QUAD ECONOMY &TECHNOLOGY TASK FORCE:
A TIME FOR CONCERTED ACTION
Gateway House ReportAugust 2021

Executive
Executive Director: Manjeet Kripalani

Publication
Editors: Christopher Conte, Manjeet Kripalani
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Table of Contents
1. From the Task Force Co-Chairs...................................................................................................06
2. Why This Task Force?.................................................................................................................08
3. Members of the Task Force.........................................................................................................10
4. Executive Summary....................................................................................................................13
5. Findings and Recommendations................................................................................................15
1. Pharmaceuticals.........................................................................................................................15
2. Critical Minerals........................................................................................................................23
3. Fintech and Cybersecurity..........................................................................................................26
4. Space and 6G.............................................................................................................................31
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5. Undersea Communications Cables............................................................................................41
6. Conclusion....................................................................................................................................48
7. Appendix 1 : Acronyms...............................................................................................................49
8. Appendix 2 : List of Figures........................................................................................................52
9. Appendix 3 : List of Tables..........................................................................................................53

1. From the Task Force Co-Chairs
The Quadrilateral Security Dialogue – the “Quad” – has taken on increased relevance in recent years as its
four member countries recognize that to compete effectively with a rising China, they need to combine
their resources and capabilities and take collective action across the political, economic, technologicaland even military domains. The four nations demonstrated their commitment to the quadrilateralgrouping as a key pillar of their strategies in the Indo-Pacific region by holding the first-ever Quadsummit this past March. At that virtual meeting, the four countries committed to establishing working
groups on vaccine production and distribution, emerging and critical technologies, and climate change.
The in-person Quad summit scheduled for late September provides an opportunity for the four
countries to assert a collective role in ensuring that the development and deployment of technology
bolsters democratic development, rather than strengthening autocratic trends. The four nations have acommon interest in countering China’s efforts to control supply chains for certain critical minerals andtechnologies and to dominate the development of emerging technologies. The Quad must also work
together to influence global technology standard-setting with the goal of maintaining a free, open andliberal digital order. The Quad can pool its resources and capabilities to prevent China from dominating
the digital development of regions like Southeast Asia and the Pacific Islands. Quad members’ firstmover advantage in software can be leveraged to provide leadership in the critical areas of financial
technologies and cyber-security. By combining their resources and expertise while bringing to bearshared democratic values that must guide technological development, the four powerful nations can
succeed in shaping the landscape in which new technologies will emerge and in protecting access tocritical minerals and technologies.
This Task Force report addresses areas in which the Quad can make immediate and substantial progresson economic and technology issues and provides policymakers with concrete ideas for moving the Quaddiscussions forward. The Task Force report focuses on five key areas: pharmaceuticals, space and 6G,
critical minerals, undersea cables, fintech and cybersecurity. With contributions from experts in all fivesubject areas from Australia, India, Japan, and the United States, the Quad Economy and Technology Task
Force report presents its findings and recommendations for sustaining trusted and secure technology
ecosystems anchored in principles of transparency, security, accountability and individual control.
Some of the Task Force recommendations include bringing the unique strengths of each Quad nation to
the challenge of China’s increasing involvement in subsea cable construction; establishing a maritime
command center to deal with non-traditional maritime security threats; democratizing development of 6G
solutions; establishing cooperative mechanisms to enhance space situational awareness; and developing
common data protection standards in the fintech space—to name just a few.
The power of the Quad on pharmaceutical cooperation has already been demonstrated with theannouncement in March of the vaccine production and distribution initiative to manufacture 1 billion
vaccines and distribute them throughout the region by the end of 2022. The COVID-19 pandemic
demonstrated the pitfalls of relying on Chinese supply chains for critical medical equipment andpharmaceuticals. The global health crisis has widened the cracks already apparent between the Chineseand democratic systems, and emphasized the need for healthy competition.

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The main focus of this report is on technology cooperation that will assist the four nations in collectively
competing with China’s growing global digital footprint and influence.
The Task Force report also identifies barriers to Quad cooperation, such as diversity of standards andregulations across the member nations regarding economic and technological development. To help
overcome these hurdles, the private sectors must play an integral role in the Quad dialogue. The roleof the private sector is also critical in identifying areas that would benefit most from joint research anddevelopment programs designed to foster innovation and entrepreneurship and build upon each Quadnation’s scientific, technological and academic strengths.
The imperative for enhanced Quad cooperation on the five key areas of concern has never been moreurgent. The Task Force findings can help guide policy discussions, while the recommendations can serve
as a roadmap for actions the Quad can take both now and in the longer term.

Dr. Lisa Curtis,
Director of Indo-Pacific Security
Centre for New American Security
Washington, D.C.

Dr. Surjit Bhalla
Executive Director for India
International Monetary Fund
Washington, D.C.

