How Does India Innovate?
Innovation isn’t easy. Globally, at least 90 percent of new product introductions fail in the year they launch. India is often viewed as a hotbed of innovation, but truth be told, the odds of launching a breakthrough success in this market may not be meaningfully better than anywhere else in the world. And the landscape is highly competitive. In looking at more than 14,000 launches in the fast-moving consumer goods (FMCG) sector in 2011 for India, Nielsen deemed fewer than 40 as true breakthrough innovations.
Free registration required to download full report.
Backgrounder — Governance in India: Corruption
Source: Council on Foreign Relations
With a booming economy throughout the 2000s, India was touted as one of the most promising major emerging markets. But that breakneck growth sputtered to a decade low in 2012, with many observers pointing to the corrosive effect of endemic corruption—including a spate of scandals under Prime Minister Manmohan Singh—as a culprit. Perhaps more than India’s weak currency and rising inflation, the graft problem has undermined institutions and thwarted efforts to reduce poverty and catalyze sustainable growth in the world’s largest democracy. Public revelations of corruption, including major scandals in the telecommunications and coal industry, have galvanized a rising middle class with increased demands for better governance. The tide has spurred new political movements, and forced Prime Minister Singh’s Congress Party to address transparency and marshal reforms. As the country enters a busy political season, culminating in the 2014 general elections, corruption is expected be a cornerstone issue—and one with big implications for India’s development.
A Deadly Triangle: Afghanistan, Pakistan and India
Source: Brookings Institution
With the U.S. and its allies planning to scale down their military efforts significantly in Afghanistan in 2014, a dangerous neighborhood—filled with nuclear weapons, disputed borders, as well as ethnic and tribal divisions—has the potential to become even more threatening. In the first Brookings Essay, historian William Dalrymple examines one ominous scenario, which could be disastrous for both the region and the world: the contest between India and Pakistan in Afghanistan becoming even more deadly.
Source: Ernst & Young
Our survey of over 3,000 board members, managers and their teams delivers three clear messages:
Executives and their teams are under increased personal pressure to produce growth in extremely challenging conditions.
Unethical conduct — including fraud, bribery and corruption — in response to this pressure is not just a just a hypothetical risk. One in five respondents have seen financial manipulation occurring in their companies. Fifth-seven percent believe that bribery and corruption are widespread in their country.
Compliance programs work, but not well enough. Companies that do not keep asking the right questions — and demanding answers — are exposing themselves to significant risk.
Source: Congressional Research Service (via U.S. Department of State Foreign Press Center)
Seven nations—China, France, India, Pakistan, Russia, the United Kingdom, and the United States—possess nuclear weapons. North Korea tested a nuclear explosive device in 2006, and announced that it had conducted a test in 2009 and another in 2013. Israel is widely thought to have nuclear weapons. As an aid to Congress in understanding nuclear weapons, nuclear proliferation, and arms control matters, this report describes which agency is responsible for research and development (R&D) of nuclear weapons (i.e., nuclear explosive devices, as distinct from the bombers and missiles that deliver them) in these nations and whether these agencies are civilian or military. It also traces the history of such agencies in the United States from 1942 to the present. This report will be updated annually, or more often as developments warrant.
In the United States, the Army managed the nuclear weapons program during World War II. Since 1946, weapons R&D has been managed by civilian agencies, at present by the National Nuclear Security Administration (NNSA), a semiautonomous agency in the Department of Energy. Concerns about “the immediate and long-term issues associated with the NNSA,” however, led Congress to establish the Congressional Advisory Panel on the Governance of the Nuclear Security Enterprise in the FY2013 National Defense Authorization Act, P.L. 112-239. China’s nuclear weapons R&D is apparently under the direction of the military, collectively called the People’s Liberation Army.
France’s nuclear weapons R&D is supervised by the Ministry of Defense, which delegates the direction of these programs to the French Atomic and Alternative Energy Commission (CEA). However, as with NNSA in the United States, CEA is not a part of the Ministry of Defense. CEA also conducts nuclear programs in science and industry under the supervision of other ministries.
