Floods, Tariffs, AI: India’s Perfect Storm Of Disruption

India frets over the consequences of the 50% tariff wall blocking most traditional Indian exports to the US. President Donald Trump continues his assault on the independence of the US central bank, the Fed.

Artificial intelligence (AI) makes news around the world, some good, some bad. Amidst all this, an elephant in the room receives little attention, even as it demolishes hills, lives and built infrastructure.

Heavy rains are wreaking havoc in North India, delivering landslides, death and destruction in Jammu and Kashmir and Uttarakhand, flooding Punjab and Uttar Pradesh, not to speak of large swathes of Pakistan. India has warned Pakistan that flood waters would be coming its way down the West-flowing tributaries of the Indus.

Tariff Consequences

India’s pharma exports are exempt, for the time being, from the Trump tariffs. So are iPhone exports to the US, thanks to fleetfooted flattery of the US president by Apple CEO Tim Cook, who gave President Trump a glass disc with the Apple logo cut out in the middle and the President’s name and Tim Cook’s signature engraved, respectively, at the top and bottom of the disc, along with a 24 carat gold base on which to mount this transparent emblem of sycophancy.

Gems and jewellery exports would suffer less than textiles, seafood and engineering goods, as there are few viable alternatives to India’s low-cost diamond polishers. China, Vietnam and Bangladesh are likely to gain market share in the US at India’s expense in the case of garments. If the effective ban on Indian garment exports to the US stays in place, regaining market share would be hard.

There is considerable disappointment among exporters over the government’s failure to block the tariff threat. The government promises to help garment and other exporters find alternative markets for their blocked exports to the US.

Stoking Controversy

It has also brought in the 130th Constitution amendment bill, which seeks to remove/disqualify ministers who are arrested and kept in jail for 30 days, after being charged with offences that invite a jail term of at least five years.

Cynics like the present author would argue that the bill has been introduced to create a controversy, to engage people, in case those in the export business need something to take their minds off the pain of having their livelihoods blocked, along with their exports. The Opposition, too, can be trusted to be diverted by the blatant violation of the common-law principle that an accused is presumed innocent until proven guilty, and spend less time talking about the failure to handle Trump and more about the bill.

The Prime Minister had promised to stand like a rock in front of Indian farmers, to defend them from the Trump tariff onslaught. Standing in front protects only against a frontal attack. The government has exempted cotton imports from all import duty, so as to lower costs for garment exporters. Cotton farmers feel as if the roof has fallen in on their heads, even as their sides are defended.

This is the time for India to abandon its longstanding policy of protecting synthetic fabrics from import competition and make synthetics and blended fabrics available to Indian garment manufacturers at global prices.

India has hardly any presence in the synthetic/blended garments segment, which accounts for almost 75% of the global garments trade. Some local producers of synthetics would feel the pinch, but it could give a new opening to the entire export-oriented garment industry that employs hundreds of thousands of workers.

Swadeshi Has New Meaning

Speaking at Maruti-Suzuki’s new plant for electric cars in Gujarat, Prime Minister Modi gave a new definition for Swadeshi. It doesn’t matter where the investment comes from, whether it is black or white, he said, but if Indian sweat has gone into producing value with that investment, it is Swadeshi. This gives a new, nuanced interpretation of self-reliance, allowing foreign companies that have production bases in India to label local output as swadeshi.

German Adidas, French Puma and Japanese Asics produce shoes and sports apparel here. Going vocal for local could mean, given the new definition for swadeshi, choosing these brands in place of American Nike or Reebok, if consumers want to register a protest against Trump’s unfair penal duties on India.

China Gets A Pass

China is a bigger buyer of Russian oil and coal, and the European Union is a bigger buyer of Russian LNG than India. But the Trump administration selectively blames India for giving Russia the money to wage the war in Ukraine. The US has not dared to impose penal duties on China. Instead, it has extended its trade deal deadline by another 90 days.

Trump has also extended a warm welcome to Chinese students, as many as 600,000 of them a year. This move comes even as the Trump administration seeks to overhaul the H1B visa system, by raising the threshold remuneration to qualify for a visa in this category. This would impact the business model of Indian information technology companies that deploy workers onshore in the US. Fewer Indian IT professionals would be able to enter the US to work for Indian IT firms.

Humans Far From Useless

This squeeze on jobs comes at a time when AI is making new inroads into business and R&D, threatening to make many junior-level jobs redundant, as AI-wielding workers enhance their productivity severalfold.

With the help of AI, researchers at Massachusetts Institute of Technology have engineered two entirely new chemicals as candidate antibiotics against some superbugs that have proven resistant to all conventional antibiotics. Right now, the only possible solution to antibiotic-resistant bacteria is identifying viruses that eat such bacteria. Such bacteriophages were in use before the discovery of penicillin, and further research in the area of phages disappeared in most parts of the world, except in Georgia, a former constituent of the Soviet Union.

Instead of letting AI-enabled antibiotic synthesis kill off interest in viral phages, the power of AI should be harnessed to further study the properties of viruses and their natural ability to attack and destroy bacteria.

China has launched a mission to integrate AI into its production base. It is called AI + Manufacture. Clearly, Xi Jinping has only thought and little poetry. Mao had Mao Zedong thought and wrote poetry. He could say things like ‘Women hold up half the sky’, and ‘let a hundred flowers bloom’. But Xi is likely to implement his new action plan thoroughly, if prosaically.

The elements of AI + Manufacture have been summarised as follows:

One, smart robotics, to perform hazardous, repetitive or precision tasks, two, predictive maintenance and analytics, to minimize waste and downtime, three, quality control and computer vision to eliminate human error from product testing and raise quality, four, digital twins and simulation, to optimize workflow and train AI models on how factories run, and, five, use of AI in design and R&D.

China already deploys a quarter of the world’s industrial robots. Once they are guided and coordinated by AI, expect big jumps in productivity.

Meanwhile, OpenAI is being sued in California, for allegedly guiding a would-be suicide to his death. Clearly, AI brains are, as of now, skilled, but lack wisdom and judgment. Humans are far from having been rendered useless, at least for now.