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India’s Lack of Entrepreneurship is Due to its Culture

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I came across an article shared on a Facebook group, describing Apple co-founder, Steve Wozniak’s, take on Indians’ lack of creativity and the resultant dearth of innovative enterprise. The article was met with a lot of pushback and hate-posting, mostly arising out of national and cultural chauvinism.

But Woz’s words were like music to my ears. He is certainly not the first person to have lambasted Indians for their lack of creativity and innovation, but he is one of the few ones who touched on points that subtly implicated the culture, straying away from the oft-cited bogey man – the Indian educational system.

I will try to swing further Woz’s wrecking ball and try to break down (pun intended) the shortcomings of Indian culture that stymie creativity, innovation, entrepreneurship, and individual progress.

For this rant, I shall use everyday examples and observations, while eschewing citing scientific literature. This is, thus, an opinion grounded in empiricism.

Low Expectations

Entrepreneurship is the pursuit of a lofty goal, often, with scant resources. The challenges are not merely of an infrastructural or a monetary nature, they are first and foremost of a psychological kind. The individual has to place his personal life and tertiary goals on the proverbial altar that will serve as the foundation of his venture.

Unfortunately, such goals and aspirations have no place in a culture of low expectations. Indian culture encourages playing safe just so one gets to check off a centuries old check list of ‘success.’ The check list comprises of education (in select disciplines), employment (in select industries), matrimony, a mortgage, and a car loan.

With the bar set to keeping up with the Joneses, setting off on an almost monkish, backbreaking entrepreneurial journey is off limits.

Group Think

Starting a business or being innovative requires a person to make critical decisions that can either make it or break it. Such critical decision-making needs one to be self-aware and accustomed to make independent decisions from a young age.

A culture that puts a premium on defining one’s identity in the ethnolinguistic group in which one was born is not at all geared for the rigors of independent decision-making.

To add to the burden, individuals are perceived as part of a group and are expected to be in lockstep with group conventions, practices, and thought. For a maverick, this can be stifling and self-isolation is the only counter-measure.

A sub-malady of group think is that individuals get painted with a rather broad brush. Group outliers, viz. future mavericks, tend to be ridiculed, jeered, and in some cases, ostracized due to the misalignment of their compass with the group north star.

A combination of group think and steep penalties on renegade behavior means that the raw creative energy, the fuel of entrepreneurship, is lost or discharged in hackneyed pursuits.

Identity Politics

Group think and ethnolinguistic segmentation segues into identity politics. People tend to judge individuals by their default identities, issued at time of birth, by no virtue or fault of their own.

While this pathology seems to be at its peak in the US, fortunately, there are counter voices that rail against it.

In India, it’s part and parcel of the routine life. Preferential policies and biases towards hiring folks of similar ethno-linguistic groups as that of the employer is rampant in most parts of the country.

Identity politics can creep into fraternizing, segmenting the populace along ethnolinguistic fault lines. This can be extremely counterproductive to the process of information exchange and making beneficial acquaintances – essential pre-requisites to entrepreneurial beginnings.

Lack of Grassroots Innovation

Entrepreneurship has become such a money-minting buzzword that universities now run courses that teach folks how to bootstrap their ideas into successful businesses. Big to medium sized cities see at least one event dedicated to discussing and fostering entrepreneurs. Magazines beat the entrepreneurial drum at least once in their publication cycle and Youtube is chalk full of videos on entrepreneurial hacks.

 

But really, entrepreneurship and innovation is not a gala affair and certainly doesn’t result from a structured top-down plan. It’s more akin to the randomness and meandering trajectories of Brownian motion. Over time, a few of these random trajectories lead to success.

Rockefeller’s success with oil, Henry Ford’s successful application of the assembly line, modern day advances in fracking, the smartphone, and all the petty things that make our domestic life convenient have one thing in common. They are the cumulative result of the effort of average individuals, with great minds and even greater dreams, who wanted to innovate contemporary processes and systems to bring about a greater good.

Indians, for a variety of reasons, lack the innovative mindset. Outliers apart, most Indians don’t think of upgrading existing ways of doing things to make their own lives better. To demonstrate this, I will use two extremely routine, but telling, elements of our lives – house cleaning and food packaging.

