Critical infrastructure: risks with China

There was a time when large armies, led by ambitious warriors, would cross continents on horseback and slaughter millions to establish empires. Today, technology has advanced to a stage where nations can be brought to their knees without firing a single bullet, through economic and cyber warfare.

China’s spectacular economic rise started in 1981 at Shenzhen, where Deng Xiaoping declared, to the horror of many, that ‘Being rich is glorious’. Since then, China has not looked back and has developed a growth rate which no other economy in the world could even dream of. This could only happen in an authoritarian state, where any opposition, media, judiciary or NGOs could not really affect any decisions taken.

The pulls and pressures of democracy were missing in the unstoppable juggernaut of modern China. A lot has been written regarding Indo-China relations, as they occupy a central stage in the Indian mindscape.

There is always a desire to compare the two incomparable nations and the self-effacing Indian might rue our state of affairs, ignoring the valuable fundamental rights, independent judiciary, vocal media and active NGOs – not to mention the multiplicity of parties and the opposition. Do such checks and balances provide more sustainable growth or act only as retardants? In 1981, the combined trade of India and China was estimated to be worth Rs584 crore.

It grew to Rs10,270 crore in 2000 and then to Rs76,676 crore in 2005, with the balance of trade turning adversely against India, due to rampant export of iron ore and import of finished goods. Things did not stop at this and we have now reached a combined trade of Rs5,74,647 crore in 2020, with an adverse balance of payment of Rs2,93,255 crore.

The year 2020 witnessed two important events at the beginning of the year, almost simultaneously – one was the Covid-19 pandemic and, the other, the skirmish at Galwaan Valley. Both have had profound and lasting implications. The world will never be the same even after vaccination and a near complete cure of Covid-19 is available. The Galwaan Valley skirmish shattered the fragile thread of trust between India and China.

Suddenly, the government of India realised there was huge risk involved in the import of equipment and systems from China to cater to our growing critical infrastructure such as defence, railways, telecom, aviation, roads & ports and, above all, electrical and electronic equipment. The government issued orders making the import of electrical equipment from China difficult and, in July 2020, also reined in the bidding of projects from countries which had common land borders with India, including China.

It is interesting to note that, in the last seven years, India imported Rs1,42,000 crore worth of electrical equipment from China and about Rs15,350 crore worth of this equipment comprised of intelligent hardware. India’s power generation, transmission and distribution systems are becoming increasingly intelligent and use industrial electronics to make them more efficient. Meanwhile, the grid has also become vulnerable to malware and spyware from individuals and state players.

In the last 10 years, a huge amount of ‘generation equipment’ was imported from China. In the last seven years, China’s exports to India included intelligent equipment such as remote terminal units, communication modules, networking equipment, FRTU, PCB Cards, Machine/CPU/SCADA, SCADA software, ethernet switch cards, ethernet switches and control panels, etc.

Theoretically, the risk of malware being present in the system is really irrespective of whether a cyber-attack on our electrical systems has already happened or not. Interestingly, the government is diluting its earlier orders by allowing parts, components and assemblies to be imported for electrical equipment. For an EPC contractor, everything would be a component. This is happening as supervisory control and data acquisition contracts have already been given by many states and the Chinese have been practically managing power substations.

The Central Electricity Authority has published a report on Cyber Security in Power Systems, and its recommendations need urgent implementation, which includes testing of potentially high- risk equipment in Indian laboratories. The capacity for such testing also needs to be created. It would also be in our interest to identify, isolate, evaluate and replace such intelligent equipment, which are ‘category one’ high risk for our power systems to ensure safety from any untoward incident in the future.

Industry also needs to find alternative sources for components and equipment that are not made in India. Such imports can alternatively be got from sources in Taiwan, Malaysia, Korea and Japan, before we manage to establish indigenous supplies by local industry, which will require both technical and financial collaboration with large corporates. It is high time a ministerial level position is created to target such companies from around the globe to establish world-class technology-based manufacturing in India.