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2. Why this Task Force?
The Quadrilateral Security Dialogue, or Quad, is evolving from a maritime security grouping for the IndoPacific into a long-term strategic partnership, with a wide spectrum of shared values and principles, acommon world view, and vital interests that are in alignment.
This evolution is possible because beyond defence, the four democracies that comprise it – Australia,
India, Japan, the U.S. – have much more to offer each other and the region.
All four have complementary strengths in technology, healthcare, finance – areas necessary for future
economic and social development. The unique mix of the group – three developed and one developing
nation, three Pacific and one Indian Ocean nation, three producer-trading nations with one massive
emerging market – lends itself to innovation, experimentation and cooperation that can be a template
for a new, post-pandemic geopolitical era.
Why not expand the Quad with an economic and technological dimension, and put its powerful matrix towork? Why should this interesting strategic partnership not be glued with the pragmatism of businessand the ideas of entrepreneurship?
The idea had already germinated at Gateway House, Mumbai in 2019. Several conversations with industry
executives, technology experts, venture funders, financiers and diplomats from the four countries over
six months made this clear: everyone wanted to enhance the Quad, but no one was willing to take thefirst step forward.
As Covid-19 took root in 2020, the importance of the Quad became apparent, as did the urgency of
putting our collective economic and technological knowledge to best use for the immediate and the longterm. What started as a series of exploratory conversations began to solidify as a study for a Task Force.
In May 2020, the Gateway House team identified five immediate areas ripe for economic and technologicalcooperation among the Quad nations, and experts from all the four Quad countries with the knowledgeof them from industry, academia, politics, the strategic community and government.
Key to any task force’s success is the choice of chairs – in this case, co-chairs. Dr. Lisa Curtis, Director of IndoPacific Security at the Centre for New American Security and Dr. Surjit Bhalla, executive director for India,
International Monetary Fund. Understanding the urgency of classifying and building a coalition of economic
interests with technological transparency, both co-chairs supported the Task Force with enthusiasm.
The Task Force’s first meeting was held virtually on March 23, 2021 – boosted by the first virtual summitof the Quad leaders held on March 12. After five months, the Task Force has been able to publish its
findings, available in this report.

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The Task Force has taken on the study of subjects that are expeditionary – emerging technologies, space,creation of new products, new standards and new supply chains essential for the world we will live in.
Through multiple meetings from four time zones, members used their knowledge and their networks tobring to this report a rich understanding of the subjects and to bring promising proposals for the future.
The outcome is a blueprint for the Quad’s most urgent and pressing cooperation in the immediate term
– and for the development of a long-term engagement. It is not just for the consideration of the four
governments, but for all democratic stakeholders, including business, the technology world, media andacademia. We hope all will use the findings of this report to prepare to face the challenges before us.

Manjeet Kripalani,
Executive Director,
Gateway House: Indian Council on Global Relations
Mumbai9

3. Task Force Members
CO-CHAIRS
1. Lisa Curtis
Senior Fellow and Director of the Indo-Pacific Security Program at theCenter for a New American Security (CNAS).
2. Surjit S. Bhalla
Executive Director for India, International Monetary Fund

MEMBERS
1. Rahul Bajoria
Chief Economist – India & Antipodeans, Barclays
2. Amit Bhandari
Fellow, Energy and Environmental Studies Programme, Gateway House
3. Rajiv Bhatia
Distinguished Fellow, Foreign Policy Studies Programme, Gateway House
4. Penny BurttGroup CEO, Asialink
5. Karl Eikenberry
Former US ambassador to Afghanistan and lieutenant general, US Army, retired.
6. David Feith
Adjunct Senior Fellow at the Center for a New American Security (CNAS)
7. Chaitanya Giri
Fellow, Space and Ocean Studies Programme, Gateway House
8. Bonnie Glick
Senior Adviser (non-resident), Project on Prosperity and Development, CSIS
9. Cdr. Amrut Godbole*
Fellow, Indian Navy Studies Programme, Gateway House*Commander Amrut Godbole has contributed to the section on Undersea Communications Cables. The contents of the report
are his personal views, and do not reflect the official position of the Indian Navy or the Government of India.

10. Pawan Goenka
Former Managing Director & CEO, Mahindra and Mahindra

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MEMBERS
11. Wendy Holdenson
Director and Executive Vice President, Mitsui & Co. Australia
12. Masahiro Kawai
Project Professor, Graduate School of Public Policy, University of Tokyo and Former Dean, ADB Institute
13. Dr. I-Chung Lai
President, Prospect Foundation
14. Walter Lohman
Director, Asian Studies Center, The Heritage Foundation
15. ND Nalapat
Professor of Geopolitics, Vice-Chair, Manipal Advanced Research Group and UNESCO Peace Chair,
Department of Geopolitics and International Relations, Manipal University, India
16. Baijayant “Jay” Panda
National Vice-President, Bharatiya Janata Party (BJP)
17. Cleo Paskal
Associate fellow Energy, Environment and Resources Programme
and the Asia-Pacific Programme, Chatham House
18. Sameer Patil
Fellow, International Security Studies Programme, Gateway House
19. Tirthankar Patnaik
Chief Economist, National Stock Exchange of India.
20. David Rasquinha
Former Managing Director and Chief Executive Officer, Export-Import Bank of India.
21. Martijn Rasser
Senior Fellow, Technology and National Security Program, Center for a New American Security (CNAS).
22. Phillip Reiner
Chief Executive Officer, Institute for Security and Technology
23. Peter Rimmele
Resident Representative of Konrad Adenauer-Stiftung Office, India
24. Ari Sarker
Co-President for Asia Pacific, Mastercard
25. John Seaman
Research Fellow, Centre for Asian Studies, Institut Francais des Internationales

