How Can India, Russia Achieve Technological Sovereignty?
© AP Photo / Aijaz Rahi
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India is emerging as one of Russia’s most prominent strategic partners as trade between the two countries grows.
As tech cooperation between India and Russia gains momentum, the Russia-India Business Forum: Strategic Partnership for Development and Growth was held in Delhi last week, where more than 100 B2B meetings took place.
The forum also featured prominent representatives of the Russian IT sector. Sputnik reached out to one of them — Valentin Makarov, president of St. Petersburg-based RUSSOFT, who spoke about the impact of Western sanctions on the Russian IT sector, the new technological order, and the possibility of India and Russia attaining tech sovereignty.
Digitalization is Need of the Hour
Sputnik: Both, India and Russia, are witnessing a lot of technological advancements. What do both countries have in the offing for other countries in terms of technology?
Valentin Makarov: Russia in one year, particularly last year, proved its technological independency. It’s very important, as our critical infrastructure and processes are protected against any cyber attack. It is very good, because if you are able to do that, it means all security issues are very carefully protected, respected, and developed. There are three schools of cryptography: Russia, America, and China. Europeans accept American cryptography, which means America can control everything in Europe. Therefore, Russia is one of three major forces in security issue as well as cyber security.
Secondly, we have good scientific investment in the field of quantum physics. There are a number of Russian academic institutions and businesses which are conducting practical research and development, and even producing their devices, equipment, and software for quantum physics, quantum cryptography, and quantum computing.
Next thing is that nowadays there is dependency of every country on processors. There is only one big producer in Taiwan and then there are American Intel and AMD, who share a big part of the global market. The problem here is that if you don’t follow the rules dictated by America, you need to try to find something else.
Russia has at least two free and open conceptions of processors. One for blockchain, which is big, but another one is for a different kind of calculations used in laptops, servers, and supercomputers. We have this technology; however, we can’t produce it at the moment, because during Perestroika, all science was put off and we lost the technological ability to produce chips. So even in this area, we have people who have the ability to create these processors for the future and compete with companies like Intel and AMD, which is very important.
Apart from this, Russia proved during the pandemic that its competency level in other areas like biology, biochemistry, pharmaceuticals, etc. is equal to any other country. So, Russia has breakthrough technologies in some areas, which are very important in this particular new technological setup with the global economy coming in cycles.
According to the Kondratieff theory of economic development, we are at the end of the fifth economic cycle and entering the sixth. This new economic setup is based on IT, which has grown immensely during the last two years in every sphere of life, like medicine, manufacturing, metal, metallurgy, etc. You need digitalization — otherwise, you won’t be able to compete. So, we do have that and we have these achievements in the era of global competition.
As far as India is concerned, the country has grown fantastically in the last seven years or even more. It has become fifth largest global economy. Around $220 billion in exports of IT services and other services is an immense base to become not only a supplier of services to others who use it for good profit, while the country itself uses it for small margins, but also to become a leader in the field.
There is a complementarity between Russia and India: Russia is competent in creating breakthrough technologies, while India can bring these technologies into practice. Together, we can create new, globally innovative and competitive products. This complementarity of our IT industries, in my view, creates an inevitable and absolutely natural way of cooperation on a strategic level.
Moving Away from Dollar
Valentin Makarov: It was a very difficult time for Russia during Perestroika, as science was lost, but since [President] Putin came to power and the economy began to grow, we have achieved a certain level of integral competencies not only in breakthrough technologies, but in new technologies, too. So, now all the sectors of the economy are grown enough to implement the achievements of IT, which is a good sign, otherwise, if you have breakthrough technology but the economy is doomed, you may not implement it, whereas right now we can do that.
What we need first is to eliminate the dependency of both countries on the law of the dollar. We, together with India and other countries, now need to create another digital financial paradigm, which is called fintech. This is because in this new technological order, which have cyberphysical systems, a person is out of process management and management is being organized by artificial intelligence and the Internet of Things. For example, what we did in the aviation sector, where we replace pilots with autopilots, and in automobiles, where we replace human-driven cars with self-driven cars. So the old things, banks and fiat currencies, should be replaced by new things, because if this doesn’t happens in the finance sector and you don’t replace old practices with new IT solutions, you will lose and somebody else will do it.
You can take the example of China’s digital yuan. When they offer the digital yuan to everybody instead of the dollar, then the rate difference will be zero. Therefore, we need to work together with China, India, Indonesia, Malaysia, all these countries in the South and Asia, in fact, and also with BRICS countries to create this new financial world based on new technologies developed by Russia, India, China, etc. So, this is a very important thing.
The second important thing is to agree on regulation of this market and of other markets of cyberphysical systems. It’s even more difficult than to create new technologies. It is important, because if you create technologies which provide an opportunity to use cyberphysical systems, it is a very small thing. The big thing is to have regulations which will allow you to implement it. So we in parallel have to look into technology and prepare standards, procedures, and agreements over implementation of these new technologies. Those who implement these new technologies first will win, and those who create them but do not implement them will lose.
