The first interaction I narrate was with a young Israeli who was spending a few months in India after a stint in the Israeli army.

The brash Israeli

It was my second year in IIT and the fact that I had cleared the ‘elite’ Joint Entrance Exam (JEE) was still a source of pleasure for me. I was not shy of sharing this pleasure with others. Once, I was on the way to the institute in a train and a group of young Israelis happened to share my railway compartment. I got talking with one of them and probably irritated him with my smugness.

He asked me,

“What should I be importing from India to Israel?”

“Textiles”. That was the only answer that I could come up with.

“So, you are studying in the best technical institute in the country,” he asked, “and you are telling me that India can export only T shirts?”

This statement had more insults per square inch than any that I have ever come across and I am still not sure that I have processed all of them. But I did process the most obvious one. I realized that just being in an ‘elite’ institute did not mean anything. I actually had to know stuff.

This should be obvious to every student but it isn’t. Especially, the students of elite institutions.

What I learnt in the next interaction was not as obvious.

The Indian with an American accent

He had all the characteristics that I found ridiculous. He was an Indian who talked with an American accent, he moved his hands too much when he talked and most of all he was unnecessarily ebullient on stage. If memory serves me correctly, his name was ‘Ash’ Kakkad. He was at IIM Calcutta to give us a preplacement talk for General Electric. That is, he was there to tell us students why his company was a good place to work at.

I sat through his presentation alternately bored and supercilious and have forgotten everything he said except for one thing. He talked about how business life was different from what was taught in business schools and he took the example of cash. He said that management schools focused on revenue and profitability whereas GE of the time was all about cash [1]. I particularly remember him saying

“In my training, they just talked cash, cash, cash…till cash was coming out of my ears.”

I have forgotten every pre placement talk in my campus but I remember this sentence.

No doubt the importance of cash was strengthened a lot by my first few years of experience of analyzing cash flows of projects and companies at a rating agency. And then my cofounders and I had to live this phrase when our startup grew rapidly without external funding. You have to focus on cash from business when each month a growing salary bill is funded entirely from it.

Strangely enough, many business owners do not look at this metric at all and I believe that is one key reason they get into trouble. I have become a big advocate of cash being the number one metric every business should look and am in the process of writing a detailed piece on this. Mr. Kakkad’s passionate evangelism of the importance of cash flows, planted a seed which has now grown so big that many students who hear me speaking about cash flows would be as irritated with me as I was with Mr. Kakkad.

The earthy entrepreneur

Beware of an accomplished Maharashtrian who pronounces ‘this and that’ as ‘dhis and dhat’. He is likely to be a plain talking, no nonsense person who merciless destroys your stupid notions. One such person was invited to give a guest lecture in our production engineering course. He was an entrepreneur and he began by asking,

“What is the most important skill needed to be an entrepreneur?”

We came up with many answers. Given that we were students of an ‘elite’ engineering college, the answers centered around good product, technical proficiency, first principles thinking and surprisingly enough — understanding customer needs.

The entrepreneur pulled out a gadget. It was an emergency light that worked in case of power cuts. The need for it was obvious — this was in early 90s when power cuts were very common but inverters were not. The product was well designed and priced attractively. The entrepreneur could more than answer our technical questions. He convinced us that all our identified skills for entrepreneurs were embedded in the product.

He then offered to leave ten pieces with any student who volunteered. The student would need to find buyers for the gadgets and when he got the money from the buyer, he would transfer half of it to the entrepreneur and keep half for himself.

Only one of the sixty students raised his hand and it was not me. I was terrified just by the thought of approaching strangers and trying to sell them something.

A respect for sales people was born out of this fear. I had to drop my attitude of looking down on sales. This is very wide spread attitude amongst technically proficient people and I have had to correct it in many smart students.

It seems that others have faced the same challenge. Here is the entrepreneur Sridhar Vembu on X

Note the sentence, “You may even become good at business”. There is no chance of becoming good at business unless you understand and appreciate sales people.

The man in a Stetson

I shared a compartment with the tall American in Karnavati Express from Ahmedabad to Bombay. I found out that he was an artist who painted for six months in the US and spent six months traveling all over the world. He had seen nearly hundred countries and was on his fourth Indian trip. We talked about his experiences in different places but what has stayed most with me most is not his stories but who he was.

In those days, reservations in Karnavati Express did not mean as much as one would have wished. Daily travelers got into reserved compartments as a matter of right. They would make you squeeze against each other so that they could sit in the space created. A berth reserved for three people would have at least seven sitting on it. Many others would be perched on the upper berth.

The fans in the crowded compartment struggled with the hot and humid July weather. The daily passengers talked over the noise of the fans and the train and my twenty-year-old self got increasingly irritated and resentful. I was tightly pressed against other reserved passengers and all of us became sullen about being bullied out of what we had paid for.

All of us, except the American. The tall artist sat through the whole journey with an upright back and a slight smile on his face even as sweat poured down his face from under the Stetson. I don’t think that he was tolerating the heat and the noise and the bullying. He was just being.

I did not have the word for it then but I was seeing a sthitaprajna person. Someone who was completely calm and unaffected by outer events, someone who was dealing with the external world with equanimity.

Of all the concepts and ideas discussed in this short piece, I am furthest away from internalizing this one.

Strong emotions can be Signals

I think about why these four interactions have stuck in my memory decades after they happened. I believe it is because the interactions made me aware of a big concept or idea that I was previously blind to. The awareness came along with a strong emotional reaction. For example, the Israeli humiliated me and the entrepreneur scared me. But, try as I might, I could not brush away what they said. I couldn’t blame the messenger.

Many a time, a strong emotional reaction to something suggests that there may be a learning opportunity. When this kind of negative reaction comes up, maybe we should be thanking the person who evoked it.

But there is no chance that I can thank any of the above mentioned ‘hit and run’ teachers. I don’t even remember the names of three of them. This tribute is not really for them. It is for you. It is possible that something you said has profoundly impacted someone and you don’t even know that. It may not even be something you said, it might be who you were in a particular situation.

If this has happened, you can accept the thanks on the behalf of my four interlocutors.

You don’t have to be called a teacher to be a teacher. You don’t have to be an Upadhyaya to be an Upadhyaya.

[1] Ironically, GE of the nineties was later criticized for over reliance on financing and short-term lending. The criticism said that it relied too much on financial engineering rather than cash from industrial operations.

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It was June and I was at a beach in the Northeast of the United States with a bunch of other Indians. One of them pulled out a tube of sunscreen and offered it to me. When I declined, she looked at me strangely. I, in turn, looked at all of them strangely as they applied a thick layer of cream on themselves.

I was reminded of this incident when I started reading the book, In Defense of Sunlight by Rowan Jacobsen. Jacobsen has made the case that all of us should seek out more sunshine. I agree with him although I concede that our case is not truly testable.

It is customary to start an article such as this with the admonishment that this is not medical advice and that you should talk to your doctor. But as I type this, I am asking myself what does this even mean?

I don’t have a doctor and I know many others who don’t. The one doctor I have consulted in the last five years is an endocrinologist. I can’t imagine waiting in his anteroom for nearly an hour and then asking him about how much sunlight I should get and whether I should use a sunscreen when I am doing it. If I did ask him, I am pretty sure that he will end his response with asking me to consult a dermatologist and that he could recommend one.

What would the dermatologist say? I am speculating here but there is a good chance that the dermatologist tells me that there are 5.5 million cases of skin cancer each year in the United States. He may tell me that “Patients with metastatic melanoma have a poor prognosis, with a median survival duration of only six to nine months.” and that the American Academy of Dermatology recommends sun protection for people of all skin tones whenever they are outdoors.

If I heard only this, I would order a sunscreen from the dermatologist’s clinic itself. However, there are some other relevant facts. Jacobsen points out,

“Nearly 99 per cent of skin cancer cases are basal cell carcinomas (BCCs) and squamous cell carcinomas (SCCs). Those are certainly no joke…but they rarely spread beyond the skin or result in serious health issues.”

That is not all. There is also the matter of race. Darker skin has a much greater ability to handle the sun. Jacobsen reports that ‘For melanoma, incidence of new cases per year is about 28 per hundred thousand people in Whites, 5 in Hispanics, and 1 in Blacks and Asians.”

But perhaps, even the 1 in hundred thousand case rate is not a risk worth taking? Why do I need to expose myself to sunlight anyway? To get Vitamin D? I can always supplement with Vitamin D capsules, can’t I?

A full-size book can be written about Vitamin D and thousands of them have been written! A search for “Vitamin D books” on Amazon throws up this

The focus on Vitamin D began when population-wide studies from the 1980s began showing that “people with low Vitamin D levels had a higher incidence of dozens of diseases, including breast cancer, colorectal cancer, high blood pressure, diabetes, heart attack, stroke, dementia, depression, and several autoimmune diseases.”

These studies led to a boom in Vitamin D supplements.

Unfortunately, newer studies show that unless it is to correct a very severe deficiency, these supplements do not have health benefits. It is the exposure to sun that leads to both health benefits and a rise in Vitamin D levels. These studies have got more and more assertive and one Swedish study even concluded,

“Avoidance of sun exposure seems to be a risk factor of a magnitude similar to smoking in life expectancy.”[1]

If the increased level of circulating Vitamin D is not leading to health benefits, then what is? Jacobsen has a few candidates and the most prominent of them is Nitric Oxide. Nitric Oxide is a short-lived gas that helps enlarge our blood vessels. When blood vessels are enlarged, circulation improves. This has been well known in medicine and NO releasing medication forms a part of the tool-kit to deal with a range of diseases such as heart diseases, blood pressure and impotence.

Jacobsen takes us through the mechanism of Nitric Oxide and the sun. We get Nitrates from food — especially Nitrate-rich foods such as leafy greens and Beets. Our body takes these nitrates and deposits them near the skin. When sunlight hits these Nitrate deposits in the skin, they are partly converted to NO which circulates in our blood vessels.

“Not only does it dilate blood vessels — which has led to a wave of new cardio drugs, as well as Viagra — it’s also used by the brain to transmit signals, and by the immune system to kill pathogens. It even improves the efficiency of mitochondria, the tiny structures in our cells that transform nutrients into usable energy.”

Nitric Oxide is not the only mediator between the sun and health benefits. For example, Jacobsen says that Infrared light can reach deep inside our bodies and energize our mitochondria. Another example is that Infra-red rays also help heal the body — a principle behind photobiomodulation therapy, which some dentists use post-procedure to stimulate cellular repair. Jacobsen is convinced that given the low risk of melanomas and the range of benefits, people, especially those with dark skin should not be told to avoid the sun.

“And it’s especially poor advice for people with darker skin, who almost never get sun-induced skin cancer and yet suffer higher rates of many of the other diseases that seem to be alleviated by sunlight.”

It seems we made a mistake when we reduced the interaction between the sun and a complex system such as a human being to a Vitamin pill.

Evolutionary logic would support this claim. Just two hundred years ago, my ancestors walked tens of kilometers in the sun on a regular basis. There is a good chance that they did without any cloth on the upper body because textiles were too expensive to be worn on a regular basis. If they were farmers, which is likely, they had to be in the open for large parts of the day. It is likely that my body has evolved to thrive and not just survive under the sun. And it is not just biological evolution, long standing religious and cultural practices also encouraged my ancestors to go out in the sun.

The Surya Upanishad (part of the Atharva Veda) for example, has exhorted us to worship and meditate on the Sun thrice a day — at sunrise, midday, and sunset. It has made this recommendation thousands of years ago. It is very unlikely that such practices would have survived if they were bad for most individuals.

This biological and cultural history suggests that our bodies would have evolved to take advantage of the sun. As Jacobsen says,

“…the human body evolved in an environment of abundant sunlight, and we are designed to make use of that solar energy in various ingenious ways…”

But, those of us who live in big cities, no longer live in the world of our ancestors. It is incredibly difficult to get sun on your skin in Mumbai. The months of April to June are too hot and humid to be out in anything but the early morning sun. In the months of monsoon — July through September — you may not see the sun for weeks on end. October is almost as humid as May. The period Mid-November through mid-January is cool enough to sit out in the sun for a few minutes but these are the peak months for air pollution. As per some accounts, Mumbai has the highest number of skyscrapers under construction in the world! This means that on most days, sunlight will struggle to reach you through all the dust in the air. Mid-January through perhaps mid-March is a brief period when it is pleasant to sit in the sunshine — if you can find it.

If you get sun in your apartment for any meaningful amount of time, you should consider yourself lucky. Most of us do not have the luxury. We have to hunt for an open space in our neighborhood and snatch a few minutes of sunshine on our arms and face. To get sunshine on our back or chest, we would need to go to Goa.

If we do go to Goa to get sun, we may end up applying sunscreen because we are afraid of sun burns. This fear is not baseless, as our skin, unlike that of our habitually topless ancestor, is not used to sun. Just as you cannot run a marathon if the most exercise you have been getting for the last few years is a gentle stroll, you cannot sun bathe for long periods of time if you get sun on your skin only once in a while. Our bodies need to get used to the sun the same way they need to get used to exercise — gradually.

Jacobsen describes many mechanisms by which this ‘getting used to’ happens. Most obviously, our skin darkens. This melanin driven darkening protects you from the worst effects of sunlight. Additionally, the skin thickens with exposure to sunlight and that is protective. Finally, sunlight and sweat on our skin promotes the growth of a layer of bacteria that acts like a sunscreen. (If the idea of bacterial colony on your skin sends you running to take a shower with industrial strength cleaners, remember that the cleaners will merely substitute one type of bacteria with another, like it happens in our guts. Microbiomes are natural on all parts of our body and destroying one type of bacteria would result in another type and the new one could be much worse for us).

Without these protections, all of us need to figure out how we can get more sun in our lives regularly just as we try to figure out how we can get slightly more exercise or slightly better food or slightly better sleep.

But should you try to get more sunlight? The case for better food, exercise and regular sleep seems clear cut. Is the case for sun exposure as good? Assuming your goal is not to have a fair, blemish free skin but is to become healthier, should you try to figure out how to get more sun in your daily life?

I may have been persuasive but I am just a guy on the internet who is quoting a book written by a science journalist. Sure, the science journalist is quoting many doctors but against those doctors are arrayed many others including the formidable sounding American Association of Dermatologists. If we dig deeper in the evolutionary argument, we would discover that my habitually top less ancestor ate differently and lived very differently. Perhaps, he did not live long enough to get cancer? And the Nitric Oxide? Maybe scientists will soon change their tune about it as they have about Vitamin D?

Can you even test whether whichever decision you end up taking is right?

If you increase your sun exposure and notice that your health is improving, is there a causation? First of all, it is very likely that your daily sun exposure would be one factor in many. Perhaps you decided to focus more on health and are eating better, sleeping better and getting some exercise. Could you even isolate the effect of sunlight on you, the individual?

Or if you suffer a negative health event after increasing your sun exposure, how do you know if the sun was actually to blame?

It’s like following the sound advice to walk on the footpath instead of on the main road. However, if you’re walking through Koramangala in Bengaluru during peak traffic and a food-delivery rider zips down the sidewalk to beat his deadline and clips you, was walking on the footpath a bad decision?

This kind of unknowability isn’t unique to sunlight — it is all around us, in health, in parenting and in businesses. Science can give us population averages and physiological mechanisms, but it can’t give us a personal guarantee. We have to make calculated trade-offs based on our skin type, our environment, and our daily routines. Getting a little more sunshine may not be a testable cure-all, but for most of us, stepping out of the shadows is a reasonable place to start.

[1] The American Academy of Dermatology objected to these conclusions, stating “We believe the results of this study may encourage the public, women in particular, to seek the sun and / or use indoor tanning devices, ultimately increasing their risk of cancer.”

Edit: Added the sentence “It seems we made a mistake when we reduced the interaction between the sun and a complex system such as a human being to a Vitamin pill.”

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“We ranked all our software product vendors on their customer support.” Our client said.

“And…?” I asked eagerly.

“XYZ company from Ahmedabad was the first.”

“And…?” I asked again, thinking that a second position was a bit disappointing but not shabby.

“Everyone else…” The client paused before dealing the final blow, “was ranked below 5.”

This was the fifth year of our startup. We were market leaders in funds management and wealth management. More than 50% of the Mutual Funds investments in India went through our system. The biggest wealth managers in India used our product. We believed that this success was because we really understood the requirements of our clients. Understanding our clients was our credo and hence, it was a shock for us to realise our customer support was poor. How could a startup that made products that customers loved be bad at customer support?

This article is about how just having a good attitude is not enough for good customer support. The attitude has to be supplemented with resources and a good process. But above all, the article is about what I call the golden rule of support: Customer support issues have to be resolved in the customer’s mind and not just on an email or in a report presented to the senior management.

When we came back to the office from the meeting, I asked our wealth management product leader to tell me how many outstanding issues we had with the client and we ran into the first reality check. We did not know. Support issues were raised on email (and sometimes on phone). We had an Excel sheet where we were supposed to collate the issues but the sheet had not been updated.

(This may sound incredible to anyone who has not worked in a startup but I don’t think this kind of thing is uncommon. I am confessing to this sloppiness so that any startup in such a situation today does not spend time in personal recriminations but gets down to tackling the real challenge).