India’s nuclear weapons R&D appears to be controlled by the Department of Atomic Energy, which is under the direct control of the Prime Minister.
Israel’s nuclear program is under civilian control, but since Israel neither confirms nor denies that it possesses nuclear weapons, it classifies information on such weapons, including organizations responsible for R&D. The Israel Atomic Energy Commission reportedly has overall responsibility for Israel’s nuclear weapons program, and the Director General of that commission reports directly to the Prime Minister.
North Korea’s Ministry of Atomic Energy Industry is in charge of the day-to-day operation of the nuclear weapons program. Under it are nuclear-related organizations. Policy is decided by leader Kim Jong-un and other Communist Party and military leaders who advise him.
Pakistan’s National Command Authority (NCA) supervises the functions and administration of all of Pakistan’s organizations involved in nuclear weapons R&D and employment, as well as the military services that operate the strategic forces. The Prime Minister is the chair of the NCA, and membership includes senior civilian and military leaders.
Russia’s State Atomic Energy Corporation (Rosatom) is responsible for nuclear weapons R&D and production. It is a civilian agency, though it has many links to the military.
In the United Kingdom, a private company, AWE Management Limited, manages and operates the Atomic Weapons Establishment (AWE), a government-owned, contractor-operated entity. The Ministry of Defence (MoD), which is headed by a civilian, controls the operations, policy, and direction of AWE and can veto actions of the company. The MoD provides most of the funding for AWE.
Source: International Monetary Fund
This report summarizes the findings of the Financial Sector Assessment Program (FSAP) for India. The assessment was undertaken in June and October 2011. The findings were further discussed with the authorities during the Article IV consultation mission in January 2012.
The key macro-relevant findings of the Financial System Stability Assessment (FSSA) are as follows:
- India has made remarkable progress toward developing a stable financial system but confronts a build-up of financial sector vulnerabilities. The system is becoming more complex, with interlinkages across institutions and borders. The main near-term risks to the financial system are a worsening of bank asset quality and renewed pressures on systemic liquidity. However, stress tests did not reveal near-term stability concerns, suggesting the banking system would be resilient to a range of adverse shocks.
- The prominent role of the state in the financial sector contributes to a build-up of fiscal contingent liabilities and creates a risk of capital misallocation that may constrain economic growth. Gradually reducing mandatory holdings of government securities by financial institutions, and allowing greater access to private (domestic and foreign) sources of capital, would provide more room for the financial sector to intermediate funds toward productive economic activities, thereby improving prospects for sustained growth.
- The regulatory and supervisory regime for banks, insurance, and securities markets is well developed and largely in compliance with international standards. Areas for improvement include greater de jure independence of regulatory agencies; consolidated supervision of financial conglomerates; reductions in the large exposures and related-party lending limits in banks; stronger valuation and solvency requirements in insurance; and the monitoring of corporations’ compliance with reporting, auditing, and accounting requirements for issuers.
- Further steps are needed to promote deeper fixed income markets, including a prudent reduction in banks’ minimum statutory holdings of government bonds in line with evolving international liquidity requirements, which would support liquidity in secondary markets and the development of a yield curve; and upgrading the corporate insolvency framework. Use of capital markets to refinance infrastructure loans would help alleviate pressures on banks.
Source: Congressional Research Service (via Federation of American Scientists)
In today’s fluid geopolitical environment, the relationship between the United States, the world’s oldest democracy and an established global power, and India, its most populous democracy and an aspiring global power, is seen as a key variable in the unfolding international dynamics of the 21st century. As U.S. foreign policy attention shifts toward the Asia-Pacific (or Indo-Pacific) region, and as India’s economic and military capabilities grow, Washington’s pursuit of a strategic partnership with New Delhi demonstrates that the mutual wariness of the Cold War era has rapidly faded. A vital and in some ways leading aspect of this partnership has been security relations, and today the two countries are engaging in unprecedented levels of military-to-military ties, defense trade, and counterterrorism and intelligence cooperation. Still, although considerable enthusiasm for deepened security engagement is found in both capitals—and not least in the U.S. Congress—there is also a persistent sense that this aspect of the bilateral relationship lacks purpose and focus. Some observers arrgue that the potential of the relationship has been oversold, and that the benefits either hoped for or expected may not materialize in the near future. While Obama Administration officials variously contend that India is now or will be a net provider of security in its region, many independent analysts are skeptical that this aspiration can be realized, at least in the near-term.