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MEMBERS
26. Sharad Sharma
Co-Founder iSpirt Foundation
27. HK Singh
Director General, Delhi Policy Group
28. Tomohiko Taniguchi
Professor, School of SDM, Keio Univeristy and Former Advisor to the Cabinet of Shinzo Abe
29. Matthew Turpin
Visiting Fellow, Hoover Institution and Senior Advisor, Palantir Technologies.
30. Ashok Wadhwa
Group Chief Executive Officer, Ambit
31. Naoyuki Yoshino
Professor Emeritus, Keio University, Former Dean of the Asian Development Bank Institute124. Executive Summary
The Quad Economy and Technology Task Force was conceived in 2020 to study promising areas forincreased cooperation between the Quad countries of Australia, India, Japan and the United States
beyond the security maritime partnership they already have established.
The onset of the Covid-19 pandemic underlined the dependencies and vulnerabilities of the Quadnations individually and as a group. It bought an urgency to developing multi-stakeholder economic andtechnological cooperation between Quad members, identifying areas for collaboration, and expanding
and deepening a virtuous cycle of interdependence among the four democratic nations.
The Task Force includes 31 members from the four Quad countries, and is led by co-chairs Dr. Lisa Curtis,
Senior Fellow and Director of the Indo-Pacific Security Program, Centre for New American Studies,
Washington D.C., and Dr. Surjit Bhalla, Executive Director for India, International Monetary Fund.
Gateway House, which acts as the secretariat of the Task Force, conceived and identified five study areas
for the Task Force – the Pharmaceutical Sector, Critical Minerals Supply Chains, Financial Technology
and Cybersecurity, Space and 6G, and Undersea Communication Cables. The Task Force was divided
into five Working Groups whose members have extensive and varied expertise on the subjects. The Task
Force has run for five months, beginning with its first meeting on March 23, 2021, and culminating in
the final report to be released on August 23, 2021.
The Task Force found commonalities in the five study areas – in particular, the need to increase economic
and technological interdependence among the Quad countries and to establish common and updated
rules and standards for emerging technologies.
Supply chains received critical attention. In the area of pharmaceuticals, the Task Force recommends the
speedy production, distribution and rollout of vaccines to all regions, in particular the Indo-Pacific. On
the challenging issue of the waiver of Intellectual Property Rights, a pragmatic and immediate solution
is to increase the use of licensing agreements. On these and the issue of standards, efforts to engage withwilling partners under the Quad Plus-Plus formula must be intensified.
Since rare earths and other minerals that are critical for the future economy are available only in certain
regions, supply chains for them can be strengthened by creating deep financial markets similar to thosethat exist for bullion and oil. The Quad nations also can create a mechanism to monitor takeovers of rareearth assets and critical mineral supply chains, especially by state-owned enterprises, which lead tomonopolies and artificial shortages.
Undersea communications cables, which carry 95% of global data, is an area where the Quad has anadvantage arising from its leading companies in the sector and its growing markets in countries like
India. A public-private partnership to create an independent infrastructure provider for undersea cablesin the Indo-Pacific region will advance the technology. Most importantly, the Quad and its partners must
actively coordinate participation in international institutions like the International Telecommunications
Union to influence Information and Communications Technology (ICT) standards-setting positively. A
Quad Command for non-traditional maritime security threats will be beneficial in executing these plans.

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A Quad Strategy for 6G technology standards must be put in place through the Quad or the D-10 grouping
with a democratic ethos and transparency built into its research, development and deployment.
Establishing an ICT sub-working group within the Quad’s existing Critical and Emerging Technology
Working group will enhance the standards-setting exercise.
Nowhere it is more important to conceptualize and coordinate common standards for the Quad than on
cyber security and data protection. The four Quad nations can jointly use their significant niche capabilities
in finance and technology, and their capital, to expand access of fintech in developing countries.

145. Findings & Recommendations
1. COOPERATION ON PHARMACEUTICAL SUPPLY CHAINS
In the past two decades, global health crises have dominated the global discourse. From Ebola to SARS
and MERS, and now the COVID-19 pandemic, health emergencies are increasing. Crisis-related issues
have overshadowed perennial concerns such as the market power of pharmaceutical companies, andthe high cost of drugs. During the present pandemic, a truly collaborative response is necessary and thereaction to Covid-19 has shown the way.
KEY FINDINGSThe Quad nations are important players in the global pharmaceutical supply chain. Their market
size and production capacity influence the worldwide trade in pharma goods. The U.S. is the biggest
pharmaceutical market,1 and Japan is the third largest.2 India is the third largest producer of pharma
products by volume.
1. Market Size and Production• USA: The U.S. is currently the leading pharma player globally by value of production – US$ 500
billion, or 40% of the world market., It also is the third largest exporter, with exports valued ataround US$ 54 billion in 2019. The domestic market for pharmaceuticals in the USA is projected to
grow to US$ 675 billion by 2030. But the USA depends heavily on China for some pharmaceuticalproducts. In 2019, for instance, items imported from China included 72.48% of first-aid boxes andkits, and 49.86% of wadding, gauze, and similar articles.
• India: Globally, India ranks 14th in value of production of pharmaceutical products, but 3rd involume. The Indian pharma industry is valued at US$ 41 billion, with the potential to triple its size to
US$ 120–130 billion by 2030. However, India, over the years, has been importing on an average 68%
of its entire supply of bulk drugs and drug intermediates from China, according to data provided by
the chemicals and fertilizer ministry in reply to a parliamentary question.
• Japan: Globally, Japan ranks third in world by value of production of pharmaceuticals, and 18th inexports, with exports reaching US$ 6.4 billion in 2019. The Japanese pharma market is valued at US$
95 billion, the third largest in the world after the U.S. and China, and with an aging population, it is
only expected to grow. Recently, as part of the Japanese government’s effort to diversify its supply
chains and reduce reliance on a single source, all companies have been given subsidies to onshore
their manufacturing capabilities or move out of China.
• Australia: Australia holds 2% of the global pharma market, and imports more than 90% of its
medicines largely from the US majors, on which it spends over US$ 8 billion annually (US$ 8.7 billion
in 2020.) In recent years, Australia has suffered from frequent medicine shortages due to supply
chain disruptions. Additionally, Australia has limited manufacturing capacity across the domestic
pharma ecosystem, apart from vaccine manufacture.

