring an important half of the argument that Ambedkar himself had come to appreciate. Legal and economic rights are important for Dalit progress but for the society to truly reform, it must bring religious memory, moral arguments and cultural reconstruction into the mix.

I will leave you with the final section of Nagaraj’s essay that captures this complementarity perfectly. And, I will urge you to read his brilliant essay in its entirety.

”To conclude, in what way was Ambedkar transformed by Gandhiji? Babasaheb had always opposed the question of untouchability as a religious question; he accepted the primacy of religion in the matter. He did to religion what Gandhiji did to the idea of economic uplift. It is a pattern of acceptance and altering the same. Religion is the crucial thing, true. Give up Hinduism itself was the Ambedkarite alteration. The 1935 Yeola Declaration of Ambedkar that he would not die a Hindu was an act of recognizing the legitimacy of the Gandhian mode although rejecting the choice in which solution was sought. Economic uplift is the effective remedy, true; let us rejuvenate the entire village not the selective mobility: such was the Gandhian transformation of the Ambedkarite idea. Even regarding the caste system Gandhiji had to change his soft approval of it: in the Harijan issue of November 16, 1935, he simply declared that caste has to go much to the consternation of his orthodox supporters. He even criticised the cruel restrictions on inter-dining and inter-caste marriage, a refreshing change compared to his earlier vacillation regarding these.

Needless to mention at this stage that both Gandhiji and Ambedkar can and should be made complementary to each other. Surely such efforts will be met with stiff opposition from hardened ideologues and researchers, and they are bound to unearth fresh evidence to fuel the fire between the two. One way of fighting such tendencies, apart from pointing out the political necessity of such hermeneutic exercise, is to file a philosophical caveat highlighting the notion of ontological difference to distinguish between contingent details of historical fact and the truth of a deeper historical concern. At the level of deeper historical truth, the conflicting fact disappears to reveal the underlying unity. The theoretical project of this entire book draws its sustenance from the notion of ontological difference. In this case accepting and examining the difference leads to the truth of dynamic unity.”

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Matsyanyaaya: Assessing India’s Response to Supply Chain Conflict with China

Big fish eating small fish = Foreign Policy in action

— Pranay Kotasthane

Earlier this week, I attended a workshop on Supply Chain Conflict: Lessons from the Russia-Ukraine War and China-U.S. Economic Relations, put together by Chris Miller. The workshop brought together researchers studying the weaponisation of energy, electronics, and semiconductor supply chains. I was asked to speak on India’s responses to China's supply chain weaponisation. This gave me an opportunity to synthesise many ideas I have discussed previously in these pages. What follows is a summary of my comments.

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The Nature of the Problem

Compared with the West’s economic integration with China, India’s economic relationship with China takes an unusual form. The two countries have an active and seemingly intractable boundary dispute, which means that of the four dimensions of their economic relationship—trade, technology transfer, investment, and talent—India and China don’t do anything substantial on the latter three. Press Note 3 (PN3) screens Chinese investments to prevent opportunistic takeovers. Huawei is already excluded from 5G trials. Visa and personnel restrictions limit talent flows.

What remains is trade, specifically in intermediate goods, where Chinese value-added in Indian manufacturing is high. China is the single largest contributor to foreign value added (FVA) in India’s exports, at 34 per cent as of 2020, implying that India’s exports are highly reliant on Chinese imports. This makes the India-China economic relationship unusually lopsided. Even though there is active containment in three dimensions, there is excessive reliance on a single dimension.

This lopsidedness is now being tested from the Chinese side, and it helps to distinguish between two kinds of restrictions China has imposed—global and India-specific. The strategic logic behind each is quite different.

China’s global restrictions on rare-earth magnets, gallium, and germanium apply to all countries. Essentially, China’s response to US export controls on China was to hold the entire world hostage to key inputs it controls. I had classified this earlier as a case of international market failure. For years, China’s overcapacity was causing the market failure of negative externalities, through which artificially low prices destroyed competitors and intangible manufacturing knowledge base, while creating dangerous vulnerabilities. Now, its restrictions exhibit the characteristics of monopoly behaviour, reducing supply and leveraging its dominance. India is caught in these restrictions, but so is everyone else.

But it’s the India-specific restrictions that are more revealing. Over the past year, speciality fertiliser exports to India were blocked even as China resumed them to other countries. Herrenknecht tunnel boring machines assembled in China were blocked from export to India. Foxconn’s Chinese engineers were recalled from its Indian facilities, and shipments of specialised manufacturing equipment were held. All this was happening even as the political relationship was moving towards normalisation.