We have seven billion people on one side and one billion on the other side, both dependent on the dollar-based financial system. If we are able to create these agreements for the implementation of technologies, we will win — but if not, then one billion people will say that "we are better, so forget about your independence, accept our technologies and enjoy colonialism."
How Western Sanctions Generated New Ideas
Sputnik: Over the past year, numerous sanctions have been imposed on the Russian tech sector and economy at large. What challenges and opportunities have Western sanctions created for the Russian tech sector?
Valentin Makarov: The first thing that happened due to sanctions and the special military operation was that 30,000 people left the country fearing mobilization. It is a big flow, because these people, during these certain years, were grown enough to be competitive in the global market and were considered as the best programmers at solving unsolved problems. So this is a big blow to the industry.
The developing centers of foreign corporations in Russia asked their personnel to consider relocation and told them that they will get packages for relocation. So, a certain population relocated, while the rest are in Russia. IT associations helped them to be absorbed by Russian companies. The Russian companies have increased their level of competency, because they are very good developers and have good spirit.
The second blow, which is even bigger, was on finance. They stopped making transactions with Russia and didn’t let others do it either. So, we needed to find a way to make transactions, and we did it, but still we are losing money on these transactions.
We need to have an independent financial system, because there is no reason for dependency on the dollar or to be obliged to follow the sanctions. If we have an independent financial system, then all stories with sanctions based on the dollar will disappear.
Apart from this, hardware is a much stronger problem than sanctions against using software, because software is being transferred via line and good telecommunications, while hardware is not. A lot of people are now engaged in these businesses and there is no practical problem in getting hardware, but we are losing money.
However, sanctions have not only brought bad things, but also good things. Russians have a history of starting to work when something happens. So, all of a sudden people started working to overcome problems. All challenges generate a desire to overcome them. We are accustomed to get over problems and this has been evident during the perestroika also.
Sputnik: You also said that India appears to be the biggest potential partner for Russia to create and achieve technological goals. Could you elaborate on what aspects of cooperation might prove most productive?
Valentin Makarov: In my view, we need to follow a policy that as been proposed for other countries by India, and this proposal is that we need to produce in India. We need to make technology transfers to India. We need to train our people to absorb new technologies and to increase the level of competencies.
We completely agree with this, as it is a new model of conducting business, and it is very important too. We cannot go to India or to other countries with the same model of capitalism. We need profit. For example, I sell a black box and you pay for it. If something happens, then our engineer will come and you have to pay more for that. It doesn't work, and it will not work anymore.
So we are coming with a new model, where we will make a technology transfer and create joint ventures in India. We will continue to provide new technologies, create an atmosphere of development, and train people to make new innovations. This model is much more effective and better than profit-based capitalism from the point of view of growth of the whole region. It is not good for profit, but good for the whole region to grow together.
On Way to Technological Sovereignty
Sputnik: Technology today plays a significant role in almost all sectors. According to you, how can both India and Russia achieve technological sovereignty?
Valentin Makarov: One way is to make everything by yourself, i.e. self-sufficiency, but this is impossible. It is impossible for us, because we have a very small population, so we cannot make everything. It is a very long process, money absorbing, and many risks are involved, as the market is so small. We cannot make good products if we have no market. If you don’t allow anybody to come, then nobody will let you enter to their market either. So in my view, it is impossible for India as well.
What we offer is international strategic cooperation with those who agree to work together for the new order and on the new model of business. This has even been reiterated by Vladimir Putin, Narendra Modi, and Xi Jinping. We need to integrate the growth of the whole region and the right for everybody to grow.
This cooperation should be the premiere point of development of the new model and organization of cooperation. If you need to be independent, we need to be independent all together.
Finally, when it comes to secrecy and military secrets, every country will keep those, but altogether, the economy should be shared by these three countries and then others in Asia.
On Emergence of New Global Tech Order
Sputnik: In previous interviews, you have talked extensively about the emergence of a new global technological order. What are the geopolitical implications of such a technological revolution? How can countries like Russia and India benefit from the new technological order?
Makarov: Well, we need to understand that those who begin to create new markets and fill in the new markets with the new technological order will become world leaders for at least 45-50 years. So, if you start to bring new technologies which generate new markets, which are completely free, you quickly fill these markets and prosper with good money and develop technology even more. Therefore, you are the biggest leader in the world for at least 50 years. So geopolitically, technological achievements create a geopolitical diminishing impact.
On the other hand, the capitalist world and cycles of capitalism have very bad and awful cycles with crises, wars, etc. This is because in every system, there is negative feedback as well as positive feedback. In capitalism, the feedback is positive i.e. more profit, more money. Finally, the market is finished, because the whole world has bought your product. Positive feedback always brings problems.
So, we can in the future say that we will not follow a capitalistic way, otherwise in 40 years we will have war and other crises. We need to implement negative feedback and technically we know how to do that. If profit is not the rule, and the rule is our agreement, then we will implement negative feedback, and we develop our economy, but do not overcome necessity and then prepare for the next step.
In my view, the sixth technological setup won't be capitalistic. It will not end in war because we – China, India, Russia, and other countries, including BRICS countries, will make out a way and we will not have a crisis and will arrive at another technological setup smoothly.