Over the next week, we built a list of outstanding issues and hosted this Issue Log on the web so that our clients and we had the same view of outstanding issues. It turned out that our wealth management product had more than one hundred outstanding issues across less than ten client installations.

Then came the second challenge: There was no programmer dedicated to support. To get the most crucial issues fixed, our support head would beg, borrow or steal programmers from product development or implementation. No programmers had been assigned to support because as a fast growing company, we had many new clients and a lot of demands for new features. It was also because support was not seen as a desirable place to be.

Assigning the second best programmer in the group to support with the assurance that he would be rotated out within a few months tackled the resources issue. With regular reviews we began to make a dent on our Issue Log. However, even after a few weeks, the perception in the minds of our clients did not change.

Conversations with clients revealed that our support team and the client disagreed about even such basics as the number of outstanding issues even though they worked on the same list. Our client would point out an outstanding issue and our team would insist that the issue had been closed because it was ‘just a communication issue.’

‘Just a communication issue.’ I wish I had a hundred rupees for every time someone has used this phrase.

It turned out that a significant proportion of the issues that bothered the clients were ‘just a communication issue’. The clients insisted that they were bugs. Our support team would tell them that actually it was not a bug and that the system was running as it should. Hence, they had closed the issue.

I have been on the other side of this kind of thing many times. Let me tell you of a recent example, which while being particularly frustrating, is unfortunately not unique.

Last year, I conducted a training program for a big consulting company. The program went well and I raised an invoice for my fees (Let us say it was 10,000 dollars). As it happens even with the most reputed names, my payment got delayed for a few weeks and I was advised by my contact to raise a ticket via email. Months of frustrating interactions followed.

Here is a brief retelling of one of these interactions:

My email, “Hi, My invoice number 1234 worth 10,000 dollars has not been paid.”

Their email “Your invoice worth 15,000 dollars was paid on March 10th. The issue is closed.”

The issue is closed. That sentence hurt me much more than the obvious fact that the reply was for a totally different invoice. There is no bigger aggravation in customer support than being misunderstood and then being told that your complaint has been addressed. I knew exactly why this had happened because our startup had once been guilty of the same mistake.

If you evaluate your customer support team on the number of issues they close, and you also give them the authority to close those issues, you are setting yourself up for unhappy customers. The support team begins to equate replying with resolving and closing. Once an email has been sent, the issue is marked as closed. Whether the customer agrees becomes almost incidental.

That was exactly what had happened with my invoice payment. The finance team had not even taken the time to understand my problem before closing the issue. They had not even checked the invoice number! The objective had become closing tickets rather than solving problems.

Large organisations can sometimes survive with processes like this because customers have little choice but to stay. Startups do not have that luxury. They survive on customer goodwill, referrals and reputation. For us, this kind of customer support was simply not an option.

We realised something that seems obvious in retrospect.

An issue is closed only when it is closed in the customer’s mind.

This insight led to one fundamental change in our support process.

Only the customer can close an issue.

Now, the support team had to ensure that they had actually understood what the client was saying. If the issue needed a code patch, they would send it to the client, get it installed on the test server, get a client person to test it and get the patch moved to the client server and get it tested again. Then, a support person would need to pursue the client to make sure that they closed the issue.

If the issue was ‘just a communication issue’ then the support had to resolve it in the customer’s mind and get them to close it.

Initially, the new process appeared to create more work for the support team. Within a few weeks, however, it was clear that it actually reduced their workload. When they took time to understand what the client was saying, they did not work on wrong fixes — something that was distressingly common earlier. When they clarified something, they ensured that the client understood the clarification and agreed that it was no longer an issue.

Something else happened that we had not anticipated. The new process changed not just our behaviour but the client’s as well.

Clients became much more thoughtful before raising an issue. A vaguely worded complaint now meant a support engineer calling them back to understand the problem before taking any action. If they reported a genuine bug, they knew that a fix would be delivered, they would have to test it on their test server, verify that it worked and then formally close the issue. Every issue they raised now created work for them as well. Since every operations team in the world is overloaded, they became much more careful about what they reported.

I used to tell our support head, “Client teams should be scared of you.” Not because she was rude or intimidating, but because they knew she would relentlessly pursue every issue until it was either resolved or withdrawn.

Our support head, Atiya, was a diminutive lady with a soft voice. I loved the irony that she should be the one to make clients nervous. She had one quality that made her perfect for this new customer support thinking. She was relentless.

In less than six months, the issue list for the product shrank from more than one hundred to three. It stayed below three for as long as we were running the company. But for me the best endorsement for our new approach came one day when I was sitting with the operations head of a private bank and Atiya happened to call him.

The head looked at his phone to see who was calling and said to me, “Yar aapki Atiya to piche pad jati hai. A formidable lady.”

What is one small change in thinking that transformed the outcome of a business situation for you?

This article is part of a series called Go beyond Puzzle solving. The article “The best problem solvers do not know which problems to solve” has gone viral.

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“What did the warehouse store?” I asked.

“Chemicals,” they replied.

“Which chemicals?”

They didn’t know.

They didn’t know how many chemicals were stored there. They didn’t know whether any of them required special handling. They didn’t know what accidents happened in such warehouses. They didn’t know what the warehouse operator worried about when he went to bed at night.

Yet they had a solution.

This essay is about why that happens. Especially so with analytically minded students.

I believe that this is because the students in our country are taught puzzle solving and not problem forming. Problem forming requires an immersion in the domain of the problem and it requires application of abductive reasoning. Both require skills that students don’t have. What is more, they don’t even know that they don’t have these skills. I should know — I was one such student.

I graduated from IIT Bombay a few decades ago. Since then, I have cofounded and exited a software product company. I have done many other things including writing about public policy, performing Improv comedy in front of large audiences and mentoring and training hundreds of professionals. What I am about to say on this topic is based on my own experience and from my discussions with other entrepreneurs and professionals. Most of all, it is based on how little I knew when I was a student and in my first few years of working.

Perhaps the most important thing I did not know was the difference between a puzzle and a problem.

The difference between a puzzle and a problem

The book Radical Uncertainty[1] tells us about puzzles — a puzzle is a well-defined problem with a single solution. Moreover, the puzzle has all the information needed to solve it. Puzzles can be very tough but you know that there is a solution and that there is only one solution and that you have complete information to find the solution. The Joint Entrance Exam (JEE) for example, has some really tough puzzles.

However, in working life you rarely come across puzzles. What you face are challenges which have to be broken down into problems. Problems that may or may not have a single solution. Also, you typically do not have all the information needed to solve them.

To illustrate this distinction between puzzles, challenges and problems, think of Rubik’s cube. Rubik’s cube is a classic puzzle. Even if you don’t know how to solve it right now, you can learn to do it. YouTube tutorials and some practice would ensure it.

Now, think of the challenge of launching a product like the Rubik’s cube [2].

If you had an idea for a puzzle such as Rubik’s cube, would you even know how to go about making it into a successful business? Which country would you launch it in? If in India, how would you sell? If Direct to Customer, how would you publicise it? Which material would you make it from? Where? In what quantity initially? What regulations would you need to abide by? And of course there is the overall challenge: would you make more money from selling this product than the cost you incur in making and selling it?

Trying out a solution to any of these problems would lead to a plethora of new problems. For example, you decide to make the first few batches of your product in China? In which province? In which factory? How will you ensure quality? What is the minimum quantity that the factory would have you order? How would it cost? Note that these questions cannot be answered in abstract. That is, you cannot sit with a pen and a piece of paper and answer all these questions.

The overall challenge can be tackled only by doing. No report on the market size and potential will tell you how many people will buy what you are selling. No conversation with industry experts will tell you what the cost of production will be for you. This is not to say that reports and conversations with industry experts are useless. It is to say that at best, they can give you hints. You are responsible for solving your problems. More importantly, you are responsible for forming the problems and choosing which problems to tackle first.

So why are some of the sharpest minds in our country not good at identifying which problems to solve?

Students have always solved puzzles set by others

If you have done well in academics, you probably worked hard at developing your problem solving skills. You may have spent years solving mathematics problems, physics problems, coding problems, case studies, and examination questions. Difficult problems, certainly. But there was one common feature: someone else had already defined the problem for you.

When students think about building a product in a new domain, they often carry this assumption with them. They implicitly believe that someone else — an expert — will define the problem and that their job is to solve it. A doctor will tell them which medical device is needed. An army officer will tell them exactly what should be built for the battlefield. The entrepreneur’s role, they imagine, is to solve the puzzle.

Unfortunately, reality does not work that way.

The first difficulty is that it is surprisingly hard to find truly knowledgeable practitioners. Many people speak with more confidence than knowledge. Also, fields evolve quickly, and even experts struggle to stay current.

The second difficulty is that practitioners are experts in their domains, not necessarily in technology. A doctor may understand a disease deeply but have little idea what modern sensors, software, AI, or robotics can do. An army officer may know the battlefield intimately but not the latest advances in drones, communications, or manufacturing. Their proposed solutions will naturally be constrained by what they already know.

The third difficulty is the most important one. Even excellent practitioners often cannot fully articulate what they know. A large part of valuable knowledge is tacit. People know more than they can explain.

Reality contains more than can be written down.

The warehouse operator knew things that the students did not know to ask. A doctor treating clubfoot patients knows things that may never appear in a medical textbook. A raddiwala understands flows of waste that no sustainability report fully captures.

This means that entrepreneurship is rarely about receiving a well-defined problem from an expert and then solving it. Instead, it is about collaborating with practitioners, observing reality, and gradually discovering which problems are worth solving.

This was not obvious to me when I started working.

Like many students, I assumed that most of what I needed to know had already been taught to me. There would be some workplace skills to learn, of course, but those seemed minor compared to the technical knowledge I had accumulated. Looking back, I laugh at how wrong I was.

The bad news is that there is far more to learn than you think.

The good news is exactly the same thing.

You need to learn new domains, new mental models, and new ways of thinking. Most importantly, you need to learn how to convert vague challenges into concrete problems.

One of the most useful tools for doing this is abductive reasoning.

You have been trained primarily in deductive reasoning: applying general rules to specific situations. Some of you may also have used inductive reasoning: drawing general conclusions from specific observations. Entrepreneurship often requires something different. It requires abductive reasoning — making the best possible inference from incomplete information.

In a difficult challenge, you form a problem, make your best guess, test it against reality, observe what happens, and then decide what to do next. The process is messy, iterative, and uncertain.

Fortunately, this skill can be developed.

I can point to four practices that help with problem formation: Finding Out More, Observing, Reaching Out, and Making. Together, they form the acronym FORM [3].

Finding out more

A few years ago, I was invited as an alumni examiner for the excellent Invent@IIT program at IIT Bombay. This program gets student teams to select a challenge and then build a prototype that addresses the challenge. I remember a team that had opted to do something for club footed kids.

Some babies are born with club foot. In this affliction, the baby’s foot turns inward. The standard of care, according to the students, included putting the foot of the child in a brace when they slept. Unfortunately, many kids could not sleep when their leg was in a brace because of its tightness. Also, the braces have to be frequently replaced as the child’s foot gradually straightened and that meant regular visits to the doctor for the replacement brace. These problems meant that compliance can be lower than ideal.

The student team had made a prototype that had sensors that could figure out when the kid had slept. Only then the motors in their brace would straighten the kid’s foot. The straightening would be just enough. Enough to be effective but not so much that the kid woke up. The motor system also meant that the brace did not need to be replaced as the baby’s foot got better. For an eight week program, making a working prototype was an unbelievable achievement.

My one line recommendation to the two young students — if they were thinking of taking the prototype to the market — was to become experts at club foot. Experts at a level that is better than 95% of doctors and also better than 50% specialists. This sounds daunting, I told them, but once they start doing it, they would realise that the bar I had set was too low.

This is how deep you may need to immerse yourself in a domain — especially a domain as narrow as a single disease– you should become as good as half the experts. Note that domain immersion is not the same as understanding the technology being used to tackle the challenge.

Let us take another example. You like drones. You are aware that drones have been used extensively in all three recent conflicts — US-Iran, India- Pakistan and Russia — Ukraine. You want to do something in this field. You should find out more about this field. But, how much more should you know? Enough to clear the Yogesh Upadhyaya test.

That is, you should know enough to be able to answer a set of questions from any curious and widely read non-specialist. So what would I ask you about drones?

I could begin by checking how much you know of the Russia Ukraine war. For instance, how many drones is each side using each month? How many of these are battery powered, how many Internal Combustion (IC) engines drones and how many are jet engine powered? How much is the scale difference in energy density between the best battery and petroleum fuels? What are fibre optic tethered drones and why are they used? Again, note that these questions are mainly about the domain of warfare not about technology although scientific and technical knowledge is tightly intertwined with the answers.

One of the challenges you will face as you seek more knowledge, is that you will get contradictory opinions, even from experts. Although, some experts have stronger opinions than understanding, other more genuine experts may contradict each other. This is especially so in new and emerging domains.

If this sounds troublesome, let me compound the problem. What you learn sitting on your phone will really be shaken up when you go and meet people. A lot of analytical people, find this step especially tough.

Reaching out

A young student approached me once. Her challenge: To have a more sustainable process for disposal of electronic and electrical appliances of households. I heard her out and then asked her what happened to this electronic and electrical waste currently? Not only did she not know, but also she did not know how she could know. The only answer she could think of was that she would search on the Internet.

When I asked her how her parents had been getting rid of their old electrical appliances, she replied that they had been selling them to raddiwala. Naturally, she did not know what the raddiwala did with them. When she realised that her most logical next step was to talk to a raddiwala on the campus, she was terrified and I could empathise.

In college, if someone had told me to go and talk to strangers, I would have been terrified too. I would have made all kinds of excuses rather than approach a stranger. I now know that my excuses were a way of not admitting that I was shy, afraid of rejection, very protective of my ego and in general terrified of failing. My younger self would rather not try something than fail.

If I could advise my younger self, I would tell him two things.

Get used to failure. You have to fail to do anything worthwhile. Use the reframe ‘I am not failing, I am learning from experience.’ I would also tell him that my fears were overblown. Most people will not refuse to talk to me. In fact, most people feel underappreciated and if you really listen to them, they will gladly talk to you for hours about what they do.

But you have to listen. I mean really listen. Can you?

I couldn’t. I was so desperate to impress people or win arguments that I would be formulating my answer in my mind and miss most of what the other person was saying. This is very common. I have taught listening for years now and it is my opinion that very few people listen. The listening becomes worse in stressful situations (such as meeting strangers and trying to understand something from them while trying to impress them).

I have two exercises for you to become a better listener. The first: go twenty four hours without giving anyone a suggestion. If that sounds easy, try forty eight hours or seventy two hours.

The second exercise is that in a normal conversation you silently notice the last 3–5 words the other person said before you reply. For example,

If someone says:

“I’ve been exhausted since Monday.”

Instead of jumping in with:

“Yeah, it has been crazy…”

your brain learns to stay with:

“…exhausted since Monday.”

That often leads to a much better response:

“Since Monday? What changed?”

Use it with shopkeepers, cab drivers, colleagues, family, anyone really.

A good sign you’re doing it right: people start saying, “Exactly,” or “Yes, that’s what I mean.”

A good practice in conversations when you have reached out to people working in the domain of your interest is not to ask your interlocutor to validate or invalidate your hypothesis. In other words, do not say to the other person something like, “I have this idea. What do you think of it?” This kind of question will narrow the conversation unnecessarily.

Let me give you an example from my policy work.

There was a school of thought that factories (and other workplaces) were not doing well because they couldn’t find enough skilled workers. My hypothesis was that most businesses knew how to train beginner employees and skills was not the biggest worry for most employers.

To test this hypothesis, I went around the country talking to business leaders. These leaders ranged from CEOs of companies that employed tens of thousands of people to small shops that may employ one person. I did not ask these people their opinion on skills of their prospective employees. Instead I asked them why weren’t they growing faster than they were.

My interlocutors talked for long periods of time about challenges facing their businesses. Almost always, they did not bring up skills of their beginner employees. I am not saying that skills of employees is not important for businesses. I am saying that these were not the top of mind for business leaders when they were thinking of what were constraints to their growth. I am pretty certain that the interviews would have been very different if I had started with skilling in my first question.

Reach out to people working in your domain and listen to them. If possible, meet them in their environment rather than online. This gives you chances to observe.

Observing

Let’s go back to our friends who want to make robots for warehouse. Their conversation with the warehouse operator was not their only source of knowledge. When they visited the warehouse they could have noticed many things. How many people did they see around? What were their ages? Did the warehouse workers look more or less prosperous than normal workers? Was the place neat and clean? Were there safety notices pasted around? How many trucks visited the place when they were there?

This kind of noticing can be practised almost anywhere. Let us go to your college canteen or to a chai tapri. Which are the most sold items there? How many are sold in a day? In which hours does this sale happen? Which is most profitable item? If you can answer two or more of the above questions, congratulations.

Now go and verify your answer. Note that verifying could mean talking to the guy running your canteen but that is not the only way. Also note that what you observe will not give you definitive knowledge. Being comfortable with this ambiguity is essential for learning abductive reasoning.