These aren’t decisive blows. Each is individually substitutable. Herrenknecht now supplies more from its Chennai facility. Taiwanese engineers will replace Chinese ones within weeks. Fertilisers can be routed through third countries at a higher cost. But collectively, they function as attrition, imposing friction to slow the pace at which manufacturing capability transfers out of China.

The message here is that China views supply chain diversification itself as a competitive threat. Not just the loss of specific orders or contracts, but also the very process of building alternative capacity.

India’s Response Toolkit

India has responded across five tracks to this supply chain weaponisation.

The first is defensive decoupling—PN3, the TikTok ban, excluding Huawei from 5G deployment, forcing joint ventures like JSW-MG Motors. This track has been effective in preventing the creation of new Chinese leverage. Despite conversations aimed at reversing some of these restrictions, recent changes to PN3 have been limited.

The second is trade defence: anti-dumping duties, countervailing tariffs, and non-tariff barriers. This buys time but runs into a domestic political economy constraint: Indian manufacturers that depend on Chinese intermediaries are adversely affected. And much of what looks like dumping is actually a structural feature of China’s economy, where overcapacity driven by industrial policy and weak domestic consumption makes cheap exports inevitable. India’s tariffs can’t fix this structural problem.

The third track is hardware security. India has a Trusted Source-Trusted Product framework for telecom services, screening both vendors and products for supply chain integrity. This framework has recently been extended to satellite services as well.

The fourth and most ambitious track is industrial policy—PLI schemes, upfront capital support, and specific investment exemptions aimed at positioning India as the China+1 destination. Apple is the most prominent recent example of this move. The eight chip assembly plants and one CMOS fabrication plant also fall in this category. But this track also has the widest gap between aspiration and execution.

The last track is pro-market reforms. The transition to a uniform and improved tax regime, the reduction in corporate tax rates, and labour code reforms are aimed at improving India’s manufacturing competitiveness.

What’s missing?

Two gaps stand out.

First, India is doing reasonably well on defence, but has no institutional mechanism to use its market offensively. Consider what China does with SAMR, the State Administration for Market Regulation. SAMR turns antitrust review into a geopolitical lever, delaying or conditionally approving mergers between non-Chinese companies if they generate significant revenue in China. I’ve written about this in a previous edition; the Intel-Tower Semiconductor deal collapsed because SAMR withheld approval as retaliation for US semiconductor sanctions.

India is the only other market large enough to potentially do something similar, and it has a unique asset: over 1,800 Global Capability Centres (GCCs) that are deeply embedded, sticky operational nodes for the world’s largest corporations. That’s the leverage India possesses today with no institution designed to deploy it. The Competition Commission of India focuses narrowly on market competition. We need a conversation about whether India’s market size should be used more strategically. This option is quite risky, and I would not recommend it if we had other cards to play.

Second, since Chinese overcapacity is structural, importing countries need cross-country coordination on price stabilisation. Without it, the domestic capacity painstakingly built behind tariff walls gets destroyed the next time Chinese prices drop. This is a collective action problem that nobody is working on seriously. 91 fabs are currently under construction worldwide, many of them in China. This overcapacity in semiconductors, solar panels, rare-earth elements, and electric vehicles is likely to result in another price crash, putting investments elsewhere at risk.

The broader pattern here is that India’s policy toolkit for managing its economic relationship with China is almost entirely defensive. Screening investments, banning apps, imposing duties, and hardware security mechanisms are necessary. But they don’t give India the ability to shape outcomes in its favour.

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Matsyanyaaya: The Case for Negative Results in Supply Chain Geopolitics

Big fish eating small fish = Foreign Policy in action

— Pranay Kotasthane

The other point of reflection for me was that the “weaponisation of everything” has a narrative bias problem. The dominant narrative goes something like this: we are too dependent on our adversary for commodity X. So let’s produce it ourselves or have our partners do so. This line of thinking lays the groundwork for industrial policy across the value chain.

But the flaw in this logic is that there are a mind-boggling number of chokepoints in today’s supply chains. Addressing all of them is like playing whack-a-mole. As I wrote in a previous edition, by the time governments launch a policy to spur semiconductor production, they are forced to take stock of another material produced by an obscure firm whose name no one knew two days ago. Suddenly, articles appear about how an adversary controls this ‘chokepoint’, and governments are back to the drawing board.