1 SelectUSA, Biopharmaceutical Spotlight, available at: https://www.selectusa.gov/pharmaceutical-and-biotech-industries-united-states
2 Eolas Biosciences, Market Overview, available at: https://eolas-bio.com/market/

152. Foreign Trade• Total exports of pharmaceutical products by Quad members were recorded at US$ 80.0 billion in
2019, accounting for about 13% of global exports of pharmaceutical products during the year, up
from 12% in 2010.
Figure 1: Export of Pharmaceutical Products by Quad Countries

Source: Data accessed from ITC Trade Map, India Exim Bank Research•

Total imports by the Quad member countries, on the other hand, reached US$ 166.4 billion in 2019,up from US$ 88.0 billion in 2010. It may be noted that imports of pharmaceutical products by the
Quad member countries represented 25% of the global imports of pharmaceutical products in 2019.
• Between 2010 and 2019, exports of pharmaceutical products by Quad member countries registeredan Annual Average Growth Rate (AAGR) of 4.5%, compared to 3.8% recorded for total world exports.
• During the same period, across Quad members, the highest AAGR in exports was recorded for India(12.3%), followed by Japan (7.2%), the USA (3.2%) and Australia (3.2%).
• Collectively, between 2010 to 2019, Quad countries have been net importers of pharmaceuticalproducts, with their trade deficit in pharmaceuticals increasing from US$ 33.9 billion in 2010 to US$
86.3 billion in 2019.
• Country-wise, India was the only Quad member to consistently have a surplus in trade ofpharmaceutical products. The trade surplus increased from US$ 2.4 billion in 2010 to US$ 13.7
billion in 2019.
• The trade deficits arising from trade in pharmaceutical products in 2019 were: US$ 74.7 billion for
the U.S., US$ 20.8 billion for Japan, and US$ 4.6 billion for Australia.

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3. Drugs & Medication• India is the largest producer of generic drugs, and the third largest producer of pharmaceuticalproducts after the US and China, which occupy the top two positions.3• Australia is disproportionately dependent on the U.S. and China for its drugs, 90% of which it imports.4• Both India and the U.S. are dependent on China for Active Pharmaceutical Ingredients (APIs)5 and
Key Starting Materials (KSMs)6. India imports 68% of its APIs for generic-drug formulation from
China.7 With the advent of the COVID-19, domestic manufacturers have been taking steps to decrease
this reliance and restart domestic manufacturing of these raw materials. The U.S. also is dependent
on China for more than 90% of its antibiotics, and on India and China for 75% of its APIs.8 The
U.S. is dependent on India for other generic medicines too. The United States has identified thisdependency in its 100-day review of President Biden’s Executive Order 14017 on American Supply
Chains and is looking for ways to reduce such reliance.9• Chinese APIs are 35%-40% cheaper than Indian APIs,10 making a switch commercially challenging.
As countries, especially Quad nations come out with their own economic and industrial policies tokickstart their economies, a discussion on coordination, perhaps on the lines of Japan’s subsidies
programme,11 would be timely.
4. Vaccines• The goal of vaccinating 60-70% of the world’s population against Covid-19 by the end of the year
is still distant, eight months since the first vaccine was successfully developed. As of 30 June 2021,
3 billion vaccine doses have been administered globally; and an estimated 1.5 billion have beenbought and stockpiled by the advanced countries. This demands a greater political resolve and amore generous response globally.
• The Quad countries are significant contributors to the COVAX initiative set up by GAVI, the WHO, and
the Gates Foundation. Indian and American companies will manufacture the vaccines, while the U.S.
and Japan have committed funding and Australia, its logistics and distribution capabilities.12 In total,
the Quad has pledged 1 billion vaccine doses for distribution to the Indo-Pacific by the end of2022.

3 Indian Brand Equity Foundation, Indian Pharmaceutical Industry, available at: https://www.ibef.org/industry/pharmaceutical-india.aspx
4 Institute for Integrated Economic Research Australia, Australia’s Medical Supply Chain, February 2020, available at: https://defense.
info/wp-content/uploads/2020/02/Australias-Medical-Supply-Chain.pdf
5 Substances or combination of substances used in a finished pharmaceutical product (FPP), intended to furnish pharmacologicalactivity or to otherwise have direct effect in the diagnosis, cure, mitigation, treatment or prevention of disease, or to have direct effect inrestoring, correcting or modifying physiological functions in human beings
6 Intermediaries used in the process of manufacturing drugs. They are the building blocks on which drugs are made, though they may
not in themselves be of therapeutic value, and their usage is critical in the manufacturing process
7 Gateway House Discussion with Experts
8 Doug Palmer and Fenbarr Bermingham, U.S. policymakers worry about China ‘weaponizing’ drug exports, Politico, 20 December
2019, https://www.politico.com/news/2019/12/20/policymakers-worry-china-drug-exports-088126
9 The White House, Building Resilient Supply Chains, Revitalizing American Manufacturing, And Fostering Broad-Based Growth, 100Day Reviews under Executive Order 1401, June 2021, available at: https://www.whitehouse.gov/wp-content/uploads/2021/06/100-daysupply-chain-review-report.pdf
10 Gateway House Discussions with Industry Experts
11 See for more details: Japan External Trade Organization, Incentive Programmes, available at: https://www.jetro.go.jp/en/invest/
support_programs/incentive/
12 COVAX Initiative, World Health Organization, available at: https://www.who.int/initiatives/act-accelerator/covax