Experts will contradict each other. What you observe will not match with what people are telling you. And what people tell you may not match what you have read. This is not necessarily because people are lying to you — although that also can happen. It will happen that people genuinely disagree with each other.

Can you bring yourself to welcome all the anomalies that pop up?

Putting it together — that’s funny!

Isaac Asimov once said, “The most exciting phrase to hear in science, the one that heralds the most discoveries, is not ‘Eureka!’ (I found it!) but ‘That’s funny…’” I want you to get in the habit of welcoming this phrase.

We build mental models about the world. When someone says something, or if we see something, that violates our mental model, our mind says, “that’s funny.” Funny, as in ‘does not fit with what I know.’ At this point we have two choices.

We can ignore the anomalous information. Or we could do the hard work of verifying if the anomaly is widespread and not an isolated instance, and if the former, update our mental model. Illogical as it sounds, most of us choose the first option of ignoring the anomaly. This is because of a well-known psychological phenomenon — Cognitive Dissonance. It takes a lot of work to update our view of how the world works. It is much easier to reject, ignore, or rationalize away the conflicting data to keep our existing worldview comfortable.

Let us revisit this phenomenon with two sets of entrepreneurs we have already met.

First, take our friend who wanted to have a more sustainable way of disposing electrical waste. Maybe she goes and sits with a raddiwala in the evening when he is sorting through all that he has collected in the day. Maybe she notices that the raddiwala is very rough while dismantling the plastic casing and the electronics of a fan but he keeps the motor aside with a bit more care. She notices this and asks why and gets to understand that that the most valuable part in the fan is the copper coiling in the motor. This realisation updates her mental model about waste and sustainability. Perhaps she also realises that the uneducated raddiwalas are not doing as bad a job as she thought.

Let’s now walk around the warehouse with our robotics friends. Do they see many safety notices around the warehouse? Do the workers appear young and a bit unsure? In an open ended conversation, does the warehouse operator talk about safety? If answer to any of these questions is yes, it is possible that the two students would need to update their mental model. There could be a demand for a robotics solution in this particular warehouse not because robots are cheaper but because, at least for some specific tasks, they could be safer. I don’t know whether those students will end up building a robot. I hope they do. But I hope they spend at least as much time understanding warehouses as they spend understanding robots.

Updating our mental models is difficult. We are not psychologically built to let go of our beliefs. Reality can tell us what is wrong with our mental models but we don’t listen and we don’t notice. You see this phenomenon all the time in casual discussions, especially about politics. Our beliefs about subjects such as politics do not matter much in our work life. However, our mental models about our own domain are critical.

A product manager needs to understand her customers or she would run the product into the ground. A professional sportsman needs to clearly understand his own strengths or weaknesses and if he does not, then the scoreboard reminds him. An entrepreneur has to contend with reality more than perhaps any other professional.

But how can you develop your skills of contending with reality when you are not an entrepreneur or a product manager or a top tier sportsperson?

You make.

Making (or doing)

Make something. Anything. And then make something else.

For an example of making, let me go to the ‘boring’ field of accounting. The professor who taught us financial accounting in the first term of my management course was a terror. He was known to set papers that really tested whether you had understood the concepts of accounting. The most consequential part of his course for me was an assignment. We had to make, by hand, daily accounts for a month for a fictious chai shop. The assignment had stringent rules. For example, we had to have a new type of accounting entry every day. These rules plus the professor’s reputation meant that most of us did not coast. We had to work hard on making the accounts on many sheets of A4 paper. I hated the assignment when I was doing it. I still love what it gave me — understanding of accounting from first principles.

I am a big proponent of learning by doing. However, for many of us, it can be very painful do something in a field for the first time. For almost all of us, it is extremely rewarding after we have done it.

No amount of reading about drones will teach you as much as building even the simplest prototype will teach you. Consider the Tether Management System (TMS) of a tethered drone. Unlike a normal drone, a tethered drones is connected to a base station by a cable that may carry power and communication signals. This eliminates some challenges such as battery life and electronic jamming, but introduces entirely new ones. How do you stop the cable from tangling? How do you ensure that it unwinds smoothly when the drone climbs and rewinds when it descends? How do you prevent the drone from exceeding the tether limit? How do you ensure continuous power and communication even as the cable twists, bends and experiences tension?

Notice what has happened. A project that looked straightforward has suddenly become a collection of dozens of smaller problems. Building even a rudimentary TMS will force you to learn about motors, sensors, pulleys, control systems, mechanical design and failure modes. More importantly, it will teach you something that no lecture can: reality always has more constraints than you imagined.

In such situations, I usually begin with railing against reality. I crib about how unfair reality is and generally have a very adversarial relationship with it. Gradually, I start grudgingly accepting it. In a few cases, this acceptance becomes less and less grudging till I am able to flow with it.

Making makes you wrestle with reality (and in some cases flow with it) and teaches you what lectures and exams do not. I would recommend that you make even if you are not sure that you want to be an entrepreneur right now. If you put your efforts to make at the top of your CV and practice talking about it, I guarantee you that it will help you get the job you want.

In fact, all of what I have suggested — Finding, Observing, Reaching out and Making (FORM)– will help you get a job and do well in it. That is, these skills are useful even if you don’t want to be an entrepreneur right now.

However, I suggest that you don’t practice FORM for utilitarian reasons such as getting a job.

Curiosity beyond utility

It is natural for a young person to be focused on the next thing. Students are naturally focused on getting a good first job. People in their first job are focused on getting the next one. Almost all young people are focused on finding their first (or next) life partner. Unfortunately, these very natural priorities can act as blinkers against FORM.

You may ask, why should I read about war in Ukraine if I want to make robots for logistics? Or why should I build a spool for Fibre Optic drones if my priority is to get a job in an algorithmic trading firm? These are valid questions and the utilitarian answer is that these activities would not help you, at least in the short term.

However, while I respect utilitarianism, I find that a strictly utilitarian way of living is incredibly boring. I get in conversations with taxi drivers, old relatives and fellow passengers just because I am curious. I read up stuff, meet people and write articles about all kinds of subjects because I love learning new things. I could argue that my multiple skills help me make money and get respect, which they do. But that is not why I do it. I do it because I find it interesting.

Paul Graham, the founder of Y Combinator suggests the same thing. Chase what is interesting for you.

Stay curious. Read widely. Talk to people. Notice anomalies. Make things.

The goal is not merely to become a better entrepreneur.

The goal is to develop a richer understanding of how the world actually works because it is interesting.

Everything else tends to follow from there.

School rewards people for solving puzzles. Life rewards people for finding them.

[1] The book Radical Uncertainty calls it puzzles and mysteries. I have changed mysteries to problems because the word mystery seems to mislead people.

[2] The example of Rubik’s cube is not mine. I first saw it in this LinkedIn post.

[3] A friend of mine, after hearing an early version of this essay, remarked that FORM sounded a lot like Design Thinking. Others may notice similarities with Lean Start-up, Steve Blank’s “Get Out of the Building”, ethnography, or other approaches to innovation. Those similarities do not surprise me. People trying to understand how humans learn under conditions of uncertainty often arrive at comparable ideas.

Also, FORM is not intended to be a novel framework. My goal is much more modest. I am trying to explain, especially to analytical students, why identifying worthwhile problems is often harder than solving them, and how one might go about developing that skill. If some of the examples in this essay make those ideas more concrete and actionable, it will have achieved its purpose.

Edit: Typos corrected. Thanks Rajnish.

This article is part of a series called Go beyond Puzzle solving. “How to spot a bad expert” in this series has received a lot of attention.

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1. The IEA reported that in 2024 China consumed 30% more coal than the rest of the world put together!

2. China also installs a lot of wind and solar power capacity!

So what is China? A Climate Change warrior or a coal guzzler?

Questions like these will come up only if you think that there is only one factor that determines the energy policies of a country.

3. Before the Strait of Harmuz, there was the Strait of Malacca! China policy makers understood many decades back that a shipping blockage could put the country in dire straits.

A country’s policymakers have to think of many factors when thinking of energy. We believe that energy sovereignty and cost of energy rank the highest for China.

4. Nothing demonstrates the importance of energy sovereignty, over climate change action, for China more than its Coal to Chemicals industry.

5. It is because of this industry that China is not as worried about the war in the gulf as it could be. This is because its dependence on imported fossil fuels for crucial materials like Ammonia is low.

6. China’s wariness about depending on imported fuels is also clear in the share of power generation that comes from Natural Gas.

Remember, Natural gas based power plants are the most flexible (after hydropower) in responding to the variable solar and wind plants. In spite of that, the NG share in China’s electricity grid is low. This is another example of energy sovereignty being priority over climate action.

7. Other than energy sovereignty, low cost of energy is a key priority for China. It uses coal in manufacturing of a range of basic materials. We show here Silicon for solar cells as an example to illustrate the importance of the cost of energy.

8. China has used low cost of energy to dominate a range of raw materials.

This domination in raw materials has helped it dominate a range of final products too such as Solar cells, Batteries and EVs.

9. China also installs a lot of nuclear power plants. More than any other country in the world. However, the projected nuclear additions pale in comparison to projected thermal additions. We believe that safety concerns are the main reason why nuclear installations are so ‘low’ compared to thermal.

Even with ‘only’ 6GW installations a year, China is a leader in Nuclear tech and has more or less the whole technology in its control.

10. Without energy technology sovereignty, there is no energy sovereignty and China has managed to develop tremendous capabilities across a range of technologies.

The country has also leveraged these capabilities in the export market.

11. China’s concerns about energy sovereignty, low cost, technology leadership and climate change come together in its rapid electrification. This rapid electrification has also helped it become a leader in technologies such as Electric Vehicles and Heat Pumps, as well as in electrifying several industrial processes.

However, there are indications that the pace of electrification will slow down a lot going forward, as further electrification would require replacing coal in industrial processes that require higher temperatures, which is a significantly more challenging task.

12. China’s renewable push has been helped by its geography. The coal deposits are in the North and West. Those regions also have a lot of land as well as a lot of sun and wind. The transmission infrastructure that was put up as ‘air coal transport corridor’ helps in transmitting sun and wind over wire too. This reduces one of the factors that cause solar and wind to increase system costs.

13. Conclusion: China’s policy is not climate change driven. It is a Policy of Pragmatism.

The detailed arguments and sources backing this short piece can be found in our article, Decoding China’s Energy policy. Feel free to share this article or any or all of the images.

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Then Arjuna steps forward. Asked the same question, he replies that he can see only the eye of the bird. Dronacharya allows him to shoot and the rest as they say, is Itihaas.

I hope our policymakers keep the lesson of this story in mind. Too often, decision-makers and implementers lose sight of the real objective and end up focusing on a proxy instead. The goal of industrial policy is more factories that are actually up and running, not more land sold in the name of future factories.

A few years ago, I travelled across the country speaking to factory owners, and there were some depressingly common themes in both their stories and what I could see for myself. In many parts of India, the approach roads to industrial areas were among the worst in the vicinity. I call this “rolling the mud carpet for industry.”

This visible sign of neglect was reinforced by what factory owners told me. Owners in well-established industrial parks said that when they began thinking about expanding their businesses, they were not met with support, but with hostility — or at best, indifference. This was from park authorities and other relevant officials. For example, a factory owner told me that the electricity distribution company officer would not even provide the form needed to apply for a new power connection for expansion.

Some of these problems may well be reduced if the promised “plug-and-play” model and single-window clearances are genuinely implemented in BHAVYA parks. But even then, the core problem will remain unless it is addressed explicitly. Too often, the real target of those in charge is the sale (or long-term lease) of land, not whether factories actually begin production. The problem can get compounded if the park is supposed to sell the land at a ‘cost plus’ model which can make this land much more expensive than that in surrounding areas.

This focus on land disposal is reinforced by the incentives of many buyers. A significant share of industrial land is bought not for immediate production, but for speculation. Entrepreneurs and other buyers may acquire plots in the hope that, if the park develops well, they will later be able to sell the land at a profit. Manufacturers have an additional incentive: banks often prefer promoter-owned land as collateral when lending to them.

Of course, not every vacant plot in an industrial park is vacant because the business had no intention of producing. An entrepreneur may buy land with the intention to set up a factory and then face a reversal of fortune that forces him to put those plans on hold. Or, a business may purchase two adjacent plots even though it intends to build immediately on only one of them, keeping the second for a future expansion.

While it may not always be obvious why a particular plot in an industrial park remains vacant, one thing is clear: incentives matter. Mumbai readers can see this for themselves with a visit to Millennium Business Park (MBP). MBP is a software park rather than an industrial park, but it suffers from some of the same underlying problems that plague industrial estates.

MBP has large vacant plots — an especially striking sight in a city famous for land scarcity and at a time when demand for office space should, in principle, be supported by the growth of Global Capability Centres (GCCs). More tellingly, even many of the built-up offices and galas remain locked. Decades after launch, the underutilisation of such prime real estate is hard to miss. It is accompanied by an environment that sends a simple message: you are not welcome here.

In many buildings, even basic infrastructure is unreliable — lifts often do not work. MBP’s website does not appear in the first few pages of a Google search, and it is not clear whether it has a functional online presence at all. Conversations with companies operating within the park reveal deeper, more serious shortcomings. For instance, for many years, the park lacked even basic essentials such as reliable backup power and high-capacity internet.

So how can the government ensure that most of the BHAVYA parks do not become like MBP or worse? It should make sure that success, for all those involved, is not measured by land sales but by the beginning of production in a factory. The latter could be measured by proxies such as electricity consumption. Capable and empowered officers would then make sure that they remove all obstacles in the way of setting up factories and that they do not attract speculators in the first place.

Let Dronacharya specify what the target is. Arjuns will do the rest.

_________________

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You probably know that China generates more renewable electricity than any other country in the world. But did you know that it also consumes more coal than all other countries combined? Sensationalist headlines — often accompanied by striking images of solar PV panels — can be misleading. Yes, China adds vast amounts of Renewable Energy (RE) capacity every year. But it also adds and uses large amounts of everything in its energy system and this everything includes humongous amounts of coal. There are very good reasons why it does this. Analysis that focuses narrowly on renewables misses the depth of Chinese thinking on energy. This piece aims to correct that imbalance. We show that Availability, Reliability and Affordability are the primary objectives of China’s energy policy, and that clean energy is encouraged — but only so far as it does not undermine these priorities.

China’s energy policy is often interpreted as a climate strategy, but it is better understood as a national energy strategy.

China’s energy system is vast, rapidly evolving, and documented by datasets that do not always agree. So the analysis that follows relies on multiple sources to capture the overall structure rather than every precise figure. Please see footnotes [1] and [2] for important information relating to the data source.

Coal is the bedrock of China’s energy policy, and that is where we begin.

Coal — The ‘ballast’

Ballast, n, heavy material placed in a ship or hot-air balloon to keep it steady

Take a look at the following chart from International Energy Agency [1]

This is the data from the chart above

Note that the increase in coal consumption is 10.4 times the increase in wind and solar.

This comparison, however, is subject to the so-called primary energy fallacy. Only a fraction of the energy content of coal is converted into useful electricity, whereas electricity generated by wind and solar is almost entirely usable, aside from transmission losses. Even after correcting for the primary energy fallacy — by assuming a generous 33% conversion efficiency for coal — the increase in useful energy from coal remains more than three times the increase from wind and solar.

China has indeed added vast quantities of renewable energy over the past two decades — but it has added multiple times that amount in coal use. It is no surprise, then, that coal made up more than 60% of China’s energy system in 2023 [3].

No wonder Chinese policy makers have often described coal as the ballast of their energy system.

Is coal marginal in electricity production?

You might ask: what about electricity? China manufactures for the world and maybe all this coal is used in industrial processes? Surely most of China’s electricity now comes from renewables? The numbers answer the question emphatically.

Perhaps coal’s dominance in electricity generation is merely a historical artifact, and thermal power is now in decline? It is not.

The increase in generation from coal fired plants between 2000 and 2023 is 3.4 times the total Solar (PV) and wind generation. This is when presumably the coal fired power plants have to back down whenever the wind and solar plants are generating electricity. Even between 2015 and 2023, the increased electricity generation from coal is 1.4 x than the increased generation from Wind and solar. Only when we reduce the comparison period to the last 2–3 years we see that the increase in generation from wind and solar was more than the increase from coal. In fact, in 2025, thermal power generation actually saw a decline in China.

Well, perhaps this is all in the past and the recent reductions in the cost of solar modules will mean that all new capacity addition in China is Solar PV or Wind? Perhaps not. In 2024, China began the construction of 94.5 GW of new thermal capacity (this accounted for 93% of global construction starts for coal power). Also, as we detail later, the growth of Wind and Solar is expected to slow down as the procurement rules have been made less attractive. In the first half of 2025, China brought a capacity of 21 GW of thermal capacity online and the full year commissioning was expected to be 80 GW. To put this in perspective, India added 20GW of coal capacity each year in 2015 and 2016, and slowed down to cumulatively add only 38GW during 2017 to 2025; In other words, China was expected to bring more thermal capacity online in 2025 than India did in the last decade.