Nongovernmental analyses of the course and pace of U.S.-India security relations are oftentimes incompatible or even conflicting in their assumptions and recommendations. Such incompatibility is frequently the result of the differing conclusions rooted in short-term versus long-term perspectives. The Obama Administration—along with numerous pro-India analysts in Washington—has tended to emphasize the anticipated benefits of long-term engagement as opposed to a short-term approach that seeks gains derived through more narrow transactions. This latter tack can have the effect of raising and then thwarting expectations in Washington, as was the case with the ultimate failure of U.S. defense firms to secure the multi-billion-dollar contracts to supply new combat aircraft to India. At the same time, frustrations among many in the United States have arisen from the sense that India’s enthusiasm for further deepening bilateral security cooperation is limited, and that New Delhi’s reciprocity has been insufficient.
Looking ahead, there is widespread concurrence among many officials and analysts that the security relationship would benefit from undergirding ambitious rhetoric with more concrete action in areas of mutual agreement. In their view, defining which actions will provide meaningful gains, even on a modest scale, appears to be the central task facing U.S. and Indian policy makers in coming years.
To assist Members of Congress and their staffs in clarifying the status of and outlook for bilateral security cooperation, this report—a companion to CRS Report R42823, India-U.S. Security Relations: Current Engagement, by K. Alan Kronstadt and Sonia Pinto—takes a systematic approach to the major strategic perspectives held by policy makers in both countries and the ways in which these perspectives are variously harmonious, discordant, or, in some cases, both. The report opens with a brief review of the pre-2005 history of U.S.-India security relations. This is followed by discussion of key U.S. security interests related to India. Next is a focus on India’s defense posture writ large. With this context set, the report reviews key areas of convergent and divergent security interests and perspectives. A brief discussion of the outlook for future security cooperation closes. For information on U.S.-India relations more broadly, see CRS Report RL33529, India: Domestic Issues, Strategic Dynamics, and U.S. Relations , coordinated by K. Alan Kronstadt.
Source: American Economic Association
Why do Indian software workers employed by U.S. firms earn more in the U.S. than in India? There are several possibilities, among which is the pure effect of location on workers’ economic product. This study seeks to isolate the location effect from other effects in a single setting via a natural experiment: a randomized allocation of temporary U.S. visas among one group of Indian software programmers. In this setting, outputs are close to perfectly tradable, workers in the U.S. and India are observably and unobservably identical in expectation, effects like Baumol’s cost disease and cost-of-living compensating differentials are less relevant, and some of the plausible effects of place on productivity (such as access to technology) are identical for both groups. The large majority of the earnings gap remains, suggesting that these workers are several times more economically productive solely due to working in the U.S. rather than in India. This effect is measured for a single firm and external validity is circumscribed. Further study of the effect of location on economic product has implications for the economic gains to migration, trade, and technology transfer.
Source: Congressional Research Service (via Federation of American Scientists)
A handful of developing countries are becoming major players in the global economy due, in part, to their large populations, rising trade flows, and rapidly growing economies. These evolving economies are likely to be of increasing interest to the 113th Congress. Led by China, these rising economic powers (REPs) include Brazil, India, Indonesia, Mexico, Russia, and Turkey. Based on purchasing power parity estimates, China, India, Brazil, and Russia are now among the 10 largest economies in the world and Mexico (#11), Indonesia (#15) and Turkey (#16) are not far behind. With large economies and rising shares of world trade flows, the REPs have greater involvement in World Trade Organization (WTO) negotiations and dispute settlement cases, have protested with greater frequency U.S. economic and trade policies, and are more able and willing to deflect or reject U.S. trade and market access demands.
Although they have made great economic strides, any of these REPs could stumble if they do not take steps to improve their business climates by undertaking a range of trade, regulatory, and structural reforms. At the same time, other large developing countries that have enormous economic potential, such as Egypt, Iran, Nigeria, and Vietnam could rise if they successfully address underlying political and economic challenges.