House cleaning involves sweeping, mopping, and wiping down surfaces.

The Indian broom hasn’t undergone any significant upgrade since its inception. It’s still made of long fibers of processed grass, held together by a plastic casing which doubles up as the handle. From head to tail, the broom measures around 3.5 feet. The result: poor cleaning and significant strain on the back from bending over. No thought has ever been put into upgrading this tool. It’s only through the entry of products from the West that urban Indians are being introduced to the ‘real’ broom – one with greater work efficiency and optimized for use in upright posture.

Mopping in the average Indian household is performed with a rag and a bucket of water. One has to squat and use their bare hands to mop the floor with the wet rag. Only recently has a mop and a purpose-built bucket been introduced into Indian homes. But to much dismay, this convenience is the result of globalization and trade, not local innovation.

It’s routine to wipe down surfaces with a damp rag. The process requires frequent rinsing and wringing of the rag. Not only is it time consuming, it also produces poorer results. To date, there is no alternative to this, as there is nothing like Clorox wipes on the market.

Food packaging is my pet peeve. I was particularly wowed by food packaging in North America. There is a great emphasis on three criteria – ease of opening, resealability, and ease of dispensing. Cue food packaging in India, and except a few multinational brands, most food packaging is dismal. None of it meets the above three criteria and situation hasn’t changed much over the past few decades.

It seems, at least empirically, that the driver of innovation and entrepreneurship – the individual – is missing in action. This very much explains, partly, the state of shambles India has found itself in.

Lack of Infrastructure

I won’t detail on infrastructural quagmires affecting at a macro level like GDP and public transportation. This is an individual-centric harangue, so I will touch on the micro effects.

Innovation or entrepreneurial pursuit needs contemplation, solitude, and some spare time to etch out the road map. The above elements become unattainable due to the way infrastructure is (mis -)set up in India, at least in urban India. (These problems don’t occur in rural India because there is no infrastructure to begin with.)

The Indian infrastructural setup is for the most part pre-industrial. This accompanied by a pre-industrial culture and way of life throttles any serious contemplation and self-reflection.

Following has been my observation.

Poor roads and dismal traffic management often result in urban Indians spending over 3 hours commuting one-way. While one could theoretically brainstorm and introspect while stuck in traffic, the co-existent cacophony from honking and outdated car motors makes this theoretical prospect unfeasible.

But what about using ear plugs and reading up on relevant issues on the Internet while stuck in traffic? This unfortunately is made impossible due to poor Internet speeds/bandwidth – a characteristic flourish of digital India.

The same lack of quiet is continues on into the urban residential setup, thanks to poor city planning, resulting in noisy vehicular traffic streaming right down the middle of the township. The problems get compounded, every now and then, by cultural and social events, where making the most noise and being inconsiderate to others seems to be the end goal.

With a lack of privacy, quiet, and uninterrupted me-time, it’s hard to think about anything, except the most trivial matters.

Inverse Logic

Part of the goods and services tax in India is also the culprit for not affording the average Indian sufficient downtime. Elements that free up time and make daily routine convenient – frozen and canned foods, processed foods, packaged foods, and household appliances like dishwashers, refrigerators, washers, and ovens – incur a steep tax.

The rationale: the above goods and products are luxury items, hence, should be steeply taxed.

The counter-rationale: how can these conveniences become mainstream if they cost a lot?

The result: most Indians continue to live pre-industrial lives, with household chores occupying a significant chunk of their daily schedule.

Introspection, contemplation, and brainstorming, then, are prerogatives of post-industrial cultures of the West, which is where most innovation and developments occur. This is not serendipity, it is cause-and-effect.

Parental Baggage

This might become a contentious issue.

Exceptions aside, adults in the West are expected to bear fewer parental responsibilities than adults in India. While helping parents out occasionally and tending to their health in times of need can certainly be accommodated in the life of a young adult, there is a threshold to such accommodation, beyond which it adversely affects the adult’s life.