China’s ability to mine coal and use it

China consumed over 4,953 MT of coal in 2024 — more than the rest of the world combined. The total global demand in the same year was 8, 805 MT. This scale is enabled by two capabilities: the ability to mine coal in vast quantities, and the industrial capacity to convert it into useful energy. The fact that China could begin construction of 95 GW of thermal capacity in 2024 reflects not just resource availability, but also its depth in manufacturing power generation equipment, and project execution capability. The year 2024 was part of a longer trend.

Here is the half yearly change in thermal power plant permitting, construction start and commissioning for the last ten years.

Note that the time periods in the chart above are half yearly.

China has commissioned at least 30 GW of coal capacity almost every year since 2015. After a brief pause, the permitting of new plants and the start or restart of construction have picked up again. According to IEA, this was because in 2021 there were power shortages and subsequently over 200 GW of new thermal capacity was approved in 2022–23. As noted earlier, these additions are several times larger than what countries such as the United States or India have been able to build in recent years.

China’s strength in thermal power lies not only in the scale of deployment but also in the technical performance of its plants. In 2022, for example, China commissioned a 1.35 GW unit at Pingshan. According to this report, the plant was independently assessed by Siemens and Steinmüller to have an efficiency of about 49% — significantly higher than the roughly 35–40% efficiency typical of conventional coal plants. Higher efficiency means that less coal is required to generate each unit of electricity, and therefore lower CO₂ emissions per unit of power produced.

We have very little information on the cost of thermal power plants in China and would love to see an analysis on the same.

Coal use in China also extends well beyond electricity generation. Non-power uses — 1,859 MT in 2025 as per IEA — exceeds total coal consumption in every other country. As we will see later, the use of coal as a feedstock to produce oil, gas, and chemicals is approaching — if not already exceeding — total coal consumption in the United States and Europe. This, too, is made possible by China’s technical capabilities.

Coal use in China has not increased uniformly across sectors. Consumption has declined in some areas, driven by the electrification of industry and by reduced output in sectors such as cement, as well as a shift away from coal in space heating. We return to these trends in the section on electrification.

In contrast, coal use in steel remains high, as the vast majority of production continues to rely on blast furnaces. Coal consumption in the production of basic materials has also remained strong and is a key factor behind China’s competitiveness in these industries. We examine this more closely in the section on cost.

Perhaps the most important factor in the use of coal is that policymakers and official discourse treat coal as a strategic resource rather than a legacy fuel.

Policy makers and media respect coal

For years, Chinese policymakers and official media have consistently described coal as the ʻballast’ of the energy system — an essential foundation for ensuring energy security. Coal provides energy security because only 9.9% of total coal supply is imported (most of it is coking coal because China does not mine sufficient quantities of coking coal). Incidentally, most of these imports come from Mongolia and Russia.

In spite of the high reliance on coal, many commentators believe that China is at the forefront of “fight against climate change’’. Why is that? People — especially commentators — have difficulty in dealing with multifactor complexity. They deal with this difficulty by reducing this complexity to one factor. Analysts who see the world through the glasses of Climate Change especially, have trouble believing that there is any other consideration.

Decision makers on the other hand, have to deal with the multifactor world they live in.

It is complicated — Factors that determine a country’s energy policy

Energy sovereignty

In 2003, the then Chinese President Hu Jintato, coined the phrase ‘Malacca dilemma’. In its narrow sense, the phrase referred to China’s vulnerability arising from the fact that a large share of its energy imports (mainly crude oil) passed through the Strait of Malacca — a narrow chokepoint that could be blocked by a hostile power. More broadly, the fact that China had to depend a lot on one source — Middle East — and one sea route for its vital energy imports, was seen as a major national security risk.

This concern was not without historical context. In World War II, the United States froze oil supplies to Japan well before the attack on Pearl Harbor — fully aware that Japan depended almost entirely on imported oil. The lesson was clear: import dependence for fuel (or food) is a strategic disadvantage.

In recent times, the United States has urged India to stop purchase of Russian oil, even as it continued its own diplomatic and commercial engagements. The US has attacked Iran twice in the last twelve months and has killed its supreme leader. With the former president of Venezuela in the custody of the US, and that country surrounded by the US, most of the countries with significant oil reserves are now under US influence. Decision makers in China must be grateful for the prescience of Hu Jintao.

Incidentally, lack of energy sovereignty may not always manifest itself in something as drastic as total unavailability of energy. Much more common is the fact that the price of energy can increase very sharply. The US attack on Iran for example, has led to significantly higher oil and natural gas prices for all importers.

Dependence on imports for essentials such as food or fuel creates strategic vulnerability and reducing that vulnerability is a core responsibility of national leadership. As Tim Marshall observes in Prisoners of Geography,

“All great nations spend peacetime preparing for the day war breaks out.”

The Chinese leadership has used coal to mitigate threats to its economic sovereignty but energy sovereignty is not the only variable in their decision making,

Energy has many different facets

Unreliability arising from geopolitical risk is not the only factor in any country’s energy policy. Some of the others are,

• Unreliability arising from intermittency of technologies like wind and solar.
• Cost of energy — High cost of energy impacts everything. Energy sources are not just any other commodities. Their cost will flow into everything -food, transport and manufactured goods. A high cost of energy can also put strain on government finances as it has done in many states in India and in many countries in Europe. The cost of energy can be the most important factor in many industries and we will explore this later in this piece.
• Pollution — Energy sources can be polluting, especially coal. Pollution concerns can arise not only from thermal power plants but also from direct burning of coal for space heating and cooking and from its use in industries.
• Climate change mitigation - Countries the world over have pledged to reduce or at least moderate the growth of their Carbon emissions. China is one of them.
• Balanced development - China’s population centers are towards the East. The West is sparsely populated and energy rich but does not have as many employment opportunities. Developing the Western part of the country is a stated objective of the policy makers.
• Energy technologies proficiency — Deriving useful energy from sunlight or Uranium or fossil fuels requires technical intervention (i.e. machines such as panels, reactors, boilers, turbines, generators, etc). A society that can make these machines quickly, cheaply and efficiently, is going to have an advantage over others. Technology independence is an essential part of energy independence. A very relevant consequence of such proficiency can be export market revenues.

Tradeoffs and symbiosis

These factors can involve trade-offs. Most obviously, expanding wind and solar — key climate mitigation technologies — can reduce grid reliability and raise system costs as we have explained in our peer reviewed paper here. At the same time, some measures serve multiple objectives. For example, many of China’s large wind and solar bases are located in the western half of the country, supporting both decarbonisation and regional development. In other cases, policies are symbiotic: transmission lines built to move coal power eastward are now also used extensively to carry wind and solar generation.

For China, coal does not just tick the energy sovereignty box. It also checks the low cost box. Let us look at a case study to see how cheap (and reliable) energy gives the country an edge in manufacturing.

The pricelessness of cheap energy — a case study

Cheap energy can make or break an industry. Firms that secure energy at significantly lower costs than their competitors can gain advantages that are difficult — sometimes impossible — to overcome. One of the clearest examples of this dynamic in China comes, ironically, from solar Photovoltaic (PV) manufacturing. We say ‘ironically” because the cheap energy underpinning this industry largely comes from coal. Let’s begin by taking a brief look at how solar PV cells are made.

The life of a PV cell begins in a quartz (sand) mine. Quartz crystals of the required purity and size are smelted in furnaces using coking coal and wood chips, at temperatures that can reach 1,800°C. This process yields silicon that is 98–99% pure, which is then subjected to the Siemens process. In this process the silicon is ground into powder, mixed with chemicals and distilled to form very high-purity polysilicon. The polysilicon is subsequently melted in an ultra-pure quartz crucible using the Czochralski (CZ) process, which rearranges its internal crystal structure. The resulting ingots are sliced into wafers and eventually assembled into modules. Every step in this chain is extremely energy-intensive.

As Vaclav Smil has noted, producing a tonne of polycrystalline silicon requires roughly 3,000 times more energy than producing a tonne of cement — an industry already known for its high energy intensity. Seaver Wang of the Breakthrough Institute — a US based think tank that conducts research on energy systems, climate policy, and emerging industrial technologies — estimates that around 60,000 units of electricity are required to produce one tonne of silicon. By comparison, aluminium — often described as “congealed electricity” — requires about 12,000 units per tonne. So, for the production to be competitive, electricity must be cheap.

For manufacturers of such energy-intensive products to remain competitive, electricity must also be reliable. A high capital cost means that a lot of money is lost any time the machine is sitting idle. Continuous operations are also technically unavoidable because any interruption can result in equipment damage. Low-cost power alone is insufficient; interruptions can destroy output and equipment.

To ensure reliable and inexpensive electricity for silicon producers, China developed industrial parks for silicon production adjacent to coalfields in regions such as Xinjiang and Inner Mongolia. A report by the Breakthrough Institute documents — using satellite imagery — how industrial clusters located next to coal mines produce silicon ingots alongside aluminium and glass, both of which are also energy-intensive materials.

To be clear, this is not an argument that China’s success in the solar PV industry can be explained solely by access to cheap and reliable coal-based electricity. As data from the same Breakthrough Institute report shows, the sharp decline in solar module prices over the past decade was driven largely by cost reductions in cell and module assembly, stages where electricity costs are relatively less important. Moreover, these cost declines were observed globally, not just in China. These cost reductions were probably driven by the fierce competition amongst the Chinese manufacturers — a competition that has left a lot of them badly bruised.

Even so, there is little doubt that access to exceptionally low-cost energy played a decisive role in undercutting global competitors. It is worth quoting at length from the Breakthrough Institute report, which draws on analysis by the International Energy Agency (IEA):

“A recent IEA report on the solar manufacturing sector assessed electricity prices in the XUAR to be around $70/MWh, almost 30% lower than the global average industrial electricity price (Figure 3). Relative to electricity prices prior to Russia’s invasion of Ukraine, the IEA determined Xinjiang’s electricity rates were approximately one-third that of rates in Germany, where the German firm Wacker Chemie is one of the only major international solar-grade polysilicon manufacturers outside of China (ranked fourth in production capacity in 2022).

However, the IEA’s assessment of XUAR electricity prices of $70/MWh is likely a significant over- estimate. Recently published regulated pricing for large industrial customers in the XUAR lists rates that average $48-$58/MWh for time-of-day electricity sales. Most solar-grade polysilicon production and metallurgical-grade silicon production also rely primarily upon dedicated on-site coal-fired power plants that directly serve the industrial facilities, as opposed to electricity purchased from the grid. These may offer functionally cheaper power. Additionally, posted electricity rates may not account for additional targeted direct subsidies.”

Taken together, these factors help explain how Chinese producers were able to achieve cost levels that proved devastating for competitors operating in higher-cost energy environments.

The advantage of low-cost energy neither begins nor ends with silicon PV manufacturing. Aluminium or ‘congealed electricity’ needs cheap and reliable electricity. Cheap Aluminium, in turn, is the foundation of many other industries. Seaver Wang and others of the Breakthrough Institute argue that cheap and reliable electricity has been a major factor behind China’s dominance in energy-intensive materials such as magnesium and synthetic graphite too. Control over these upstream materials, in turn, gives China a decisive advantage in downstream industries — including batteries, and by extension electric vehicles.

China has used this decisive advantage extensively. According to a Reuters report, China has shipped nearly a $1 trillion worth of batteries, solar components, electric vehicles and wind power systems since 2018. Incidentally, this would be the same order of magnitude as crude oil imports in the same period.

While it is beyond the scope of this article to carry out a comprehensive analysis of coal and electricity pricing in China, we know from pronouncements, both from policy makers and from media, that pricing of coal is given a lot of importance in the country.

How is coal priced in China?

It is difficult to determine the price of coal paid by electricity producers and industrial users in China. What is clear, however, is that the government plays a significant role in shaping coal prices. As the National Development and Reform Commission (NDRC) noted in its report to the First Session of the 14th National People’s Congress in March 2023:

“We created long-term mechanisms for coal price regulation and oversight, kept coal prices within an appropriate range, actively responded to the sharp rise in international oil and gas prices, and guaranteed stable supply and prices for household electricity and gas.”

The pricing of coal by the miners is not everything. People familiar with energy policies in India would know that duties, taxes and cess can double the price at the pithead itself. Transportation charges by railways could take the total price 4–5 times the pit head price. Our very preliminary assessment is that the taxes are lower. The logistics of transferring coal from the North-West are complex and hence put a “significant strain on the country’s transport infrastructure” as per IEA. Consequently, most new thermal power plants are being made near the mines in the North and the West of the country removing the need for long distance transport.

We would love to see a comprehensive analysis of coal and electricity prices in China and of taxes and transportation charges.

China’s ability to mine and use coal gives it a measure of energy sovereignty and access to cheap, reliable energy. The same concerns — cost, reliability, and import dependence — also shape China’s approach to oil and natural gas.

Oil and Natural Gas

Petroleum based products made up 18.3% of final energy consumption of China in 2023. Transport consumes about 49% of these products, while non-energy uses — such as petrochemicals — account for roughly 29%. Only 27.5 % of the crude used was extracted domestically; China’s oil production has remained broadly flat for nearly two decades.

Natural Gas made up 7.9% of China’s energy supply in 2023. In 2021 China became the world’s largest importer of Liquified Natural Gas (LNG). Gas consumption is dominated by industrial use, followed by city gas, with only about 10% used for electricity generation.

Faced with high import dependence, China has sought both to moderate demand for petroleum products and natural gas and to diversify supply sources and transportation routes. We begin by examining the demand-side measures that China has adopted.

Just Stop Oil

The most visible shift away from petroleum products in China has been the rapid adoption of electric vehicles (EVs). This transition has been enabled by China’s leadership in battery manufacturing, which has also spilled over into adjacent sectors such as drones. This pattern recurs repeatedly in China’s energy transition: energy policy reinforces manufacturing competitiveness, and manufacturing scale, in turn, strengthens energy strategy. China has exploited such virtuous cycles with notable consistency.

Another measure on the demand side has been to push for Heat Pumps. Heat pumps are electricity-powered devices that move heat from one place to another, much like a refrigerator operating in reverse. They are significantly more efficient than conventional furnaces and offer substantial benefits in terms of local air pollution. China is both the world’s largest producer and the largest market for heat pumps: in 2023, China accounted for more than one-quarter of global heat pump sales and was the single largest market for heat pumps used in buildings. We note that in the case of Heat pumps, China has, at least partly, substituted direct coal based heating with electricity (partly powered by coal). This substitution, in addition to efficiency benefits, would have reduced local pollution.

China generates only 3% of electricity from natural gas. This is striking because flexible gas-fired generation is widely regarded as the best complement to the intermittency of wind and solar and China has the world’s largest installed capacity of wind and solar power. The contrast with the United States is stark where gas accounts for 42% of electricity generation. Why the difference? We believe it is because China wanted to keep its imports of natural gas to a minimum. Incidentally, with increased domestic production, China now has 31 GW of Gas fired capacity under construction.

Perhaps the most revealing Chinese initiative aimed at reducing dependence on imported oil and gas is its large-scale push to convert coal into chemicals, oil and gas. There are different estimates about how much coal is used in such processes. According to Reuters, existing facilities — concentrated mainly in north-western China — already consume around 276 Million tonnes of coal with the expectation that the amount will double in the next five years. A report from Bloomberg cites IEA estimates of 380 million tonnes used in the coal to chemicals industry. Most reports though agree that this figure is set to increase and some even suggest that the coal used in coal to chemicals would cross 500 MT soon.

In any case, the amount of coal converted to chemicals, oil and gas is already nearly equal or more than coal burnt in the US or Europe.

As per Reuters, the fastest-growing segment is coal-to-gas, with planned output expected to substitute nearly one-fifth of China’s LNG imports, at costs projected to fall between LNG prices and those of piped gas. IEA reports that “The country’s methanol and ammonia outputs are predominantly coal-based, with around 85% of production relying on coal rather than natural gas.” Here is the breadth of products made from coal as per the same report.

More than any other programme, the coal to chemicals industry of China underscores that the primary driver of China’s energy policy is energy sovereignty rather than climate considerations; as a Reuters report notes, “coal-to-gas projects emit nearly three times as much carbon dioxide during conversion as is released when the gas is burned.” We must note however, that Chinese scientists have claimed that they have significantly improved the efficiencies of processes involved and hence have reduced the carbon intensities of these processes.

We also note that the Chinese concerns about risks arising from a lack of energy sovereignty are not misplaced. As the Bloomberg report notes,

“Fittingly, the US last week told at least one American exporter of a petrochemical feedstock called ethane that it needs to apply for export licenses going forward if it plans to ship it into China. Washington said the flows “pose an unacceptable risk of use in or diversion to a ‘military end use’ in China.” Last year, China accounted for nearly 50% of US ethane exports.”

China not only reduces the use of imported Hydrocarbons as much as it can, it also diversifies where it gets its oil and gas from.

Diversified Supply

China has systematically sought to diversify its sources of crude oil. According to the U.S. Energy Information Administration (EIA), Russia was China’s largest crude oil supplier in 2024, followed by Saudi Arabia and Malaysia. The EIA also argues that a significant share of China’s imports from Malaysia may in fact be sanctioned Iranian oil that has been re-routed. This assessment seems plausible: China’s reported imports from Malaysia — around 1.4 million barrels per day — far exceed Malaysia’s domestic crude production of roughly 0.6 million barrels per day.