U.S. exports to the REPs and other developing countries have become an increasingly important source of growth for the U.S. economy. If the United States is to maximize its export potential and boost its living standards, U.S. exporters and investors may need to have better access to the REP markets. Trade and investment barriers remain considerably higher in most of the REPs than in the United States and other advanced countries. Efforts have stalled in these countries to reduce their barriers further, and several REPs have reactivated industrial policies or found ways to take advantage of gaps in the world trade rules to promote home companies at the expense of foreign companies.
The United States’ ability to persuade these emerging economic powers to embrace the principles of free and fair trade is constrained by growing differences over the role of the state in economic activity. The more interventionist practices and philosophies of REP governments coincide with a desire to maintain “policy space” to promote development of their economies via policies that often appear to violate the letter or spirit of WTO rules and obligations. Persuading the REPs that a strengthened multilateral trading system is squarely in their national economic interests and a way to move their domestic economic reforms forward remains a challenge.
As global power and prosperity is reconfigured, U.S. trade policymakers face a number of overlapping and complex issues relating to the role of future trade liberalizing negotiations, U.S. leverage in influencing REP economic reforms, and the management of the global trading system. Given the checkered history of the Doha Round, future progress on trade liberalization within the WTO may require new approaches. Principles that have guided multilateral trade negotiations in the past, such as unconditional most-favored-nation (MFN) and special and differential treatment (S&D), may need to be reexamined. Similarly, if the United States wishes to negotiate free trade agreements (FTAs) with large and more significant trading partners, it may need to consider deviations from its standard FTA template. At the same time, ongoing Trans-Pacific Partnership (TPP) negotiations and a potential comprehensive U.S. FTA with the European Union (EU) could serve as incentives for the REPs to view multilateral or bilateral negotiations more favorably.
Source: Congressional Research Service (via U.S. State Department Foreign Press Center)
U.S.-India engagement on shared security interests is a topic of interest to the U.S. Congress, where there is considerable support for a deepened U.S. partnership with the world’s largest democracy. Congressional advocacy of closer relations with India is generally bipartisan and widespread; House and Senate caucuses on India and Indian-Americans are the largest of their kind. Caucus leaders have encouraged the Obama Administration to work toward improving the compatibility of the U.S. and Indian defense acquisitions systems, as well as to seek potential opportunities for co-development or co-production of military weapons systems with India. In a report accompanying the FY2012 Defense Authorization (S.Rept. 112-26), the Senate Armed Services Committee expressed its belief that a deepened strategic partnership with India will be critical to the promotion of core mutual national interests in the 21 st century.
The United States and India have since 2004 been pursuing a “strategic partnership” that incorporates numerous economic, security, and global initiatives. Defense cooperation between the two countries remains in relatively early stages of development. However, over the past decade—and despite a concurrent U.S. engagement with Indian rival Pakistan and a Cold War history of bilateral estrangement—U.S.-India security cooperation has flourished. American diplomats now rate military links and defense trade among the most important aspects of transformed bilateral relations in the 21 st century. The United States views security cooperation with India in the context of common principles and shared national interests such as defeating terrorism, preventing weapons proliferation, and maintaining regional stability. After initial uncertainty, under President Barack Obama, senior Pentagon officials assured New Delhi that the United States is fully committed to strengthening ties through the enhancement of the defense relationship made newly substantive under President George W. Bush. Many analysts view increased U.S.-India security ties as providing a perceived “hedge” against or “counterbalance” to growing Chinese influence in Asia, although both Washington and New Delhi repeatedly downplay such motives. While a complete congruence of U.S. and Indian national security objectives is unlikely in the foreseeable future, meaningful convergences are identified in areas such as the emergence of a new balance-of-power arrangement in the region.