17•The global production, distribution and roll out of vaccines has been slow, and the speed of mutationof Covid-19 has posed a new and complex challenge. China’s announcement in June that it has
administered more than a billion doses of its vaccines to its people has added urgency to the Quadgovernments’ commitments, implementation of which is yet to begin.
• G7 governments in June committed to produce 1 billion vaccine doses (inclusive of 500 million Pfizer
doses by the U.S.) for distribution to developing countries. Overall, the G7 will distribute 2 billion
doses of vaccine. Europe is now the largest exporter of Covid-19 vaccines.
• The U.S. will make available 80 million doses to its partner countries in the developing world such as
Afghanistan, Brazil, Peru, India, Thailand, the African Union, Georgia, Oman, Kosovo, and the Caribbean. Of
this, 75% will be distributed through the COVAX facility, and 25% through bilateral channels.13• India, which has the largest vaccine manufacturing capability in the world, produces 60% of theworld’s vaccines,14 and has committed to manufacture the vaccines promised by the Quad Vaccine
Working Group.
• India exported 60 million vaccine doses under its Vaccine Maitri (friendship) programme fromJanuary-April 2021 but it suspended the programme due to the serious second wave of the virus.
Its capacity is currently strained, even for production at home, so India is importing vaccines. It
will resume vaccine supply to its neighbours in South Asia by July/August 2021.
• While vaccines are being manufactured, some innovations have been made to fill in the gap. In May
2021, India’s Defence Research and Development Organisation, in collaboration with Dr Reddy’sLaboratories developed a drug called “2DG,” which has shown promise in reducing Covid-19
mortality rates in India.15• Researchers at Griffiths University in Queensland, Australia too have developed a medicine thatcan kill 99.9% of the Covid virus. Subject to further trials and approvals, it is expected to becommercially available by 2023.16
5. Medical Devices & Equipment• The world has long been dependent on China for medical diagnostic kits, personal protective
equipment, gloves and other such equipment that became necessary for pandemic response.
• The U.S. is now the world’s largest producer and market for all medical devices. India, Australia
and Japan are all importers. India’s Production Linked Incentive Scheme for medical devices,Japan’s subsidy scheme for relocation of industries and supply chains and Australia’s new Modern
Manufacturing Strategy, aim to build domestic resilience and reduce dependence on China.17
13 White House Statements and Releases, FACT SHEET: Biden-Harris Administration Announces Allocation Plan for 55 Million Doses tobe Shared Globally, 21 June 2021, available at: https://www.whitehouse.gov/briefing-room/statements-releases/2021/06/21/fact-sheetbiden-harris-administration-announces-allocation-plan-for-55-million-doses-to-be-shared-globally/
14 Invest India, Pharmaceuticals available at: https://www.investindia.gov.in/sector/pharmaceuticals
15 DCGI approves anti-COVID drug developed by DRDO for emergency use, Press Information Bureau, 8 May 2021, available at:https://pib.gov.in/PressReleasePage.aspx?PRID=1717007
16 Deborah Marshall, Researchers develop direct-acting antiviral therapy to treat COVID-19, Griffith News, May 17, 2021 available at:https://news.griffith.edu.au/2021/05/17/researchers-develop-direct-acting-antiviral-to-treat-covid-19/
17 Operational Guidelines, Production Linked Incentive Scheme for Pharmaceuticals, Department of Chemicals, available at: https://pharmaceuticals.gov.in/sites/default/files/Operational%20Guidelines%20of%20PLI%20scheme%20for%20Pharmaceuticals_0.pdf;
Government of Australia, Modern Manufacturing Strategy, available at: https://www.industry.gov.au/data-and-publications/make-ithappen-the-australian-governments-modern-manufacturing-strategy/our-modern-manufacturing-strategy#:~:text=The%20Modern%20
Manufacturing%20Strategy%20is,for%20now%20and%20future%20generations.

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6. Supply Chains• Besides being overly dependent on China for medical supplies, the Quad nations are significantlyinterdependent. The US is dependent on India for generics, Australia relies on the U.S. for antibiotics,
and the U.S. is the market leader in medical devices. The Working Group preferred to expand thisvirtuous interdependence.
• Supply chain interdependences have created challenges in the past. Indian companies are dependenton U.S. manufacturers for filters and bioprocessing bags for vaccine manufacturing. They faced
severe shortages when the U.S. invoked its Defence Production Act to increase domestic supplies of
medical items to fight Covid.18 Restrictions on exports as a result of the DPA are now being relaxed.
Further action is suggested includes:• The US should ramp up production and, if appropriate, license to India and countries closer to US
shores technology involved in manufacturing filters and bioprocessing bags in ways that are likely
to require little or no retrofitting of manufacturing facilities.
• India might be able to scale up manufacturing in order to act as an alternative to China for importersof the filters and bags.
• India, Japan and Australia formally launched the Supply Chain Resilience Initiative (SCRI) in April
2021.19 This seeks to create a virtuous supply chain that is sustainable.
7. Research & Development• The U.S. is currently the leader in developing cutting-edge pharmaceutical technologies and systems,
innovation. Its R&D expenditures in the sector totalled an estimated $102 billion in 2019. A strong
IP protection regime ensures continued strong R&D spending.20• India gained a foothold in the world market with reverse-engineered generic drugs and APIs.
Now, it aims to be the global hub of manufacturing and R&D in pharma as well as a major player inoutsourced clinical research.
• In fiscal 2019, Japanese pharma companies stepped up, spending $14 billion on R&D – an amountequal to 16% percent of the industry’s total sales.21• Australia’s total annual R&D spending in 2020 was $922 million. The federal government’s 202021 budget boosted it by $2 billion for additional R&D incentives, in part to support development ofdomestic pharma manufacturing.22

