The billion dollar pachyderm

As Intel eyes India as a home for a chip factory, it risks delivering a white elephant that misses the real problems and potential of the place

There are plenty of reasons for questioning Intel's proposed chipmaking plant investment in India, and not just the old outsourcing chestnuts of exporting jobs, remote quality control and balance of trade. Instead, the proposed deal exemplifies an unhealthy Western habit: pretending to look ahead while denying the future.

India's problem isn't a lack of outside investment, it's a lack of infrastructure. Roads, bridges, water and power are all drastically below the standards expected of a modern industrial nation. In dollar terms, India spends nine times less than China on such things; four times less as a percentage of GDP — it's not going to catch up. There's no point in building a fab plant if the lights are never on and you can't get your products to the nearest port.

Yet even this hides the real long-term problem. Let's assume there is a magic wand that can upgrade India's infrastructure to European or American standards at one wave. A billion people get electric lights, and the expectation that they stay on. Where does the power come from, and where does the resulting pollution go? If the West is nervously coming to accept that existing energy sources are running low, how will we react if competition for those resources intensifies?

These are not empty questions. Globalisation works both ways: by extending our business interests out to the developing world, we not only accept a moral responsibility for the economies and people there but acquire a very practical interest in their success. If we build them up for a future that we know is not going to be sustainable, we'll suffer if our implicit promises go sour.

It's not as if the home of high technology has got a particularly good track record in infrastructure management. Intel, AMD and everyone else in the silicon business have to ask themselves why they think they can make energy-intensive plant work in India when California, inventor of the rolling blackout, has still got plenty of its own problems to sort out.

There are alternatives to building infrastructure in the Western way: we just don't know what they are yet. In the same way that the developing world has become one of the most exciting practical wireless laboratories on the planet, using new technologies to bypass the whole old wired way of doing things, it can be the natural focus for building sustainable industry.

We know only two things about a workable future: everyone will be neighbours no matter where they live, and we'll be sharing everything. It'll be a lot more Madhya Pradesh than Manchester. The smart Western investor must ask themselves how to get there from here — and when they get no answer, give the people who know the resources to prove it.