In scientific research, there is a well-known concept called the “negative result”. It’s an experiment that shows an expected effect doesn’t materialise. Negative results are underpublished because journals prefer dramatic findings. Yet they are essential for correcting false beliefs. Supply chain geopolitics has a similar problem. We are awash in studies documenting how dependencies were weaponised. What we almost never see are systematic studies of the opposite: cases where weaponisation was attempted and failed. Without such studies, we are only reaffirming weaponisation as an all-powerful instrument.

But history is full of such negative results. As I documented earlier, Cobalt was the in-fashion dual-use material of the 1970s—one tonne went into every F-16’s jet engine. The US imported almost all of it from then-Zaire. When supply disruptions hit, new mining projects were initiated; the more abundant Molybdenum began displacing Cobalt in certain alloys; efficiency improvements reduced per-unit demand; and military stockpiles provided insurance. The net result was not that Congo stopped being the world’s major Cobalt producer—it still accounts for over 70 per cent of global supply. Rather, Cobalt itself was displaced as the hitherto indispensable material. Once substitutes emerged, the hackles were lowered. Similarly, China cut off tungsten exports to the US during the Korean War. Within three years of the US government guaranteeing a higher price to domestic miners, American firms were producing more than the required stockpile.

The same pattern repeated itself in the Russia-EU energy standoff. In edition #219, I had argued that Putin’s hope of using energy as a weapon bombed spectacularly. European countries reduced Russian oil imports from 26 per cent to 3.2 per cent within a year. Gas imports fell from 38 to 17 per cent. Germany built a long-stalled LNG terminal at record-breaking speed. France fell back on nuclear. Within a few months of Russia’s energy restrictions, it was Europe which went on the offensive by weaponising shipping insurance. Even this worked imperfectly because enforcement was leaky and Russia redirected exports to Asia. Neither side’s weaponisation delivered the decisive blow it sought.

This distinction matters because it tells us where weaponisation might actually work and where it won’t. Knowledge-rich chokepoints—EDA software, EUV lithography—are genuinely hard to substitute because they require decades of capability-building. Commodities and intermediate goods, by contrast, are far more elastic. Yet nobody writes the report titled “China’s restrictions didn’t really work.” This narrative bias has real policy implications. Governments can support firms’ risk-reward trade-offs at the margin, but they cannot replace them with a PLI scheme for every commodity an adversary might restrict.

What we need is a research agenda that documents negative results as rigorously as it documents successful weaponisation. Where did price signals redirect supply chains faster than government intervention? Where did substitutes emerge organically? Where did the Law of One Price erode export controls, as it inevitably will with China’s rare earth restrictions, where international prices are already three times domestic Chinese prices? Such studies might not generate breathless headlines, but they will help governments distinguish between dependencies that genuinely need addressing and those that markets are already addressing.

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HomeWork

Reading and listening recommendations on public policy matters

—Pranay Kotasthane

1. There are a bunch of AI for Public Policy projects useful for readers:

   1. [Show & Tell] I have found the parliamentary standing committee reports incredibly helpful, especially to analyse domains such as defence, where secrecy reduces state capacity. But these reports are locked in websites that are difficult to access and automate. So I built an AI project using Claude Code to tackle this problem. From now on, you will never miss a parliamentary standing committee report. Use this repo to set email alerts, create AI summaries of important reports, and get unified access to all 16 department-specific committees across both Lok Sabha & Rajya Sabha. Fork, bring your own key for AI summarisation (or use ollama), and you are set. Please open PRs to further improve this.

   2. [Show & Tell] Many people are building cool stuff using AI for public policy use cases: visualisations, AI reports, analytical tools, etc. But there is no one directory which lists all these projects. So I built one using Claude Code. The repo is here. Check the Contribution guidelines and add more projects.

   3. [Show & Tell] The Takshashila research team has launched four West Asia war trackers to analyse the daily developments and their impact on India.

2. [Puliyabaazi] The next Puliyabaazi features Anushka Saxena’s masterclass on military drones. Do NOT miss.

   जंग के मैदान का नया इक्का? Are Drones Rewriting the Rules of Warfare? ft. Anushka Saxena

3. [Paper] Amit Kumar & I have a paper investigating the impact of China’s Gallium and Germanium on American consumption. Hint: not by much.

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