18 Explained Desk, Explained: The US Defense Production Act, invoked to lift ventilator production, The Indian Express, March
30, 2020, available at: https://indianexpress.com/article/explained/explained-us-defense-production-act-ventilator-productioncoronavirus-6336374/
19 Australia-India-Japan Trade Ministers’ Joint Statement on Launch of Supply Chain Resilience initiative, Press Information Bureau, 27
April 2021, available at: https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1714362
20 https://www.phrma.org/en/Advocacy/Research-Development
21 Eolas Biosciences, Market Overview, available at: https://eolas-bio.com/market/
22 Australian research gets billion-dollar boost in sweeping stimulus budget, Smriti Mallapaty, Nature, available at: https://www.nature.
com/articles/d41586-020-02835-y

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•There is collaboration among Quad countries. For example, The Australia-India Strategic Research
Fund has been in place since 2006, promoting collaboration between scientists in the two countries.23
The latest grant round has prioritized collaborative research projects focused on contributing to
the global response to the COVID-19 pandemic. Among earlier instances of collaboration, one thatstands out is India’s participation in the U.S. President’s Emergency Plan for AIDS Relief (PEPFAR).24

8. Rules, Regulations & Standards• The inequality in vaccine distribution, access and manufacturing capabilities has led to proposals
to reassess Intellectual Property (IP) rules affecting emergency response. India and South Africa
introduced a proposal at the World Trade Organisation (WTO) in October 2020 to waive intellectual
property rights to speed up COVID vaccine production.25 The U.S. and the European Parliament have
now agreed to back the proposal and pursue negotiations, but other developed nations, including
Switzerland and Japan, are resisting the idea. A revised proposal submitted in May 2021, would
establish such a waiver for at least three years.26 While IP protection has fostered innovation andthe rapid development of vaccines, a contrarian view suggests that it would remain a roadblock to atruly global and equal recovery from the pandemic.
• The Working Group discussed the view that waiving IP rights is about politics and optics, and would
not necessarily enhance vaccine production. Even if IP protection were waived, enhancement would
require significant financial outlays to build new facilities and fund new entrants. What is required is
speeding up vaccine production in existing facilities. The Working Group also heard the alternative
view that IP rights waiver would be desirable for speeding up the production of vaccines and theirdistribution.
• International institutions have been slow or unable to respond to the pandemic. The World HealthOrganisation has been criticised at the World Health Assembly by many nations for being deferential
to the People’s Republic of China, stopping short of holding it responsible for the pandemic. The
WHO’s International Health Regulations have failed to meet the organization’s stated aims of a swift
response to emergencies. The Security Council failed to come up with a coordinated response, withany discussion or concrete solutions blocked by China.

23 Collaborating with India on Science and Research, Australian Government, Department of Industry, Science, Energy and Resources,
India Australia Strategic Research Fund, available at: https://www.industry.gov.au/funding-and-incentives/collaborating-with-india-onscience-and-research
24 India US Collaboration on PEPFAR, available at: https://in.usembassy.gov/embassy-consulates/new-delhi/sections-offices/pepfar/
25 Waiver From Certain Provisions Of The Trips Agreement For The Prevention, Containment And Treatment Of Covid-19,
Communication From India And South Africa, 2 October 2020, available at: https://docs.wto.org/dol2fe/Pages/SS/directdoc.
aspx?filename=q:/IP/C/W669.pdf&Open=True
26 Proposal for a TRIPS waiver from intellectual property protections for COVID-19-related medicines, vaccines, diagnostics andother health technologies, Medecins Sans Frontiers, https://msfaccess.org/sites/default/files/2021-05/COVID_TechBrief_MSF_AC_IP_
TRIPSWaiverQ%26A_ENG_27May2021-2.pdf

20

RECOMMENDATIONS

1. Short Term (1-2 Years)
1. Broad Policy Guidelines to the Quad governments
a. Reduce excessive dependence on China for materials like Active Pharmaceutical Ingredients (APIs),
Key Starting Materials (KSMs), Personal Protective Equipment (PPE), Oxygen producing equipment,
and other similar goods. This can be done by the three-pronged approach of onshoring, near-shoring,or ally-shoring of manufacturing and production capacity in the Quad countries.
b. Develop a virtuous cycle of interdependence through coordinated government programmes
among the four member countries to insulate them from dependence on China for raw materials,
vaccines and medicines. The Quad countries can coordinate their subsidies programmes or incentive
schemes to create a sustainable and robust pharmaceutical manufacturing ecosystem. Inspiration canbe taken from the subsidies given by the Japanese government, or India’s Production-linked Incentive
scheme. Discussions on a coordinated pharma industrial manufacturing policy should also take place on
a ministerial and leadership level.
c. Strengthen supply chain resilience systematically, comprehensively, and in a planned manner.
Increased digitalisation can strengthen the pharma supply chain with continuous monitoring, predictive
maintenance and remote automation. This will enhance productivity and reduce costs.
2. Supply Chain Resilience Initiative: This India-Australia-Japan initiative’s progress should be
expedited through digital technology and trade and investment promotion. Governments must
involve representatives of the pharma industry. The US should be invited as an observer, if not a full
member eventually. Ideally, it should evolve into a Quad SCRI.
3. A Quad Emergency Response Mechanism may be devised with 24-hour monitoring operations
centres in each of the four Quad countries, a sophisticated capacity to monitor the spread of
pandemics, foster coordination amongst disease control agencies, and oversee stockpiling of drugs
and other tools so that governments can respond quickly and effectively to emergencies in the IndoPacific region and elsewhere. This can be modelled on the humanitarian assistance and disasterresponse mechanisms developed during the Quad’s coordinated action during the 2004 Indian
Ocean tsunami.
4. A Strategic Research Fund for R&D cooperation. Based on the experience of the Australia-India
Strategic Research Fund and other similar schemes, an R&D partnership will allow the Quad to pool
resources and create common solutions to problems in the pharma sector. It could possibly provide
funding for R&D such as envisioned by the Indian Government, which plans to set up three bulkdrug parks to carry out research and manufacturing of APIs at a cost of Rs. 143 billion. Such local
initiatives can be the starting point for collaboration between the Quad countries. Quad countries
should work together to streamline their research funding and grants to enhance cooperation. A
thorough study of existing collaborations to see how they should be improved and coordinated may
be conducted. A Quad Strategic Research Fund may be considered to address needs of the member
countries.
5. A Streamlined approach to vaccine rollout is needed, first within the Quad countries, basedon lessons from the U.S. and the successful model adopted by Israel, with involvement of local
authorities. Logistics in India need special attention, given its criticality in the world’s fight against
Covid. The Quad as a group can subsequently support vaccination around the world, including
through the COVAX initiative.