Indian children are not only expected to take care (read middle age to grave) of their parents, they are also expected to fulfill some of the latter’s dreams and expectations. In some unfortunate cases, adults are expected to live with their parents, in line with long-standing cultural norms, despite having the means to move out.

The externalities of such a setup: young adults live a sheltered life and become encumbered with expectations and demands that can put their personal pursuits in a chokehold.

Such young adults can hardly be expected to become trailblazers and mavericks.

Indians are Philistines

Granted India has its own philharmonic orchestra and hosts art exhibitions and cultural festivals. Upon analyzing closely, one finds that such events draw out only the uber-elites of Indian metros – the real bourgeoisie with Ivy-league education and refined tastes. Unfortunately, they are a niche minority.

Most of the the Indian population, including inhabitants of metros, despite their university degrees and corporate careers, couldn’t care less about the arts. Patronage to the arts is considered so superfluous that it doesn’t even brush past the mental orbit of an average Indian.

The arts play a vital role in that they encourage creativity, out-of-box thinking, and open intellectual dimensions that cannot be opened by rote lessons that are the forte of the Indian K-12 system.

Case in point: the user experience on Apple products wouldn’t have been so definitively distinct had Steve Jobs not dropped in on a calligraphy course at Reed College.

It would be almost blasphemous and heretical for an Indian to wish to study the arts or want to build a career in humanities. Not only will he/she incur the wrath of their parents and the ridicule of a vacant society, they will remain cash strapped for the rest of their lives. The culture and the resultant economic system isn’t built to nurture artistic pursuits.

Notable Takeaway

The common thread running through all the above listed reasons is culture. It’s not the lack of money, or the burgeoning population, or poor governance – oft-cited culprits – that result in a dearth of entrepreneurship, lack of innovation, and a miserable existence.

In Closing,

While I would like to end on a sanguine note, I prefer realism to optimism. Cultures are difficult to change. Cultural upheaval results from the efforts of individuals who have seen the light and hazard walking towards something better.

There is a genuine dearth of rugged individualism in the Indian culture. With the engine for change, innovation, and entrepreneurship non-existent, there cannot be a cultural shift or individual progress or creative enterprise in India.

An ex-dentist and a business graduate who is greatly influenced by American conservatism and western values. Having born and brought up in a non-western, third world country, he provides an ‘outside-in’ view on western values. As a budding writer and analyst, he is very much stoked about western culture and looks forward to expound and learn more. Mr. Malkar receives correspondence at saurabh.malkar[at]gmail.com. To read his 140-character commentary on Twitter, follow him at @saurabh_malkar

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Economy

Beyond Being Friends: Russia and China Need an Exclusive Trade Deal

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RIAC’s 6th “Russia and China: Cooperation in a New Era” conference in early June showcased once again the will of the two countries to develop exclusive relations. Over the past 1,5 years, during the global COVID crisis, both sides have even strengthened mutual trust. In December 2020, Russia and China extended their agreement on notifying of missile launches for ten years. The document was first signed back in 2009. In March, the Treaty of Good Neighborliness and Friendly Cooperation was prolonged, an agreement that has been cementing relations between the two countries for the past 20 years.

Economy contrasted with diplomacy

However, despite the long-sustained foreign policy rapprochement, Russia and China are far from fully utilizing their bilateral economic potential. In 2020, according to the Russian Federal Customs Service, China accounted for 15% of Russian exports, slightly more than the CIS (14%), but significantly less than the European Union (41%). In the structure of Russian imports, China is also behind the EU (24% versus 35%), although European food producers have been excluded from the Russian market since 2014.

In turn, Russia’s share was only 2% in Chinese exports in 2020 (with the U.S. share at 17%), and only 3% in imports (compared to 7% for the U.S., according to the ITC).

The same proportions are typical of mutual investments. By the beginning of 2020, according to the Bank of Russia, China accounted for less than 0.1% of accumulated direct investment from Russia (with the share of UK and Germany at 4.7% and 2.2%, respectively). As for the accumulated direct investments in Russia (private equity and debt instruments), China’s share reached only 0.8% in early 2020, while the share of France stood at 4.5%.