China’s partnership with Russia in the Hydrocarbons sector began in earnest in 2014. As Daniel Yergin notes in The New Map, Western sanctions imposed after Russia’s annexation of Crimea fundamentally altered Moscow’s calculus. Prior to 2014, Russia had been reluctant to accept Chinese investment in its oil and gas fields; sanctions changed that stance and accelerated bilateral cooperation.

The increased urgency of negotiations between the two countries culminated in a 30-year, roughly $400 billion deal. China also committed $45 billion in financing for the Power of Siberia pipeline, a 1,300-mile project linking Russian gas fields to the Chinese market. This was followed by additional large-scale involvement, including Chinese lenders providing $12 billion in financing for the Yamal Peninsula gas project. We don’t know the price at which China gets this oil and gas from Russia. For that matter the price at which China gets oil from Malaysia / Iran. However, we would be surprised if it emerges that China did not get a discount on benchmark prices.

For China, Russia offers not only a hydrocarbon supplier relatively insulated from U.S. pressure, but also supplies that can reach China via overland pipelines and, increasingly, the Northern Sea Route, reducing exposure to maritime chokepoints.

In addition to the Northern Sea Route, China has at least two initiatives to reduce its vulnerability to the Malacca strait. They are the ports it has built in Myanmar and Gwadar in Pakistan. These are a part of its Belt and Road initiative and would theoretically allow different sea routes for import of Oil.

If oil imports via the Northern Sea Route remain limited, it is largely because China has yet to overcome the associated logistical challenges. This constraint does not apply as much to natural gas.

A substantial share of China’s gas imports arrive via pipelines, significantly reducing exposure to maritime chokepoints. At present, four major pipeline corridors feed gas into China. Three lines from Central Asia bring gas primarily from Turkmenistan, with additional volumes sourced from Kazakhstan and Uzbekistan. A fourth pipeline is currently under negotiation, further strengthening China’s overland gas supply network. The Myanmar-China Gas Pipeline connects the western coast of Myanmar to China’s Yunnan Province and began operating in 2013 although it does not transport significant volumes. The Power of Siberia 1 and 2 pipelines deliver gas from Russia’s Siberian fields to northeast China. There is also the Far East pipeline from the same country. A detailed description of China’s gas supplies can be found here.

China’s main thrust to reduce import dependence on imported natural gas is to increase its own production. The domestic production of Natural Gas has steadily increased in the last decade. The production includes both conventional and unconventional gas.

This domestic production and demand side measures has meant that the share of imports in Natural Gas usage in China is only 39%. We believe that the core strategy of China has been to restrict usage of gas such that only limited quantities are imported. The NDRC had this to say about use of Natural Gas

“We will strictly control the expansion of projects to replace coal with natural gas and ensure the steady supply of natural gas.”

In addition to these demand and supply measures, China is believed to have reserves of 1.2 billion barrels as of January 2026. This would mean an import cover of around 110 days. By restricting exports, China could extend it to 130 days.

In spite of all the demand side measures, China still depends on Oil and Natural Gas for nearly one fourth of its energy. Most of it is imported. This is probably China’s biggest strategic weakness. This also makes China, by far the biggest importer of Oil and Natural Gas. Trends in China’s consumption of these two commodities will be one of the two main determinants of price in coming years.

The discussion of Fossil Fuels — Coal, Oil and Natural Gas — should not lead us to believe that China’s use of low carbon technologies is low. China gets more energy from Nuclear, Solar PV and Wind than almost any other country in the world. Let’s look at them next beginning with Nuclear Power.

Nuclear Power — technology leadership for tomorrow

According to the U.S. Energy Information Administration (EIA) the US took nearly 40 years to add the same nuclear power capacity as China added in 10 years. China has nearly 60 GW of capacity in operation and nearly 40 GW [2] under construction according to the World Nuclear Association. The country takes between 5 and 6 years to complete a nuclear power plant. This is a very good record by itself but looks even better when compared to what has been happening in the West.

Hinkley Point plant in England for example began construction in 2017 and may (or may not) begin operations in 2030. The 3,200 MW plant is expected to cost 48 Billion Pounds. The Vogtle plant — the first nuclear plant to be built in the US for 30 years — was originally supposed to get commissioned by 2017 at a cost of 14 Billion Dollar. The 2,028 MW plant actually began operations in May 2024 and the final cost was more than $ 30 billion.

We should note here that China has built up its construction capability over two decades, whereas the US and Europe allowed that capability to atrophy. We do not have the completed costs for Chinese plants but the World Nuclear Association states that a tariff of CNY 0.43 per kWh (7 US cents/kWh) has been set for all new nuclear power projects. We do not know if this tariff reflects all the costs of building the plants and what return the capital employed in these plants gets.

In spite of this record of setting up nuclear power plants, nuclear energy still accounts for less than 3% of China’s primary Energy supply and under 5% of its electricity generation. This is partly because of China’s relatively low starting base. But another, more important reason is that China is adding coal-based capacity far faster than nuclear — anywhere between 5 to 15 times more coal capacity begins construction every year than Nuclear.

Why is that the case?

According to François Morin, a leading expert on China’s nuclear programme, the primary constraint is safety. In his appearance on the excellent Decouple podcast, Morin explained that safety approvals are slow and conservative. While the State Council of China may approve as many as ten nuclear projects in a year, typically only about five proceed to construction.

This gap reflects deep institutional caution rather than administrative delay. Chinese leadership remains acutely concerned about the consequences of a nuclear accident. A key fear — particularly among senior policymakers — is that radiation could contaminate river systems, rendering water unusable for downstream populations and industries. Nuclear plants however, need to be near a source of water and that is why almost all nuclear power plants in China are located along the coast.

Another concern for China might be Uranium. Although China does mine some Uranium in the country, it is not adequate. It imports Uranium from Kazakhstan, Uzbekistan, Canada, Namibia, Niger and Australia. As it does in oil, China diversifies its supply sources. But the fact that it produces only one third of its requirement domestically, may have something to do with its relatively slow pace of nuclear development.

China may have concerns about safety and about depending on imports for Uranium but it has no such concerns when it comes to nuclear power technology. The core of China’s fleet is indigenised technology. Most existing capacity is built around the CAP1000 and Hualong One reactor platforms, both of which are pressurised water reactors (PWRs).

The CAP1000 is a Chinese adaptation of technology originally developed by Westinghouse Electric Company, while the Hualong One is a largely indigenous Chinese design that traces its lineage to earlier French reactor technologies. Together, these two platforms are expected to account for the bulk of China’s future nuclear additions.

Even though projected nuclear additions are far smaller than additions in coal (and even gas or renewables), China’s nuclear programme remains strategically interesting because of the technologies it is pursuing.

China is among the global leaders in developing nuclear reactors for industrial process heat: while the world’s dominant technology, pressurised water reactors, produces steam at roughly 300°C, many industrial processes require far higher temperatures, prompting Chinese investment in gas-cooled reactor designs. More recently, China has also commissioned an experimental thorium-based reactor — significant because the country has abundant thorium reserves (as does India). If this technology proves viable and scalable — both substantial uncertainties — it could represent a major step toward long-term energy security and expand the role of nuclear energy beyond electricity into high-temperature industrial heat.

Nuclear is another example of the Chinese goal of being a leader in advanced technology. However, it has not yet been able to significantly leverage its technical and project execution capabilities in the export market. Geopolitical considerations of buyers and a formidable competition from Rosatom — the Russian nuclear behemoth — might be the main reasons for that.

In general Nuclear contributes to the Chinese goal of reducing pollution and mitigating climate change. However, based on numbers we are clear that it will not be a significant part of the Chinese energy mix, at least until 2040. Its formidable actions in this field today seem to ensure its leadership in decades to come and not necessarily in the next few years.

Let us now take a look at the well publicised star of China’s energy sector — Renewables.

Wind, Solar and Hydro

The Centre for Research on Energy and Clean Air (CREA) and Global Energy Monitor expected installations of wind and solar to be more than 500 GW in China in 2025. That is roughly equal to the total installed capacity from all sources in India. Between 2020 and 2024, wind and solar doubled their share of electricity generation — from 9% to 18% as per Ember Energy — a think-tank.

In 2023, the share of renewable technologies in final energy consumption in China was 12.62%. The share of electricity generation was 30%. Of this, nearly half was hydropower. Wind and Solar PV has shown impressive growth. Individually they were still below hydropower however, as the graph below shows, the recent decade has seen a sharper increase in generation from these two technologies.

Note that data till 2023 underrepresents the growth of wind and solar in China as the last two years have seen huge additions.

China increased its Hydropower capacity by 18% between 2019 and 2024 but the generation stagnated because of a drought in South West China.

The huge additions to wind and solar capacities are the clearest signs of the Chinese commitment towards mitigation of climate change. However, climate change mitigation is not the only benefit that China gets from clean energy technologies. First of all, the huge renewable capacity could help China import less oil. Perhaps more importantly, China is now the superpower in clean tech technologies. In the words of Professor, Christoph Nedopil Wang, as quoted in the Ember report,

“For China, pushing this transition does two big things. First, it locks in China’s role as the global manufacturing hub for the clean energy age. Second, it fixes a major vulnerability — reliance on imported fossil fuels.”

Just as data till 2023 does not do justice to renewables additions in China, the data of 2024 and 2025 — especially the first half of 2025 — may perhaps not represent the trend going forward. This Wood Mackenzie report says that China added 264 GW of capacity in the first half of 2025, which was double of what it added in the same time as 2023. However, the same article points out that the rules for renewables additions after June 2025 are much more stringent. These anticipated changes of rules are a big reason for the sharp jump in renewables in the first half of 2025 as developers rushed to take advantage of the old rules. Now, China wants the growth in renewables to be ‘high-quality’ and Standard and Poors expects VRE additions to fall because of these changes.

Why did China change its renewables rules? On the face of it, the shift from assured tariff to auctions is to take advantage of the fall in capital cost of these technologies. However, we believe that there may be an additional reason. Generation from renewables is not under the control of the grid operator and is also highly correlated. Solar plants, for example, can generate electricity only when the sun is shining. It is possible that local demand is not enough to absorb electricity being generated from all the solar plants simultaneously. Because of this, as the share of VRE in a grid increases, further additions become less valuable.

Sometimes the grid may refuse to accept the electricity being generated because it does not have the capacity to absorb all the correlated electricity being generated. This is called curtailment. Wood Mackenzie estimates that the solar curtailment will be more than 5% in two thirds of Chinese provinces in the coming ten years and this will be a disincentive for investors thinking of putting up new capacity which anyway would not have as good terms as earlier.

How can grids reduce curtailment? Fundamentally, there are three ways. First, the excess energy can be stored. Second, transmission investments can be made to transfer electricity far away where it may be needed. Third, other power generators may be asked to generate less so that the curtailment of renewables is lesser. Do note that all three methods have limitations and will increase the total systems cost of electricity even if the cost of generation from the renewable plant itself is low. With that caveat let us look at grid level storage in China followed by investments in transmission and distribution.

Batteries — not saving for a rainy day

The grid battery installations in China increased from 1.4 GW in 2019 to 76 GW in 2024 according to Ember. The battery storage is now more than pumped hydro storage (59GW).

While this is more storage than any other country across the world, it must be remembered that the electricity consumption in 2023 was 9,547,540 GWH. This means that the battery storage is less than half a percent of the average daily consumption. That is around 8 minutes of storage. Electricity storage can be broadly classified into three categories: short-term storage that stabilises second-to-minute fluctuations, medium-term storage that shifts energy across hours within a day, and long-term storage designed to bridge multi-day or seasonal gaps in wind and solar generation. Seasonal storage is orders of magnitude more costly.

In Europe, winters can see many days of no sunlight and no wind blowing — called Dunkenflaute. To compensate for such days of Dunkelflaute like conditions, you would need a few orders of magnitudes more storage. As per IEA, winter is also the peak demand period for energy in China and in this period the solar output is low and wind output uncertain.

There is another consideration. Lithium-ion batteries are the most expensive component of electric vehicles and therefore a key determinant of EV prices. Large-scale deployment of grid batteries would increase demand for battery materials and could push up costs for all batteries. That would raise EV prices and weaken China’s competitive advantage in a sector where it has become the world’s largest producer.

Another way of reducing the curtailment of renewables is transmitting it to places that need electricity. Such transmission infrastructure can increase systems costs a lot. However, China’s geography has been a large help in making this transmission investment. Let us understand that.

The Hu Line, coal deposits, solar plants and transmission infrastructure

The population of China is unevenly distributed. Consider the Heihe-Tengchong line or the Hu line. This line on the map of the country splits it in two parts. The Eastern part is fertile and densely packed. Approximately 94% of that population lives in this 43% part of the country. The Western part is largely empty. One of us has covered China’s geography briefly here.

A large part of China’s coal deposits are estimated to be in the sparsely populated North-West half of the country. IEA reported that in 2024, around 81% of this thermal coal was produced in four major regions: Inner Mongolia, Shanxi, Shaanxi and Xinjiang. Shanxi is also the largest producer of coking coal. The coal consuming centers of the country were in the East and coal logistics has always been a tough challenge for the country.

Increasingly, new thermal power plants and heavy industrial parks have been constructed in the Western part of the country. To transport the power from these plants to the populated and industrial East, China built High Voltage transmission lines. For example, in 2011 it built a 660 KV DC line that is 1,300 km long. This project was known as ‘air coal transport corridor”.

This and such other projects have come in very useful for China’s renewable capacity additions because many large VRE capacities have been put up in the West. This is because the land is cheaper and the area is more sunny and windy. We could not find a summary statistic that could tell us how much of the renewable capacity is west of the Hu line. However, reports such as this one from Global Energy Monitor state that the majority of the utility scale solar installations are concentrated in the northern and northwest provinces of China. The report also states that “The highest concentration of operating wind capacity in China is in the northern and northwestern regions.” Many times, the renewables projects are just a few kilometers away from the thermal power plants. To extract both renewable power and coal power, China has invested in eleven power corridors between the East and the West.

Even with some of these corridors, China has had to make a lot of investments in its grid. Ember reports that China committed to building a “new electricity system” capable of supporting high levels of renewable energy uptake in its 14th five year plan (2021–25). To this the country has made significant investments in the grid to absorb renewable generation. Ember reports that in 2024, this investment was to the tune of 85 Billion USD.

One could argue that China has made investments in the lines to support its renewables. Or one could argue that the investments were made to support coal and renewables. The thermal power plants not only share the transmission costs but also provide inertia and other firming support for the intermittent renewables.

Curtailment of thermal capacity

As more and more highly correlated variable renewable energy comes on line, the other generators are asked to reduce their generation to accommodate renewable power. There are two challenges associated with this approach however. First, there is a technical limit to how low other generators, especially thermal power plants can go. An associated problem is that their ramp up capabilities may not be enough to meet the sharp increase in load as solar power tapers off when the sun sets. Secondly, if an existing thermal capacity is asked to back down and hence paid lesser, the plant may not have enough money. (unless the plant has a take-or-pay commitment from a power purchaser) Which in turn may mean that the plant finds it difficult to maintain itself. This could be catastrophic for the grid at nights or cloudy windless days when it is needed.

To address the first problem, China has given policy direction to make new plants more flexible. IEA reports that “special action plan for 2025–2027 calls for new or upgraded units capable of very low minimum stable output (20–25% of rated load) to provide a better backstop for variable renewables and reduced cycling costs”.

The second challenge has been handled — as it has been in many other grids in the world — by making sure that the coal plants are paid for being available even if they are not generating. In the words of NDRC “We developed a compensation mechanism for adjusting the capacity of coal-fired power plants which are used to support large wind and photovoltaic power bases.”

Perhaps, most importantly, China has changed its rules for renewable plants. As discussed earlier, starting from July 2025, RE investors will find it less attractive as market risks are now shared with the investors.

The ramp up in wind and solar generation has been accompanied by a massive drive for electrification and let us look at that next.

How do we interpret electrification?

The basic strategy for climate change mitigation is to electrify as much end-use energy as possible, while simultaneously generating an increasing share of electricity from wind and solar. At first glance, China appears to be a textbook example of this approach.

Electricity now accounts for 28.6% of China’s total energy consumption — significantly higher than in the United States(22%) or the European Union (21%). As discussed earlier, China added a quantum of wind and solar capacity in one year which was almost the same as the total installed capacity of India. It is also a global leader in electrification technologies such as electric vehicles and heat pumps.

Yet these same facts have been interpreted in two very different ways.

Seaver Wang and his colleagues at the Breakthrough Institute believe that the hype about EVs of China obscure the fact that the substitution of ICE vehicles by EVs has led to only a modest reduction in fossil fuel use. This is largely because, unlike in the United States, per-capita vehicle ownership in China remains relatively low, and transport accounts for a small share of China’s overall energy consumption. In their view, the bulk of reductions in direct coal use has instead come from declining cement production and from the electrification of industrial processes, rather than from road transport.

Cement output in China has been falling for nearly a decade — an outcome that was, in many ways, inevitable. Sensational headlines noting that China once consumed as much cement in a year (or two) as the United States did over the entire twentieth century reflected a unique historical phase: the rapid construction of housing and infrastructure for a vast population, combined with the build-out of factories for the world. Today, all three of these demand drivers — housing, infrastructure, and export-oriented industrial expansion — are gradually tapering off.