21

6. Expansion of the Quad’s footprint• Energetic, imaginative, and pro-active vaccine diplomacy is necessary, with special attention paid
to branding and publicity to counter China’s influence.
• Potential collaborators such as Thailand, Malaysia, Indonesia, Philippines, Bangladesh, Israel, andTaiwan can be engaged bilaterally or trilaterally, or in the Quad Plus format, which already includes
Vietnam, New Zealand, and the Republic of Korea.
• Quad governments can consider encouraging or forging technical and financial collaboration
under the Quad Plus Plus format, with select European countries such as the UK, the Netherlands,
Germany and France. They also face excessive dependency on China for pharmaceutical raw
materials and intermediate goods, and can help create a virtuous cycle of interdependence among
democratic nations.
7. A Quad Pharma Cooperation Plan for Africa and Other Areas may be devised and announced
as soon as possible in consonance with each of the four Quad countries’ relationships with Africancountries. An expansive and inclusive approach should be followed. The Quad’s role in the pharma
sector also can be expanded to other regions like West Asia, Central Asia, and South America.
2. Medium Term (3-5 Years)
1. Diversity of Standards and Regulations among the Quad countries is a major barrier to cooperation.
A vigorous effort is needed, in partnership with industry, to identify how these can be synchronised ina planned way. Differing regulatory practices create barriers to entry, while IP regimes close the door
to universal medicines and technology. Negotiating common standards across the four Quad countries
will ensure freer movement of drugs, vaccines, and equipment.
2. A Limited Pharma Trade Deal is desirable to eliminate existing barriers within the Quad nations.
India in particular needs deeper deregulation to enable its industry to compete globally, especially visà-vis China. Export restrictions on raw materials for vaccines imposed by the U.S. must be addressed
given their impact on the ability of others to develop vaccine resilience.
3. The Issue of IP Rights Waivers needs to be resolved pragmatically, given divergent views within
the Working Group. The subject is being debated and negotiated and will be resolved at the WTO. A
consensus view in the Working Group was that while discussions continue at WTO, licensing is the best
way to move forward immediately.

22

2. COOPERATION ON CRITICAL MINERAL SUPPLY CHAINS
The global energy sector is witnessing a shift towards renewable energy, while electric vehicles are
gaining ground over the internal combustion engine. The optimism surrounding these industries canbe seen in the market value of Tesla, an electric-car maker worth more than the world’s five largest
automakers combined.
However, emerging technologies are dependent on certain minerals – lithium, rare earths, cobalt andnickel. The batteries used by electric vehicles as well as cell phones, tablets and laptops require lithiumand cobalt in large quantities. Electric motors and wind turbines require powerful magnets made fromrare earth minerals.
Some of the critical mineral supply chains are dominated by a single country – for instance, theDemocratic Republic of Congo is the world’s primary supplier of cobalt and rare earths, while China
dominates in gallium and polysilicon production. Overdependence on a single country for any criticalmineral is a worldwide concern. The Quad Working Group on Critical Minerals was formed to study
these supply chains, identify vulnerabilities and steps that can be taken to resolve them.
The Working Group considered two groups of minerals that are important for new industries:
1. Minerals used in batteries: Lithium, Cobalt, Nickel
2. Minerals used in magnets: Rare Earth Elements (specifically NdFeB magnets)
The Working Group has focused on Cobalt, an element used in batteries, because it reflects most of theissues of supply chain vulnerability and their mitigation.
KEY FINDINGS

1. Concentration of Supply Chains
Nearly two-third of global cobalt production and more than half of reserves are in the Democratic
Republic of Congo (Table 1). Cobalt must be smelted for use, and 40% of worldwide smelting capacity is
in China (Table 2). New smelters are currently being built in Canada and Chile.
Table 1: Trends in Cobalt Production (thousand tonnes)
Country

2015

2016

2017

2018

2019

Reserves

Democratic Republic of Congo

84.4

69.0

90.3

109.4

78.0

3,600

Russia

6.2

5.5

5.9

6.1

6.1

250

Australia

6.0

5.5

5.8

4.9

5.1

1,200

Philippines

4.3

4.1

4.6

4.4

4.6

260

Rest of the World

35.5

35.0

31.2

29.8

28.0

1,443

Source: BP Statistical Review of World Energy, 202023

Table 2: Cobalt Refinery Production (2016) (tonnes)
Country

Production

Share%

China

45,04646%

Finland12,393

12.6%

Belgium

6,329

6.6%

Zambia

4,725

4.8%

Japan

4,305

4.4%

TOTAL

98,000Source: JRC, Cobalt: demand-supply balances in thetransition to electric mobility