Still, indications remain that the perceptions and expectations of top U.S. and Indian strategic planners are divergent on several key issues, perhaps especially on the role of Pakistan, as well as on India’s relations with Iran. Moreover, given a national foreign policy tradition of “nonalignment,” Indian leaders are averse to forming any “alliance” with the United States and are clear in their intention to maintain India’s “strategic autonomy.” Questions remain about the ability of the Indian economy to grow at rates sufficient to improve its security capabilities at the pace sought in both Washington and New Delhi. Despite these factors, U.S. leaders only expect India’s importance to U.S. interests to grow steadily, and they foresee India taking on new security roles commensurate with its status as a major power and stakeholder in the international system. This expectation is a key aspect of the Obama Administration’s policy of “rebalancing” or “pivoting” toward the Asia-Pacific, which is conceived as including the Indian Ocean region.
This report reviews the major facets of U.S.-India security relations with a focus on military-tomilitary contacts, counterterrorism and intelligence cooperation, and defense trade. It also discusses some of the many obstacles to deeper cooperation in each of these areas. This report will be followed by a companion piece on the strategic aspects of U.S.-India security relations. For a discussion of U.S.-India relations more broadly, see CRS Report RL33529, India: Domestic Issues, Strategic Dynamics, and U.S. Relations, coordinated by K. Alan Kronstadt.
Current Tobacco Use and Secondhand Smoke Exposure Among Women of Reproductive Age — 14 Countries, 2008–2010
Source: Morbidity and Mortality Weekly Report (CDC)
Tobacco use and secondhand smoke (SHS) exposure in reproductive-aged women can cause adverse reproductive health outcomes, such as pregnancy complications, fetal growth restriction, preterm delivery, stillbirths, and infant death (1–3). Data on tobacco use and SHS exposure among reproductive-aged women in low- and middle-income countries are scarce. To examine current tobacco use and SHS exposure in women aged 15–49 years, data were analyzed from the 2008–2010 Global Adult Tobacco Survey (GATS) from 14 low- and middle-income countries: Bangladesh, Brazil, China, Egypt, India, Mexico, Philippines, Poland, Russia, Thailand, Turkey, Ukraine, Uruguay, and Vietnam. The results of this analysis indicated that, among reproductive-aged women, current tobacco smoking ranged from 0.4% in Egypt to 30.8% in Russia, current smokeless tobacco use was <1% in most countries, but common in Bangladesh (20.1%) and India (14.9%), and SHS exposure at home was common in all countries, ranging from 17.8% in Mexico to 72.3% in Vietnam. High tobacco smoking prevalence in some countries suggests that strategies promoting cessation should be a priority, whereas low prevalence in other countries suggests that strategies should focus on preventing smoking initiation. Promoting cessation and preventing initiation among both men and women would help to reduce the exposure of reproductive-aged women to SHS.
India’s and Pakistan’s Strategies in Afghanistan: Implications for the United States and the Region
Source: RAND Corporation
India and Pakistan have very different visions for Afghanistan, and they seek to advance highly disparate interests through their respective engagements in the country. Pakistan views Afghanistan primarily as an environment in which to pursue its rivalry with India. India pursues domestic priorities (such as reining in anti-Indian terrorism, accessing Central Asian energy resources, and increasing trade) that require Afghanistan to experience stability and economic growth. Thus, whereas Pakistan seeks to fashion an Afghan state that would detract from regional security, India would enhance Afghanistan’s stability, security, economic growth, and regional integration. Afghanistan would welcome greater involvement from India, though it will need to accommodate the interests of multiple other external powers as well. India has a range of options for engaging Afghanistan, from continuing current activities to increasing economic and commercial ties, deploying forces to protect Indian facilities, continuing or expanding training for Afghan forces, or deploying combat troops for counterterrorism and counterinsurgency missions. To avoid antagonizing Pakistan, India is likely to increase economic and commercial engagement while maintaining, or perhaps augmenting, military training, though it will continue to conduct such training inside India. Increased Indian engagement in Afghanistan, particularly enhanced Indian assistance to Afghan security forces, will advance long-term U.S. objectives in central and south Asia. As the United States prepares to withdraw its combat forces from Afghanistan in 2014, it should therefore encourage India to fill the potential vacuum by adopting an increasingly assertive political, economic, and security strategy that includes increased security assistance.