State support and guarantees

So far, Chinese investments are mainly focused on energy projects, directly or indirectly supported by the state. Yamal LNG plant is a good example (20% owned by CNPC, 9.9% by Silk Road Fund): to launch construction, Novatek raised a loan from the NWF (the sovereign National Wealth Fund). Another example is the Amur Gas Chemical Complex (AGCC) of Sibur (40% owned by Sinopec)—the project will enjoy tax benefits as a resident of one of the Far Eastern territories of priority social and economic development.

Ensuring guaranteed demand is equally important, as is the case for AGCC, which is located in close proximity to the world’s largest consumer of polyethylene and polypropylene, the basic petrochemical products. It is no coincidence that Sinopec acquired the share in the Amur GCC in December 2020. By that time, it became obvious that the consequences of the COVID-19 pandemic would not undermine China’s growing demand for petrochemicals and gas chemicals: according to the ICIS forecast, China’s share in global polyethylene imports will grow from last year’s 35% to an even more impressive 43% by 2030.

Looking for viable opportunities

The lack of proper state support and guarantees restrains export in a number of other industries that could have enjoyed demand in the Chinese market. This is apparent in trade frictions between China and the U.S. (in 2019, China imposed a 25% duty on methanol imports from the United States) and Australia (in late 2020, China stopped buying Australian coal). And vice versa, it is possible to increase exports by searching for opportunities in the market niches where Russia’s sales potential is coupled with absolute competitive advantages, such as in helium market, where Russia may become one of the leading suppliers in the coming years.

Another option is the supply of Russian hydrogen, which may allow China to partially replace petroleum imports from other markets.

In 2018, according to the International Energy Agency (IEA), some 1,790 hydrogen-fuel vehicles were operated in China out of 12,952 vehicles globally; the Chinese fleet grew to 6,180 out of 23,354 units by the end of 2019. And by 2025, China plans to increase the number of buses and trucks utilizing fuel cells to 50,000, jumping to 1 million by 2030.

Moreover, in 2035, according to the official plans of the Chinese authorities, half of vehicles sold should be climate-neutral, while the other half should be powered by hybrid engines or fuel cells. A similar shift will have to occur in Japan, where the IEA forecasts the number of fuel cell vehicles to increase from 3,633 in 2019 to 200,000 in 2025 and to 811,200 in 2030.

Russia has its competitive edge in hydrogen energy development, taking into account both global leadership in natural gas reserves (used for blue hydrogen stored in ammonia) and 50+ years of experience in nuclear and hydropower, needed for production of yellow and green hydrogen. Understanding these advantages is already reflected in regulatory plans: for example, according to the Energy Strategy adopted last year, Russia will increase its hydrogen exports from 200,000 tons in 2024 to 2 million tons in 2035.

Towards a New Trade Deal

We need to admit though that a long-term strategy requires long-term investment, while the latter requires secure return. To ensure there is a horizon for planning your business, you do not have to necessarily rely on budget support: this is where exclusive trade agreements can step in. This is exactly what the Trump administration did in January 2020, concluding an agreement that obliged China to boost U.S. imports by $200 billion above the 2017 level within two years, including energy ($52.4 billion), industrial production ($77.7 billion) and agriculture ($32 billion). The deal, among other effects, has revived the U.S. oil exports to China: supplies grew to 482,000 barrels per day (bpd) after a drop to 137,000 bpd in 2019 amid trade wars.

An exclusive trade deal between Russia and China could be smaller in volume and longer in tenor (aiming to increase the trade turnover by $100 billion in at least five years) to help resume, for example, the Eastern Petrochemical Company project, in which ChemChina planned to participate previously but which remained on paper. In return, Russia could extend the tax benefits, which are now granted to residents of the territories of priority social and economic development (TOSER), to all projects with Chinese shareholding. Thus, the success story of cooperation between Sibur and Sinopec in the Amur GCC would be replicated and should provide a new impetus to bilateral relations.