The other area where electricity is substituting for direct use of fossil fuels in China is Industry. Industrial processes require heat across a wide range of temperatures. Steelmaking, for instance, requires temperatures of 1,300–1,700°C, while ammonia production using natural gas via the Haber–Bosch process operates at around 400–500°C. Many manufacturing processes — such as those used in synthetic textiles — require temperatures below 200°C. Substitution is easier when required temperatures are lower.

Seaver Wang and his co-authors argue that the bulk of China’s recent gains in electrification have come precisely from such sectors, including textiles, paper, food processing, and other light industries, rather than from high-temperature processes like steel or cement.

Ember — a clean energy Think Tank — does not dispute the underlying facts, and agrees that further electrification of industry would be more difficult. As Ember notes,

“Electricity substitution in 2023 was well below the 2019 level (over 200 TWh), mainly because much of the low- hanging fruit had already been captured, such as phasing out loose coal in residential heating and electrifying basic industrial applications, especially low- to medium- temperature heating in textiles, food and light manufacturing.”

Where Ember diverges is in its outlook for the future. It is considerably more optimistic about renewables displacing fossil fuels, arguing that technologies such as green hydrogen in hard-to-abate sectors like steel, cement, and chemicals, combined with continued growth in EVs and heat pumps, could enable a decisive break from past trends. As Ember concludes:

“If current trends continue — and, as the next chapter shows, they are highly likely to — the era of ‘more renewable, more coal’ is ending.”

Summary

We note some patterns in the sea of data that may help us make sense of China’s energy policy

China’s energy consumption is humongous: Consider the fact that China put up more renewable capacity in one year than the entire power generation capacity in India; or that in 2024, it began construction of more coal capacity than entire installed capacity in Iran; or that the country has commissioned more nuclear capacity in 10 years than the US did in 40 years and it is clear that China’s capacity to consume energy is unmatched. Its capacity to manufacture and install machinery that makes the energy useful is also peerless.

Energy sovereignty is a prime concern: Whether it is the fact that China will soon convert more coal to chemicals (and gas) than entire consumption in EU or the US or the fact of its huge investments in Russian Oil and pipelines or its low use of Natural Gas for power generation, it is clear that China takes energy sovereignty very seriously.

Leadership in Energy technologies: The fact of China’s leadership in solar, wind, batteries, heat pumps, EVs is well known. This leadership is reflected both in domestic installations and in exports and contributes more to climate change mitigation efforts than any measure taken by any other country. Its capabilities in nuclear and thermal power technologies and in coal to chemicals technology is perhaps not as well publicised. Nevertheless, both point to a leadership position in a very wide range of energy technologies.

Cost of energy is crucial: One of the many reasons that China is a leader in manufacturing — and not just in energy technologies — is that keeping the cost of energy low is a priority.

Geography is key to understanding China’s energy policies: Whether it is the fact that more and more thermal and VRE plants in China come up in sparsely populated North and West or the fact that China is vulnerable to blockading of its energy imports or the fact there is sensitivity in the country about locating Nuclear Power plants near rivers, it is clear that understanding the geography of the country is necessary to understand its energy policies.

As we discussed earlier, there can be multiple motivations for China’s energy related initiatives. Sometimes the motivations are complimentary and sometimes they are in conflict. It is also possible that over time complimentary motivations become conflicting over time. Climate Change mitigation may be a motivation for some of them and not for many others.

The table shows China’s pragmatic approach to climate change mitigation wherever, and to the extent, it does not conflict with the primary goals of Availability and Affordability.

Does it matter if China has multiple motives for doing something? For instance, if China promotes the use of Heat Pumps and becomes a leader in manufacturing them does it matter if the motives of China were to mitigate local pollution and become dominant in manufacturing heat pumps in addition to mitigating Climate Change?

In a dynamic world, it does. When different objectives of China come into conflict, which ones would it choose? Let us speculate.

What comes next?

“It is difficult to make predictions, especially about the future.” We couldn’t agree more with this adage. Add to this the fact that we will be making predictions about a vast and complex country. A country that changes all the time and a country where data is not easy to find. Knowing all this, we will still answer a few questions about the future. We are brave (or foolish) that way.

Is the reduction in thermal generation a blip or the beginning of a trend?

As discussed earlier, reports suggested that thermal generation saw a reduction in 2025. Is this the beginning of a trend or is it just an anomaly. We believe it is the latter. More importantly, as we will see in the next section, there are more relevant questions we should be asking.

The year 2025 saw two things. The first was commissioning of a lot of new VRE projects. The second was a consolidation of world wide resistance to manufacturing hegemony of China. The rules for VRE additions in China have become tougher and curtailment of VRE projects is increasing. Adding more VRE to the grid when its curtailment is increasing will not help reduce thermal generation. Sure, China can add storage; but at this point storage can only help smoothen intra day fluctuations. The country cannot use storage to smooth out inter day and seasonal variations. In any case, adding to grid storage will come in conflict with the goal of dominating the EV industry and we believe China will choose the latter. Therefore, our belief that China will continue to add thermal generation capacity.

China will continue to be an exporter of “green” technologies (including EVs and batteries). Pressures like those from Carbon Border Adjustment Mechanism (CBAM, which is Europe’s upcoming tariff on non-green imports) may drive the need to continue to add VRE projects also. But, we don’t expect the rate of addition to be the same as the past.

But all this is a ‘business as usual’ analysis and does not take into account two recent seismic events.

What happens when chips are down?

As we were finishing this piece, the US launched its second attack on Iran in eight months. The oil prices have gone up. LNG prices have shot up. Countries across Asia are stressed about their energy imports and about petroleum based feedstock.

Reports suggest that more than 80% of Iranian oil exports were going to China. As was most of the oil from Venezuela. As these sources have come under attack, we expect China to embrace coal with renewed vigour. We believe the “ballast” of China will become even more important. That means more thermal power plants and more use of coal as feedstock for chemical industries.

This will be even more true as energy-hungry Artificial Intelligence becomes a crucial part of geopolitical competition.

What happens when chips are down for more power?

It is not clear how the AI revolution will pan out. What is very clear is that the AI chips are down — they are down for huge amounts of reliable and cheap electricity. Reports suggest that the US has announced 264 GW of gas fired power plants to supply electricity to the AI chips although only (!) 34 GW of this capacity is under construction.

If China also believes that AI is critical for its rivalry with the US and if it needs cheap reliable power in huge quantities to power these chips, what will it choose? Build more thermal power capacity — a technology where it has mastery and a fuel where it has complete control, or will it stick to its climate change mitigation commitments?

What do you think?

Footnotes

[1] The charts from IEA were retrieved in February 2026. Till that date, the data for 2024 had not been updated.

[2] We have relied on multiple sources of data and they do not always agree. For instance, Ember cites China’s installed battery capacity as 76 GW on page 14 of one report, while another source cited within the same report gives end-2024 storage as 62 GW/141 GWh. Similarly, the World Nuclear Association puts China’s nuclear capacity at 60 GW operational and 40 GW under construction, whereas the US Energy Information Agency Administration gives figures of 53 GW and 23 GW respectively. These are not trivial discrepancies in absolute terms. But in the context of China’s energy system, they do not materially alter the broad picture.

[3] Sentence edited based on feedback on error from reader Navin on LinkedIn

Chart on electricity mix replaced earlier chart of energy mix (in 2023, the coal shar ewas roughly around 61% in both though)

____________

This piece is intended as the start of a wider conversation on China’s energy strategy. We would welcome engagement with government bodies, think tanks, educational institutions, energy companies, and financial institutions that see value in this discussion. Please get in touch with us on LinkedIn.

Follow Yogesh on medium. Choose the option to get the stories delivered to your Inbox. See his most read story — How did China become a manufacturing superpower.

You can follow AskHow India (@AskHowIndia) or Yogesh (@YogeshUpadh) on twitter or on LinkedIn

Follow Manish Agarwal (@manishbgagarwal) or find him on LinkedIn

We thank Anurag Gupta for his analytical support.

Have you heard the story of Ramar Pillai and his ‘herbal petrol’? Thirty years ago, Mr. Pillai claimed that he had invented an entirely herbal fuel that contained no petro-chemicals. According to him, a special blend of secret herbs, when boiled with common ingredients like salt and citric acid for about 30 minutes, produced a fuel-like substance. We might call it science fiction, except that in this story, science was the first casualty.

What’s astonishing is how much attention he received. The media covered him extensively. The Chief Minister of Tamil Nadu met him. He even began selling his “fuel.” How did so many people fall for it? More importantly, how can we quickly identify and reject bad ideas in a world overflowing with them? Even if they are our own bad ideas?

This essay offers a simple way to do that and works for both business and policy ideas. Our framework — the Ideas Chessboard — is built on four timeless principles: science, customer want, execution, and finance or law.

Science is the king — and the king is inviolable. If an idea violates basic scientific principles, it will not work. No amount of clever technology, process innovation, or financial engineering can save it.

Almost as important as the king is the queen — the customers’ desire for your product or service. You can play for a while without the queen, but you’re almost certain to lose.

Elements of execution — for example, technology and process innovations — are like the rook, bishop, and knight — nimble, powerful, and effective when they coordinate with the queen.

Finally, financial structuring and laws are your pawns. They’re useful for defense and can occasionally surprise you, but they cannot compensate for flaws in science, product design, or process efficiency.

Let us look at each of these in detail.

When High School science says no

The computing power in our phones today far exceeds that of a room-sized IBM mainframe from a few decades ago. Can we expect similar leaps in internal combustion (IC) engines, solar cells, or batteries? [1]. Can a car engine generate a thousandfold more horsepower and shrink to the size of an ant? Can a book sized Lithium Ion battery power a commercial aircraft across oceans? Can a solar cell, the size of a stamp power a huge building? The answer to all these questions is an easy no — based on the currently known laws of physics.

Mr. Pillai’s “herbal petrol” should have been as easy a claim to refute. His idea violated some of the most basic science we learn in school — most importantly, ‘The law of conservation of Energy’, which states that energy can neither be created nor destroyed.

According to Mr. Pillai, boiling a mix of herbs with salt and citric acid produced a fuel-like substance. For his claim to hold, the energy output from this “herbal fuel” would have had to be greater than the energy input used to boil the mixture. Not just a little greater — far greater — since one must also account for dilution with water, transportation energy, and conversion losses.

In other words, his secret herbs would need to have an unrealistically high energy density — higher than anything known in nature. This simple, high-school-level science check should have been enough for any informed administrator in the Chief Minister’s office to realize that the “invention” was based on wishful thinking at best and deception at worst.

It’s astonishing how many bad ideas can be weeded out using nothing more than school-level science and arithmetic. And if you’ve forgotten some of that science, there’s no shortage of online resources to help refresh your memory.

If your idea passes the high-school science test, that’s great. But then comes the next question: does anyone actually want what you’re offering?

Want Is Must (And So Is Humility About It)

If people don’t want what is being offered, any business or policy idea will fail. ‘Customer want’ is the queen on the chessboard of ideas. You can survive for a while without it, but in time you’re almost certain to lose.

India is littered with the carcasses of projects that nobody asked for — pushed through by politicians or bureaucrats armed with overly optimistic demand projections.

Take Mumbai’s monorail, for example. Services were suspended recently after more than a decade of operation. Almost no one cared, because it was never essential to anyone’s daily commute. In contrast, when suburban rail services stop even for a few hours, they do so with advance notice — because the disruption affects millions. When taxi or rickshaw operators strike, politicians scramble to respond. But when the monorail shut down, the silence was deafening. On X (formerly Twitter), I could find just one post from an individual about it — liked fewer than ten times. This indifference isn’t surprising. When the monorail last suspended operations for ten months, ridership was under 10% of the projected demand.

Public spending on infrastructure for non-existent demand is not uncommon. Take cycling tracks in Bandra Kurla Complex (BKC) as another example. BKC has offices of some of the largest companies of the country. It is extremely unlikely that the people working in those offices would cycle to the office in their formal clothes in the humid Mumbai weather. Especially, as most of the access roads into BKC are crowded and dangerous for cycling. And yet, bicycling tracks were made all over the complex. Now, the authorities are dismantling these tracks at the cost of Rs. 25 Crores because the tracks remained “largely unused”.

Even in the private world, we can see businesses that are never able to attract customers. Products that seem like sure-shot successes can flop spectacularly. An entrepreneur couple we know, strongly believed that most engineering students in the country do very little hands-on engineering. They launched a one-day workshop where students could build simple electro-mechanical devices — for instance, a working mini treadmill. Despite clear educational value, few students signed up, even at ₹1,000. Most preferred to focus on software or finance jobs rather than “core” engineering.

Undeterred, they pitched the idea to one of India’s largest engineering firms. The company agreed to run the workshop for its new hires — but at rock-bottom payment terms. The founders soon realized that even engineering companies didn’t value hands-on learning enough to pay fairly. They pivoted to making shoes for dogs and are much happier.

The error can be the other way around too. In 1943, the president of IBM reportedly said, “I think there’s a world market for maybe five computers.” History is full of such misjudgments. Who, before smartphones and social media, could have imagined global demand for selfie sticks?

Predicting demand is difficult, especially for something new. So, what can we do?

If you’re evaluating a startup, approach demand forecasts with humility. Founders often have intuitions you may not share — and sometimes, they’re right. A determined entrepreneur can start with a half-baked idea and refine it into a winner by listening closely to customers. (After all, even IBM pivoted swiftly when it saw the true demand for computers). However, it is important to judge whether the entrepreneur has thought of customers at all or is pursuing the idea just because he finds it cool.

If you’re evaluating a policy proposal, look instead for humility in its authors. It’s all too easy to take risks with public money.

The queen is a powerful piece — but even she can’t win alone. Success also depends on her allies: execution (including technology and process innovation). Together, they determine whether an idea not only attracts people — but delivers what they truly want, at a price they’re willing to pay.

The Hardest Part: Making It Work

Put aside your moral judgement of Elon Musk and you have to admit that he knows a little about bringing ideas to fruition. This is what he has got to say about ideas and execution.

Unfortunately, a lot of people do not understand this. Many of them are people who haven’t yet executed real world projects. Many scientists — at times brilliant scientists — may be guilty of this.

Turning even a scientifically proven idea into practice can take an enormous amount of work. One of the most consequential examples of this is the Haber-Bosch process. Let us begin with a little background.

All plants need nitrogen to grow. While nitrogen is abundant in the atmosphere, it exists there in a form that plants cannot use. To thrive, plants require nitrogen in a “fixed” form — ammonia or nitrates — in the soil. For centuries, societies struggled to enrich soil nitrogen. Chinese farmers once encouraged migrant labourers to live together so that human waste could be easily collected and used as fertilizer. In the 19th century, wars were fought in South America over the Guano Islands, which were covered in nitrogen-rich bird droppings.

Scientists long knew that nitrogen made up most of the air (78%), but turning atmospheric nitrogen into ammonia was nearly impossible. Breaking the strong triple bond between two nitrogen atoms required immense energy — temperatures near 1,000°C. Yet at those temperatures, any ammonia formed would quickly decompose.

The German chemist Fritz Haber solved the problem in his lab in 1908, finding that nitrogen could be converted to ammonia under high pressure and moderate temperature, using a metal catalyst. However, his method produced only tablespoon quantities — far from industrial scale.

That’s where Carl Bosch and his team at BASF stepped in. They faced enormous engineering challenges. Haber’s method required pressures around 100 atmospheres when most industrial equipment then could barely handle single-digit pressures. Moreover, the catalyst Haber used — osmium — was too rare and expensive for mass production. There were many other small and big challenges.

Bosch’s team spent years developing high-pressure vessels, discovering an alternative iron-based catalyst, and solving countless technical problems. Their success changed the world: today, half the nitrogen atoms in your body likely come from the Haber-Bosch process. One of us has written about this here.

One of us mentors early-stage startups and sees many attempting to commercialize scientific breakthroughs. This is laudable — India needs more of these ventures. Many founders underestimate the complexity of bringing lab science to the real world and that is OK. If they really knew how difficult it is going to be, they may not even begin. What is not OK is that they often fail what we call the “Wikipedia test”: their thinking doesn’t even acknowledge the technical challenges mentioned on the basic Wikipedia page about their chosen technology.

The same principle applies to public policy. Governments should be even more cautious when dealing with unproven technologies — unless a project is explicitly an R&D initiative. Bureaucracies are rarely equipped to conduct deep technical research, and governments seldom benefit financially from breakthroughs. So, if a public project proposal fails the Wikipedia test, that’s a red flag — it signals dangerous ignorance of technological realities.

Innovation isn’t limited to science or engineering — it also happens in processes. Consider the rise of Direct-to-Consumer (D2C) businesses. A few decades ago, you had to visit a shop to buy most things. Today, you can be scrolling social media, spot a product — say, shoes for your dog — and have it delivered within days. That’s not a technological breakthrough; it’s a process and distribution innovation.

In public projects, execution makes or breaks success. Sadly, India struggles here. I live in Mumbai, where half-built metro lines, bullet trains, and flyovers crawl toward completion. Some political parties are better than others but only a little — over the past decade, governments of different political stripes have shown only marginal improvement in execution speed.