From our partner RIAC

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Economy

Emerging Global Market: The Arctic on Sale

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The Arctic Region has been on a journey of geographical transformation induced by Climate Change. There has been an unprecedented percentage of what can be called as ‘Arctic metamorphosis’, witnessed as deterioration of climate twice as rapidly as in any other parts of the globe. There has been a decline in permafrost, sea ice, icesheets on ocean and glaciers in Canada, Alaska and Greenland.  There has been a notable decrease in the snow cover that earlier occupied the land. These alarming changes in the physiography were first recorded in the 1980s, and have been on a surge ever since. Around 1 million sq. miles of sea ice has shrunk over the past 50 years, halving the size of Arctic icecap. The transition has been so dramatic that it actually cut the turf to Asia, revealing the fabled North West Passage that European voyagers sought for shipping, for over centuries. As of now, it is not a matter of ‘if’ but ‘when’ will the Arctic Passageway open for regular marine transportation and when would the exploration of lucrative natural energy-resources deposits be possible.

The regressing ecosystem has been the least of the concerns of our capitalist, market-oriented, energy-hungry world economy. The melting ice caps and glaciers are paving way to access the 13% of globe’s undiscovered oil and 30% of globe’s undiscovered natural gas lying at the Arctic Ocean seabed, a home for world’s largest unexplored hydrocarbon resources. These percentages translate to 1,669 trillion cubic ft. of natural gas and 90 billion barrels of oil. The economic potential for these energy resources exceeds $2.7 trillion for Russian and American Arctic claims alone. Moreover, there are massive reserve potential for rare mineral resources also referred to as “strategic minerals” including palladium, nickel and iron-ore which might prove to be a greater economic driver than the energy resources. Apart from these, Arctic has tremendous new opportunities for high sea fisheries. The Ocean has vast stocks of marine resources including shrimp, pollock, crab, pacific salmon, squid, scallop and halibut. It would prove to be a new arena of industrial-scale commercial fisheries.

Whether the sought resources are hydrocarbon or mineral, they must procure their route via pipelines or shipping routes to the receptive markets. Along with the transitory passageways, there would be need for improved icebreakers, satellite and communication and navigation, deep water ports, double-hulled shipping vessels, operational search and aviation infrastructure development.

An even better incentive would be the inception of new sea-lanes initiated by the great Arctic melt. The shipping shortcuts of Northwest Passage and Northern Sea Route would reduce the nautical transit times by days, saving the shipping corporations thousands of miles. The sailing distance between Yokohama and Rotterdam on the Northern Route would be reduced from over 11,200 nautical miles to 6,500 nautical miles, in comparison with the current Suez Canal Route which would amount to the savings of up to 40 percent of shipping expenses. Likewise, the voyage from Rotterdam to Seattle would be trimmed by the North West Passage by over 2000 nautical miles, reducing the distance up to 25 percent in comparison with the current Panama route.

Taking into consideration the fuel costs, canal fees and various other miscellaneous charges that amount to lofty freight rates, these alternative passages will cutback the charges of a single voyage down to at least 20%, saving around $17.5 million, saving billions of dollars per annum for the shipping industry. These savings would be far greater for the megaships that have to sail all the way down to Cape Horn and Cape of Good Hope.

The world’s shipyard’s have already started building ice-capable ships, beginning with the groundwork for the navigation through these sea-lanes and for the transport of Arctic’s natural gas and oil. Billions of dollars are being invested by the private sector for the fleet of Arctic tankers. As of now, around 496 ice-class ships have been built worldwide. The gas and oil markets are investing in development of the avant-garde technology and assemblage of advanced ships, possessing double-acting tankers, that have the dual technology of steam bowing through open waters and proceed stern to smash through deep ice. These ships are capable of sailing unobstructed to Arctic’s burgeoning gas and oil fields independent of ice-breakers. These breakthroughs will turn previously unviable commercial projects into booming businesses.

Of all the Arctic States, the largest stakeholder with greatest intrinsic interests in the region is Russia. A significant 20% of Russia’s GDP comes of Russian North, and accounts for 22% of all exports. The resources of Arctic are of strategic importance for Russia; therefore, it has been so far the largest investor in the region. It has invested in the fleet of nuclear-icebreakers, the only of their kind in the world. Further, Russia is planning on increasing this fleet of 4 to 13 with a cost of over $1.5 billion. Moreover, Russia has endeavored to aim for 92.6 million ton of cargo by 2030. These hefty investments indicate the importance of Arctic as a market. Russia aims at charging for providing the sea-routes since it has the largest geographical proximity to the ocean as well as providing shipping and infrastructure in the region. The claims of oil and gas reserves are only an addition to the gains Russia has planned to make.