Ultimately, the interplay between customer demand and execution determines whether an idea succeeds or fails. Yet, both are often overshadowed by the attention given to money, laws, and lofty intentions.

Finance and Law: The Pawns of the Ideas Chessboard

If you are trained in finance or law, your training can lead you to believe that gaps in science, technology, demand, or execution can be addressed by clever financial structuring or a change in regulations. This is wishful thinking. If an idea violates the laws of science, no law or financial instrument can rescue it. Even amending the Constitution wouldn’t make the impossible possible. Similarly, if there is no demand for an idea, no amount of financial engineering can create sustainable interest.

One of us has advised many Municipal authorities on financing of projects and he is perennially frustrated by this topic. Across the country, municipal bodies are unable to recover even basic user charges for the services they provide. Their finances depend almost entirely on state government grants. Yet, for decades, bureaucrats have been chasing “innovative financial models” that would somehow attract private lenders or market-based funding. Spoiler alert: it won’t happen. Without state guarantees, no lender will risk it. The same misplaced faith is seen when policymakers believe that simply changing a law will magically generate demand for a product or service that people don’t want.

This doesn’t mean that finance or laws don’t matter. In our “Ideas Chessboard” framework, they are like pawns — often underestimated but still essential. You cannot win against a skilled player without them. For example, in an infrastructure project with a long construction period, the financing structure must ensure that there’s enough liquidity to service interest payments before revenues begin. Similarly, compliance with relevant laws is non-negotiable.

And sometimes, these “pawns” can transform into queens, shaping the fate of an entire enterprise — for better and worse. Consider the case of Dream11, India’s fantasy sports platform.

Dream11’s model was simple: users built virtual teams and won prizes based on real-world player performances. The technology behind it wasn’t groundbreaking; what mattered was scale. The more users it attracted, the larger the prize pool became — a self-reinforcing loop. To achieve this, Dream11 spent heavily on marketing, sponsoring the Indian cricket team and hiring top cricketers as brand ambassadors. The company raised nearly a billion dollars in equity, enabling rapid expansion.

Here, finance played the role of a pawn that turned into a queen — fueling growth and dominance. But that same metaphorical queen of finance was ultimately defeated by another queen: the queen of law.

A few weeks ago, the Indian Parliament passed legislation banning “real-money online gaming.” Overnight, Dream11’s business model was rendered illegal. The company’s valuation, once at $8 billion, has since plummeted. What the queen of finance had given, the queen of law took away.

Legal complexities don’t just sink startups — they can stall public projects too. Take the metro line being built above Mumbai’s Jogeshwari-Vikhroli Link Road. Because it runs along an existing road, land acquisition was minimal. Yet the project remains incomplete years later. The reason? A legal dispute over the land meant for the train depot. Without the depot, the line cannot operate. Now, eight years after the construction began, a new site has been identified for the depot.

But this raises a deeper question: Is this truly a legal issue, or a failure of execution? Shouldn’t the planners have ensured depot land availability before construction began?

That question leads us to the final — and perhaps most crucial — element of our framework.

Our framework is neat. Real life can be messy / The Living Chessboard

The neatness of our framework may give the impression that we believe there’s a strict separation between its different layers. We assure you, we don’t. In the real world, problem-solving means constantly moving between layers. This is especially true for startups.

Take, for example, a team building a chai-making machine. They know that most machine-made chai tastes terrible — one of the primary reasons being that milk tends to spoil in the machine. After much experimentation, they built a prototype that solved several technical issues.

But when they tested it with potential customers, they discovered something unexpected: many users handled the machines far more roughly than they had anticipated. The elegant glass vessel that worked perfectly in the lab began to break in the field. The team replaced it with a sturdier steel version — only to discover new technical challenges that came up. They had to fix those while ensuring manufacturing costs didn’t spiral out of control.

This is a real story by the way — and a perfect example of how the different elements of our framework constantly influence one another.

Not only do these pieces dance together, but it’s often unclear where the real problem lies. Consider a real-world case from the public policy space.

Two of us once worked on a policy advisory project for the treatment of faecal sludge — the residue collected from septic tanks in areas without sewer networks. Ideally, solids in these tanks decompose over time, and the sludge is removed periodically for safe treatment. Our role was to recommend financial and operational models for Faecal Sludge Treatment Plants (FSTPs).

As is common in such projects, there was strong enthusiasm to not only treat the sludge but also “generate wealth from waste.” Many proposed plants included components for energy recovery. This sounded impressive — but we had a basic question: how much usable energy could septic tank sludge actually contain? After all, the sludge was wet and largely decomposed by design.

A visit to several sites confirmed our doubts. One biogas recovery plant had been shut down because, as one operator put it, “the gas wasn’t enough to make even a cup of tea.” Another facility claimed to generate electricity from sludge, but only did so by mixing in large amounts of food waste — so much that the food waste made up the majority of the input. Upon further investigation, we discovered that this “waste” had previously been going to animal farms as feed — it wasn’t really waste at all.

So where was the real failure? Was it scientific, in assuming high energy potential in septic sludge? Or technical, in designing unnecessary energy recovery systems? The answer isn’t clear — and, in our view, it doesn’t matter.

What matters is this: real-world problem-solving rarely fits neatly into categories. Science, technology, demand, finance, and law interact constantly — and the success or failure of an idea depends on how well we navigate these intersections.

People driving these projects, especially, should be careful not to get trapped in their own silos. Scientists who have got a breakthrough should not think that making a useful product using that breakthrough would be trivial and that people would be queuing up to get the product. Financial experts should not think that financial structuring can solve problems with basic science or with technology. Legislators should not believe that their laws can force people to want something that they really don’t.

In the real world, the boundaries between science, customer wants, innovation, and finance or law are never rigid. They shift and overlap, influencing each other constantly. A sound idea may begin with science but must evolve through continuous feedback from customers, adaptation in design, and alignment with financial and legal realities. The best problem-solvers are those who don’t get trapped in their silos and move fluidly across these layers — testing assumptions, refining solutions, and staying grounded in what works both technically and practically. The chessboard we’ve described is not static — it’s alive, with each piece in motion, shaping and reshaping the game as it unfolds.

[1]: We have got these examples from an excellent paper from Mark P. Mills. The paper titled “The New Energy Economy: An exercise in magical thinking” can be found here.

You can follow AskHow India (@AskHowIndia) or Yogesh (@YogeshUpadh) on twitter or LinkedIn or on https://t.me/YogeshUpadhyaya

Find SR Ramanujam on LinkedIn

Follow Manish Agarwal (@manishbgagarwal) or find him on LinkedIn

Let’s begin with a quick look at the recruitment struggles of manufacturers.

Manufacturers have begun to struggle with getting workers

“More people talk about jobs in manufacturing than those who actually want to work in manufacturing.” A successful entrepreneur said this to me a few months ago. While exaggerated, there is truth in the statement: Across the country, manufacturers struggle with attracting workers. The struggle is more acute in industrial areas that are near large cities.

Near large cities, skilling agencies and technical institutes cannot fill their seats for even free manufacturing courses. A skilling institute offering a course on turning and fitting may see single digit applications for 50 seats whereas the same institute’s course on baking or beauty treatments would be oversubscribed.

The media has begun noticing this struggle. Here is The Mint

Here is The Ken reporting that 200 people leave Tata’s iPhone assembly plant every day (although 300 join).

Why do people not want to work in factories? Isn’t the youth of India looking for employment? The reality is that the youth of today have many options and the youth prefers those options to working in factories.

The New Blue Collar: From Factories to Service Gigs

I live in a high rise building in Thane, a city near Mumbai. Every morning, a young man comes to deliver newspapers. Another one cleans my car. Other people come to collect garbage and clean the common areas. After breakfast, I step out to work from a nearby cafe. When I go down in the lift, I share it with maids and personal drivers. On my way to the cafe, I see many parked taxis with the drivers scanning their phones for rides from Rapido, Uber, Ola and other ridesharing apps. There are many cafes nearby and each of them has at least one chef and a waiter. There are more than twenty salons in the same market and each has many stylists. I go back home by noon and on the way see many delivery boys from Zomato and Swiggy waiting for orders. On my way up to my apartment, I share the lift with delivery boys from Amazon and Blinkit and others. There are also washermen who come to collect clothes for ironing and washing. More uniquely, there is a dog walker who comes around noon. In the evening I see a skating instructor and a panditji who comes regularly to an apartment to perform daily puja.

Just a few decades ago, all these young people would have been looking for jobs in factories. Thane had many industrial areas and a factory job was the dominant choice for young non college educated folk. Now they have options. This story is being played out in cities across the country.

That non college educated urban youth would choose non factory work over factory work, is not surprising. What would you do? Work next to a furnace filled with molten iron or deliver packages for Amazon? Factory jobs have never been the top choice anywhere in the world.

When men become cogs in a machine

“[It] gives the operative no opportunity of physical exercise or muscular activity…It is nothing less than torture of the severest kind…in the service of a machine that never stops.”

This is Joshua B. Freeman in his book Behemoth talking about factory jobs from more than one hundred years ago. This was after the introduction of assembly lines. The assembly line changed what were workshops into ‘modern’ factories.

This may be a good place to distinguish between factories and workshops. Typically, factories manufacture large volumes of a product or a part, using assembly lines and a lot of automation. A workshop would make much lower volumes and may also do repair work. The work in factories is much more repetitive and less skilled. Many establishments may fall somewhere in between — for example, doing small batches of many different parts. I note here that this understanding is functional and not legal. The Factories Act 1948, has a different definition.

The workers at Ford did not like this transition from working in a workshop to working in a factory ,

“In 1913, the year assembly line was introduced, Ford had an astounding turnover rate of 370%.”

The travails of factory workers are captured brilliantly by Charlie Chaplin in his Modern TImes. See specially at the 13:15 mark when Charlie is overwhelmed by the repetitive act of tightening two nuts on hundreds of widgets. His arms continue to do the same motion even when he is off the line. The travails of Charlie Chaplin might have been inspired by this actual quote from a Ford worker of the time.

“If I keep putting on Nut №86 for about 86 more days, I will be Nut №86 in the Pontiac bughouse.”

The lot of a modern worker may not be as bad as that of Charlie Chaplin, but there is no denying that repetitive work on assembly lines can be very stressful. Even workers in China feel this stress. As Patrick McGee details in his book, Apple in China,

“Although there was no shortage of migrants applying to FoxConn, retaining them was a challenge given the monotony of work. Turnover at major electronics contract manufacturers in China can reach 300 to 400 percent yearly, …”

Once workers have made a bit of money, they are not in a hurry to return to the factory. There can be severe labour shortages around festival times (a phenomenon well known to Indian manufacturers). Here is McGee,

“Everybody got their extra month bonus right before Chinese New Year, and then people wouldn’t come back.” says an Apple manager. “And then [Apple’s supplier] started saying, ‘Well, we’re only going to give them half [of the bonus now], and you get half when you come back.’” Even then, a large portion didn’t return. So instead of a bonus split 50–50, the suppliers experimented with 25–75, 20–80 and so on, but none of their strategies really worked.”The only thing it changes is [that], you had a bigger exodus after Chinese New Year [rather than before],” the Apple engineer says.

Factory jobs are tough and at least the urban youth has many alternatives. What about rural India though? Surely, there is no demand for ‘dog walkers’ or ‘tennis instructors’ in our villages? What does the rural youth do then? To answer this question, let us go to a tribal village one hundred and fifty kilometers from Mumbai.

Why the village youth may say no to factories

Palsunda is nestled in the mountains of Western Ghat. The clean air means that you can sit in the shade without fans even in summers and we were doing just that one May afternoon. My institute Alumni Association had taken us on a trip to the village.

The conversation turned to employment. A veteran entrepreneur in our group, a maker of electrical equipment, spoke eloquently how the lives of many of his employees had changed — how people who had joined him twenty years ago now owned flats in Navi Mumbai. The villagers however, were not impressed. As is the nature of such conversations, they did not respond directly. They just explained how ‘ajkal ka ladka log’ (youth of today) think.

The bus ride from the village to Nasik was Rs. 37/- each way, they explained. Thanks to the construction boom in Nasik, anyone could get work at 700–800 Rupees a day. Even after lunch expenses, a young man could keep 700 from a day’s work. Twenty days of work as a casual labourer on a construction site could get him more money than what the entrepreneur would offer as a starting salary. And it was not just about money.

At home, these young men could avoid the misery of crammed flats with ten others while paying ₹1,500 a month. They would eat at least one home-cooked meal, travel with friends, and — most importantly — choose not to work if they didn’t feel like it.

Yes, the entrepreneur offered a bright future but it was uncertain. What was certain was a few months of living in cramped quarters with strangers. What was also certain was six days of work every week with very limited flexibility. Compared to the hassle-free present, the gamble on a distant bright future wasn’t worth it for most.

As transport improves, more rural youth can access nearby cities and construction jobs. And for many, there is another option altogether: to simply do nothing.

The Ladki behana and her family of schemes

Take a look at this Government of India press release. It claims that “India has recorded a phenomenal expansion of social security coverage from 19% in 2015 to 64.3% in 2025….94.3 crore people, are now covered under at least one social protection benefit.”

Social security divides people. Some believe the poor should be supported unconditionally, while others argue such schemes create dependency and burden taxpayers. For this discussion, where you stand on that spectrum doesn’t matter. What matters is this: villagers in India today probably enjoy a much higher level of social security than peasants in China did during its industrial transformation — or than workers in the US, Germany, and Britain more than a century ago. Political competition in India makes it unlikely that the trend of ever-expanding schemes will reverse anytime soon.

The implication of service-sector jobs and social security is simple: fewer people are forced into factory jobs today. If I can earn by working a few days in construction and also receive direct benefit transfers in my bank account, why would I take up repetitive factory work?

In summary, Indian youth has many employment options. Many options are more attractive than working in factories. These options may be service-sector jobs in cities or construction work with a little bit of travel. Social security increases the attractiveness of these alternatives. Of course this doesn’t mean that young people in every village and city are turning away from manufacturing — our factories are working after all. In a country as vast as India, even a minority opting for factory work translates into millions. Nevertheless, it is true that the service-sector jobs and social security have reduced the compulsion to enter manufacturing.

India has an additional challenge. Culturally, manufacturing jobs are not high status. It was not always so. Ask the Europeans from a few centuries ago.

From Calico to Cannons: India’s Lost Manufacturing Ethos

Did you know that the import of Indian cotton fabric — Calico — was banned in France for seventy-three years? In The Fabric of Civilization, Virginia Postrel notes that the ban was strictly enforced:

“Offenders could be sentenced to years of pulling oars in the navy’s galleys, with serious traffickers put to death.”

Why such harsh measures? Because Calico was wildly popular. As Postrel explains:

“Introduced by Portuguese traders in the sixteenth century, the Indian fabrics were unlike anything Europeans had ever seen. The blues and reds were spectacular and, thanks to the dyeing skills honed over centuries, the colors survived frequent washing. The cotton fabric was soft and lightweight, ideal for summer clothes and more comfortable than linen as underwear. Prints themselves were largely new to Europe, providing an irresistible cornucopia of pictorial designs without the expense of drawloom weaving.”

Such mastery in dyeing and design could only have emerged from a culture that deeply valued manufacturing.

Another example comes from Randolph G.S. Cooper’s The Anglo-Maratha Campaigns and the Contest for India. He challenges the lazy assumption that the British army was always technically superior. At the Battle of Assaye, Cooper argues, the Marathas actually held artillery superiority — not only in the number of big guns but also in their design.

At the time, iron gun barrels were more accurate and durable but too heavy for quick deployment, while brass barrels were lighter but wore out quickly and risked blowups. The Marathas solved this with “bar guns” — iron-bore cylinders sleeved in brass. The British were so impressed that Lieutenant General George Constable recommended all British forces adopt them (though this never came to pass).

Incidentally, Cooper also contends that Britain’s true advantage lay not in technology but in finance. The East India Company’s superior ability to raise credit allowed it to buy over many of the Marathas’ senior European officers — French and British alike — through inducements and threats.

How, then, did a country that once produced textiles so coveted they were banned, and artillery designs that impressed its conquerors, end up with an anti-manufacturing culture? My tentative hypothesis is that 150 years of British rule corroded this ethos. Colonial policies systematically undermined Indian industry. As Will Durant describes in The Case for India:

“A tariff of 70–80% was placed upon Hindu textiles imported into free-trade England, while India was compelled, by foreign control of her government, to admit English textiles almost duty free. Lest Indian Industries should nevertheless continue to exist, an excise tax was placed on the manufacture of cotton goods in India. ”

Under such rules, manufacturing became impossible. Farming, too, was heavily taxed. The only reliable livelihoods were in government service and trading. Perhaps this explains why Indian families, for generations, have pushed their children toward “safe” government jobs, and why so many business families still prefer trading or minimal value addition over true manufacturing.

I present this hypothesis because it shows that India was not always hostile to making things. Manufacturing was once culturally valued. Reclaiming that culture may be difficult — but it is far from impossible.

To reverse our anti manufacturing culture, we would need to roll out the metaphorical red carpet for our factory workers. Unfortunately, we do the opposite.