Considering the economic and strategic importance of Arctic and its potential to add to the world’s oil, gas, minerals, fisheries and shipping reserves makes it an alluring marketplace. The region itself has been divided among the ‘Arctic States’ that include Russia, Denmark, Iceland, Finland, Sweden, Norway, Iceland, and United States. Instead of making efforts to preserve the deteriorating environmental conditions and the physiographic challenges, these states are only in a race of dividing the resources among themselves and reaping as much assets as they can. All domains of Arctic are on sale; including the sea, land, sea-life, mineral resources, and fossil fuels. The world has turned a blind eye towards the environmental consequences for the region of the planet which will surely cost more than the gains. Putting nature’s commodities on sale have never worked in anyone’s favor.

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Economy

Covid-19 and food crisis

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COVID-19 has hit at a time when food crisis and malnutrition are on the rise. According to the most recent UN projections, the pandemic-induced economic slump would cause as many as 132 million people to be hungry. This would be in addition to the 690 million people going hungry now. At the same time, 135 million people suffer from acute food insecurity and in need of urgent humanitarian assistance. Although the pandemic’s transmission has slowed in certain countries and cases have decreased, COVID-19 has resurfaced or is spreading rapidly in others. This is still a global issue that needs a worldwide solution.

This epidemic threatens both lives and livelihoods. COVID-19 has had a wide-ranging and disruptive influence on the agriculture system. We fear a worldwide food crisis unless we act quickly, which may have long-term consequences for hundreds of millions of children and adults. This is mostly due to a lack of food availability — as wages decline, remittances decline, and in certain cases, food prices rise. Food insecurity is increasingly becoming a food production concern in nations that already have high levels of acute food insecurity.

Agriculture continues to serve a reliable and major part in world economy and stability, and it remains the primary source of food, income, and work for rural communities, even in the face of a pandemic. The impact of the COVID-19 pandemic on the agricultural system and sector has been wide-ranging, causing unprecedented uncertainty in global food supply chains, including potential bottlenecks in labor markets, input industries, agriculture production, food processing, transportation and logistics, as well as shifts in demand for food and food services.

The COVID-19 epidemic not only created a new sort of agricultural catastrophe, but it also occurred at a difficult moment for farmers. In most years during the last few years, global commodity output has exceeded demand, resulting in lower prices. In 2013, the Food and Agricultural Organization (FAO) predicted decreased global agricultural output growth due to limited agricultural land development, rising production costs, expanding resource restrictions, and increasing environmental concerns.

An expanding global population remains the main driver of demand growth, although the consumption patterns and projected trends vary across countries in line with their level of income and development. Average per capita food availability is projected to reach about 3,000 kcal and 85 g of protein per day by 2029. Due to the ongoing transition in global diets towards higher consumption of animal products, fats and other foods, the share of staples in the food basket is projected to decline by 2029 for all income groups. In particular, consumers in middle-income countries are expected to use their additional income to shift their diets away from staples towards higher value products. Meanwhile, environmental and health concerns in high-income countries are expected to support a transition from animal-based protein towards alternative sources of protein.

When people suffer from hunger or chronic undernourishment, it means that they are unable to meet their food requirements – consume enough calories to lead a normal, active life – over a prolonged period. This has long-term implications for their future, and continues to present a setback to global efforts to reach Zero Hunger. When people experience crisis-level, acute food insecurity, it means they have limited access to food in the short-term due to sporadic, sudden crises that may put their lives and livelihoods at risk.

However, if people facing crisis-level acute food insecurity get the assistance they need, they will not join the ranks of the hungry, and their situation will not become chronic

It is clear: although globally there is enough food for everyone, too many people are still suffering from hunger. Our food systems are failing, and the pandemic is making things worse.

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