Rolling out the mud carpet

On a recent factory visit, I remarked to an entrepreneur how pleasantly surprised I was by the good quality of roads in Taloja. He smiled and assured me that when we visited his second factory, I would not be “disappointed.” Unfortunately, he was right.

Factories are often located away from population centres — a sensible measure given the noise and pollution. But for workers, this creates a major hurdle: how to get to and from the workplace. Any job seeker will naturally weigh the cost, time, and discomfort of commuting into their decision.

Yet this is about more than logistics. The crumbling roads and poor housing around many industrial areas signal something deeper — our priorities as a society. The convenience of the factory worker is simply not a priority. And that message, whether conveyed through potholed streets or dilapidated dormitories, pushes workers back home.

Commuting and housing have always been top concerns of workers. During the second World War, the newly built Ford bomber aircraft factory at Willow Run could not get workers because the road was bad and because there was no place to live nearby. Commuting long distances was a concern when factories began in England nearly one hundred and fifty years ago.

When Indian workers overcome these physical barriers, our laws and labour practices make it extremely difficult for them to progress. In India’s manufacturing sector, recognition and reward for good performance are rare. Much of this stems from the prevalence of contract labour, which has become the default mode of employment. For many workers, it reduces the possibility of long-term growth within the factory.

The Damad Culture and the Rise of Contract Labour

Much has been written about the restrictiveness of labour laws in India. Rather than list all the legal absurdities, let me share an anecdote.

A well established auto parts manufacturing company was scheduling a two day shut down. This was because the automobile company it supplied parts to had scheduled a two day shut down and the parts manufacturer did not want inventory to build up. The company had to negotiate with its union to schedule this shut down. Just to clarify, the workers would not have had to work for the two days and would have still been paid. However, the law says that the union had a say and the union wanted to take the opportunity to wrangle out concessions such as a slightly longer tea break.

If a union can negotiate on issues such as when to schedule a (paid) shutdown, imagine what would happen if negotiations are on productivity linked wages or on firing. Employers across the country believe that permanent employees behave like damads (son in law — someone who has an exalted status in large parts of India).

The damad culture of permanent workers has resulted in a flood of contract and temporary workers across the country. So much so that even governments prefer employing contract workers. Manufacturing companies — even large ones — have a very high proportion of workers as contract workers. The Annual Survey of Industries 2023–24 reported that contract workers were 42% of the total workforce in factories. I would be willing to bet that this is an underestimate. Although responding truthfully to the survey is required by law, it would be miraculous if all factories surveyed were totally honest in their replies. Indeed, I would be astonished if the ASI staff has a list of all factories and workshops across the country.

This flood of contract workers means that it is very difficult to reward skill in Indian manufacturing. To understand this point, we will have to answer the question, what is really skill in manufacturing?

Are we thinking all wrong about skilling?

I watched red-hot engine casings being lifted out of their molds by overhead cranes. After cooling slightly, they were brought to a row of men wielding massive grinders, filing away the rough edges of metal still clinging to the castings. This process, known as fettling, is as exhausting as it looks. It was a well managed casting shop. However, casting is called a 3D industry — dirty, dangerous, and demanding — for good reason. The heat from the parts, showers of sparks, and fine metal dust make the work tough.

The surprise came when the entrepreneur who owned the facility remarked: “This is one of the most highly skilled functions in my setup.”

We had visited many industrial training centres during the same trip. When they wanted to showcase “skills,” they pointed to students programming CNC machines. Nobody mentioned fettling. This was repetitive and exhaustive work. Why was the entrepreneur calling it skilled?

To answer this, we need to go back a century, to when the assembly line was first introduced for automobiles. The productivity gains at Ford are well known. Less appreciated is how the tooling itself was designed to make untrained workers productive. As Joshua B. Freeman notes in Behemoth:

“Ford engineers called their jigs and fixtures ‘farmers’ tools,’ since they allowed new workers to produce high-quality parts, lessening the need for skilled machinists and their craft culture.”

Arms maker Samuel Colt once put it more bluntly: “The more ignorant a man was, the more brains he had for my purpose.” Hyperbole, perhaps — but it captures the essence of mass manufacturing: reducing the reliance on traditional craft skills by breaking work into repetitive, standardized tasks.

A Ford worker described it bitterly:

“A man checks ‘is brains and ‘is freedom at the door when he goes to work at Ford’s.”

That sentiment explains why fettling was labeled “skilled.” In such environments, skill isn’t about technical mastery but about physical endurance, dexterity, and the mental focus to perform repetitive, difficult work without faltering. I call this kind of work “khata khat” work (after the rhythmic sound that the assembly line of old made). Khata khat work is best learned on the job, not in classrooms.

Some workers naturally excel at this — stronger, quicker, or more focused than their peers. But here lies the problem: Indian labour laws and customs make it nearly impossible to reward such differences in productivity.

Many entrepreneurs tell me their biggest wish is for piece-rate pay. Paying by output would allow them to recognize the most productive workers. Instead, Indian law and the culture of collective bargaining have ensured that most employees receive similar compensation, regardless of ability. Contractors fill the gap, paying workers by productivity even if the parent company cannot.

Of course, not all manufacturing jobs are Khata khat type. Machines must be designed and repaired. Assembly lines must be engineered. Processes must be optimised. Critical process decisions require judgment. These are what I call meta-skills in manufacturing. Yet, even here, Indian firms struggle to reward them.

Companies that are wary of being caught short in court cases, have to let go of their contract workers after 240 days, no matter how good they are. Even among permanent employees, promotion based on ability is difficult due to rigid rules and collective bargaining practices. It is far easier for even a SME to recognize and promote white-collar talent than shop-floor talent.

When talented employees don’t get rewarded, not only do skillful workers lose motivation but also the society loses out on their skills. Manufacturing thrives on learning by doing. Around the world, shop-floor workers have risen to become entrepreneurs. India is losing out on this talent.

Where is our Henry Ford? Or Zhou Qunfei?

Henry Ford was born into a farming family and began his career as a machine shop apprentice. He was not alone in starting on the shop floor. Walter Flanders, a grade-school dropout, played a pivotal role in refining the assembly line at the Ford. Bill Knudsen became central to mass production at Ford and later General Motors, and eventually directed the U.S. wartime manufacturing miracle during World War II, earning the rank of Lieutenant General. He apprenticed at a bicycle shop and then worked at shipyards.

But all this was a hundred years ago. Surely such stories belong to the past, don’t they? Not quite.

Take Zhou Qunfei in China. Dropping out of high school at sixteen, she worked in Shenzhen factories for about a dollar a day polishing glass watch lenses. She eventually founded Lens Technology, producing glass screens for Motorola with a workforce of about 1,000. Soon after, Apple contracted her company to cut Gorilla Glass for the iPhone. By January 2021, Lens Technology had reached a market capitalization of $22 billion.

Or consider Grace Wang, founder of Luxshare Precision. Starting as one of the first migrant workers on Foxconn’s production line in 1988, she went on to build one of the world’s largest electronics contract manufacturers. By 2023, Luxshare’s revenues had reached $32 billion.

By contrast, I cannot recall too many Indian examples of shop-floor workers who have gone on to build multi-billion-dollar companies. Part of this is context. The U.S., a century ago, was unusually open to merit — birth circumstances and educational credentials mattered less than results. China, when it opened up, had no entrenched private incumbents, creating room for newcomers to rise. However, my informal surveys suggest that even the number of factory workers who go on to become factory heads is much lower in India than it is in China and pretty much all of Asia.

Whatever the reasons, the absence of such trajectories in India has two major consequences. First, it weakens the incentive for talented workers to stay in factory jobs if they see no path to advancement. Second, society as a whole loses out on the skills, knowledge, and entrepreneurial energy that could emerge from the shop floor.

Summary and discussions

Young Indians do not want to work in factories. This is partly a continuation of a global trend: Factory work has rarely been the most desirable employment. But in India, the trend is amplified. Urban youth now have a wide range of service-sector options, and rural youth benefit from expanding transport networks and social security programs. Add to this a cultural bias that looks down upon manual or industrial labor, and the challenge becomes even sharper.

So what can we do?

We must first accept the new reality: the industrial world is shifting from one where workers need to be protected from exploitation to a world in which they need to be attracted to shop floor jobs.

We must also recognize another truth: most factory jobs are not highly skilled, but that does not mean they are low in dignity. What workers need are good pay, safe conditions, respect and good living and commuting conditions.

The smarter private companies are already recognising this reality. In the new reality, compensation levels will rise — especially for the most productive workers, regardless of what outdated labor laws say.

An entire recruitment ecosystem has developed to find workers in regions where service or construction jobs are scarce. Competition among recruiters will ensure that “their” workers get reasonable terms. China provides a useful precedent here. It accepted that most migrant workers would not treat factory jobs as lifelong careers — particularly the khat khat (monotonous, machine-paced) jobs — and built systems accordingly. As Patrick McGee notes:

“All these suppliers depend on an ecosystem of labor brokers who take empty buses out to villages in the interior of China, where they recruit workers.”

However, recruiters can only go so far. They cannot ensure that workers get decent housing, familiar food, or opportunities for recreation. Large employers can — and should — step in.

Foxconn City in China offers a striking example. As Joshua B. Freeman describes in Behemoth:

“Foxconn City, in addition to dormitories, production buildings, and warehouses, includes a library, bookstores, a variety of cafeterias and restaurants, supermarkets, extensive sports facilities including swimming pools, basketball courts, soccer fields, and a stadium, a movie theater, game rooms, cybercafes, banks, hospitals, and even a wedding dress shop. In 2012, its central kitchen used three tons of pork and thirteen tons of rice every day.”

Yet, there is a limit to what private companies — especially SMEs — can do. They cannot roll out the red carpet alone if the government continues to roll out the mud carpet.

Governments must acknowledge that India’s labor regulations and manufacturing culture were built in an era when workers had few choices. The focus then was on preventing exploitation. But today, workers can — and do — walk away from poor conditions. The challenge now is not merely to prevent exploitation but to create conditions that attract and retain talent.

What does this mean in practice? It means making it easy for people who want to work in factories to do so — through better transportation, housing, and amenities near industrial areas. It may mean locating factories closer to where workers live. Above all, it means abolishing the mud carpet and making factory life welcoming, not punishing.

Encouraging blue-collar factory work also means recognizing and rewarding “meta-skills” — workers who show initiative, leadership, or deep process understanding. The exceptional among them should find clear pathways to grow, even to become entrepreneurs.

Educational institutes may have a strong role to play here. They may have to move their focus away from teaching rank beginners — who anyway end up taking Khat khat jobs — to identified workers who have Meta skills. They may have to design and execute courses that hone the meta skills of identified experienced workers.

Finally, we must tackle the cultural image of manufacturing. This means celebrating industrial entrepreneurs the way we glorify tech founders. It means praising workers who go on to do well in corporate careers. It means appreciating the craftsmanship behind good products. It means showing young people that “making” is as honorable — and as exciting — as coding or consulting.

We must make manufacturing cool again.

If we fail, the green shoots we see in Indian manufacturing today will not grow into a forest.

This post is part of a series on Make in India. The story How did China become a manufacturing superpower in this series has got a lot of attention.

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Despite persuasion’s central role in business, most business schools don’t teach it. They may touch on it under advertising, but rarely cover it in other situations, including sales. I discuss why that may be so. Non-business school graduates may also want to read on — this is an area where they could have an edge over B-school graduates.

Working life and persuasion

My first job was as a consultant. Very quickly, I realized that good analysis was not enough. I had to convince my bosses that my work was analytically sound. Then, together, we had to assure our clients that our proposed solution was good for them.

A few years later, I became an entrepreneur making software products. It was obvious that designing and building great products was only half the battle. We had to convince prospects that our products were worth paying for. Even in making the products, we had to persuade programmers and business analysts to share our values. For example, we believed products should look good and be user-friendly. Many programmers didn’t agree — sometimes it seemed they went out of their way to design the ugliest, most unfriendly interface possible. This couldn’t be fixed by coercion; it took patient, long-term persuasion.

My ten years as a software product entrepreneur were filled with persuasion — convincing clients to buy, convincing employees we were good to work with, and convincing them that quality mattered.

I would be surprised if any business professional thought persuasion wasn’t critical. Here is Sam Altman, CEO of OpenAI:

Persuasion is vital even in highly scientific jobs. William Pao, MD, PhD, writes in Break Through:

“To me, innovation is coming up with something that has not been done before, showing that it’s possible, and having the courage to convince others that it’s worth doing.”

Notice the last part: “convince others that it is worth doing.” This comes from a basic scientist and a leader in the pharmaceutical industry.

Why don’t business schools teach persuasion?

The first reason is simple: persuasion is a skill, and business schools usually teach concepts, not skills.

Persuasion is a skill

Educational institutions often find skills harder to teach than theory. Class size is one reason. Very few institutes have fewer than 50 students per class. At that size, it’s hard for a professor to focus on individuals, whose needs can differ greatly. One student may struggle to structure his thoughts; another may find eye contact difficult. A power point that tells both to “structure your thoughts” and “make eye contact” helps neither.

Another challenge is faculty preference and incentives. Many professors naturally prefer teaching theory over skills. Institutional structures and prestige reinforce this — professors are rewarded for publishing papers, not for practicing what they teach.

Rankings also push schools toward theory. Business school rankings rarely measure skill quality. For example, look at the data submitted by Indian Institute of Management Ahmedabad (IIM Ahmedabad). From the number of PhD students to executive education programs, the focus is on countable metrics. To be fair, skill quality is hard to measure from outside.

This difficulty is faced by students too. They cannot judge the quality of teaching in an institution. How does one choose between IIM A and IIM C, or between IIM Shillong and BITS School of Management? Most students use a simple strategy: follow the money.

Show me the money!

In the movie Jerry Maguire, sports agent Jerry Maguire (Tom Cruise) realizes that his firm cares more about money than athletes. Fired for saying so, he tries to persuade athletes to join him — only Rod Tidwell (Cuba Gooding Jr.) agrees, famously demanding: “Show me the money!”

That’s what MBA students say to business schools: don’t tell us about your professors or curriculum — tell us what salaries your graduates earn. They’re not wrong.

Students face an information asymmetry. They can’t know what they should be taught or how well an institute teaches it. Reviews from alumni vary wildly. Placement results are the only widely trusted, objective measure.

This creates a self-fulfilling loop: schools with the best placements attract the highest CAT scorers; top-paying companies hire from those schools; and few students dare choose a lower-ranked institute just for the curriculum.

In business school, students focus narrowly on landing a job. Doing well in exams helps. Learning extra-curricular skills like persuasion is rarely a priority. Placements depend more on school rank and student rank than on specific skills — a low-level equilibrium trap. The students have another challenge: persuasion is associated with unethical behaviour in many minds.

The distinct feel of snake oil

Many people see sales as shady — pushy people selling what you don’t need, smooth talkers with shaky ethics. Examples abound: souvenir sellers at tourist sites, water purifier companies pushing overpriced maintenance contracts, distant relatives recruiting you for multi-level marketing scams.

Persuasion is broader than sales, but it inherits sales’ bad reputation. Politicians promise change that never comes; companies tell you how to live. Unethical persuasion is common.

Added to this, most top MBA students haven’t had to persuade much before. Their success came from acing entrance tests, passing exams, and clearing the CAT — not from winning people over. Apart from an interview or two, persuasion wasn’t part of their journey.

So what can a young professional do?

I won’t recommend many resources. Not because they’re bad, but because it’s easy to read books and blogs and never practice. Still, here’s a blog listing good books. But don’t treat them as substitutes for real-world practice. You will be best served by following these four steps

Be aware: Persuasion is a skill. It is a very important skill.

Observe: Persuasion is everywhere. Watch your dad with his friends — who’s most persuasive, and why? Do the same with your mom’s friend group, and with your own.

Is the most persuasive person the one with the best arguments? Or are they persuasive even when wrong? If so, why? Is it confidence? Seniority? Bullying? Mockery? Ask why.

Politicians are master persuaders, but political observation is tricky — bias clouds judgment. Try to go beyond “obvious” answers like “their supporters are idiots / uneducated / bigots / sexists / casteists / racists / transphobes / Nazis.”

Understand ethics: In my ten years as a cofounder of a software product company, I was always comfortable with our persuasion. If we persuaded clients to buy, we delivered what we promised. If we persuaded employees to care about quality, we led by example.

If persuasion feels like a con, that’s because it often can be — but it does not need to be. There is a lot of ethical persuasion.

Practice: Start small — convince friends to agree with your restaurant choice. Then, persuade someone you’re attracted to be your life partner. Aim higher — persuade someone to change their political opinion. If you can do that, you’re unstoppable.

AI is cracking the IIT Joint Entrance Exam (JEE) now. Of course it is. At the end of day, JEE questions are puzzles: well defined problems with unique solutions and AI will have an edge there. In the AI world, you need to Go beyond Puzzle solving

“How to spot a bad expert” in this series has received a lot of attention.

Follow me on medium. Choose the option to get the stories delivered to your Inbox.

You can follow AskHow India (@AskHowIndia) or me (@YogeshUpadh) on twitter or on LinkedI