2. Small Size of Industry
While cobalt is critical for the battery industry, global cobalt production is small, just 121,000 tonnes
in 2019, with an industry size of an estimated $6-7 billion. This is trivial compared with industries that
produce metals such as steel and copper, which are worth hundreds of billions of dollars. Some of thecompanies involved in cobalt production and investment such as First Cobalt, Canada Silver Cobalt andNickel28 have market values of less than $100 million. Small market size means global mining majors
are less interested, and state support is more important.
3. Availability
Cobalt is usually found in combination with other minerals like copper and nickel and occasionally silver.
It is produced as a by-product. However, not all copper and nickel mines have cobalt as a by-product. In
volume and revenue, cobalt is a relatively minor product for the copper/nickel companies.
4. High Capital Expenditures
Based on publicly available figures from two projects (Capstone/Chile27, Horizonte/Brazil28), adding
cobalt separation to copper mines increases the costs significantly. This suggests that the capital
expenditure (capex) required to separate cobalt from copper is high relative to its output, resulting
in longer payback periods. As a result, companies try to tie up revenue by selling rights to the cobalt
stream to other investors (Vale/Voisey’s Bay Mine, Canada)29. New projects to refine/smelt cobalt are
currently coming up in Canada and Chile as secondary production from copper mines.
5. Futuristic Supply Source - Deep Sea
Cobalt is also found in small concentrations in polymetallic nodules in the seabed at depths of 4,5006,000 meters in the Clarion-Clipperton Zone in the Pacific Ocean and the Central Indian Ocean Basin.
However, production of this metal is not technically or financially feasible. At best, this is a resource forthe future.
27 2020 Santo Domingo Conference, available at: https://s25.q4cdn.com/701614211/files/doc_downloads/BMO-2020-ConferenceSanto-Domingo-43-101-Update.pdf
28 Horizon Mineral Annual Report 2020 available at:https://horizonteminerals.com/news/en_20210421-2020-annual-report.pdf
29 https://www.sec.gov/Archives/edgar/data/917851/000110465918039516/a18-15200_16k.htm

24

6.Recycling Possible
Cobalt can be recycled. However, given the expected growth in demand (projected demand in 2030 ismore than thrice that of 2020), most of the supply will have to come from new production.
7. Lithium
Based on the data studied by the Working Group, lithium is less susceptible to shocks and disruptionsin the supply chain than other metals and minerals.
RECOMMENDATIONS

1. More Information: A regular and credible source of information is needed for minerals required for clean
energy and electric vehicles. The Oil Market Report, a monthly publication on developments in the oilmarket, published by the International Energy Agency since the 1973 oil shocks, could serve as a model.
The IEA also issues occasional reports addressing changes in energy markets brought about by technology,
new discoveries and other developments. Such information is not currently available for the new energy
minerals. This gap must be addressed, perhaps via a dedicated IEA-like body.
2. Deeper Financial Markets: Mining projects have a long lead time (4-5 years in some cases) andthe life of the mine may be 20-25 years. In the oil, gold and silver industries, producers can sellcontracts in the futures market, and thus lock in future revenues; silver contracts can be traded up
to December 2025, for instance, while oil contracts are available beyond 2030. Having such deep
financial markets in these commodities like cobalt will be helpful.
3. More investment firms like Nickel28: These are necessary to provide liquidity to mining companies
for which low-volume minerals like cobalt will be a minor by-product. Large companies will not findsuch investments profitable, so Quad governments need to provide incentives to attract speculators.
The US and Australia already are working on this to encourage rare-earth mining.
4. Invest in a cleaner supply chain for critical minerals: Governments and industry must address theseeming contradiction between producing clean energy from dirty metals. The mining industry hasraised severe environmental concerns, allegations of labour rights violations, and complaints aboutpoor mining practices. While lax processes hastened growth, these issues must be addressed so thatthe supply chain can be made more sustainable and resilient. Quad countries can work together on
a cleaner extraction and processing policy not only in their own nations, but also in countries from
where they extract such critical minerals, leading to long term sustainable growth.
5. Monitoring takeovers: Some governments (U.S., Canada and Australia) have introduced restrictions
on acquisitions by state-owned enterprises in the past. The global cobalt supply chain also needs tobe given similar protection.
6. Increased R&D in deep-sea mining: This is already being done by different governments and may
provide a base that can later attract private firms. But the risks must be kept in mind. The seabed
is a largely untapped resource, with much of it still to be studied. The Quad countries can cometogether to create deep sea mining standards that take into account the environmental impacts ofsuch actions while taking advantage of the riches of the seabed.
7. Recycling and Replacement: This already is being done for cobalt, but will have to be introduced
for the other minerals as well. As demand stabilizes, it will gain in importance. The Quad countries
can pool their research capabilities to improve battery technologies and manufacturing in a mannerthat reduce the use of and dependency on cobalt and nickel.

25

3. COOPERATION ON FINTECH & CYBERSECURITY
In recent years, mobile phone-based fintech and digital payment apps have revolutionised finance andpayments, and are increasingly competitive with legacy financial entities such as banks. The COVID-19
pandemic has further spurred the use of mobile wallets and other digital payment services.
Constant innovation in the fintech industry has offered enormous opportunities for people, businesses
and governments. It has accelerated financial inclusion, reduced corruption, ensured greater access tolending and better money management for individuals and micro-businesses. But it also has createdrisks and challenges. Globally, cybersecurity threats have expanded in recent years, with increasing
instances of cybercrime, unauthorised transactions, ransomware attacks and data breaches.
The Working Group on Fintech and Cybersecurity examined how the Quad countries can cooperate on
fintech and cybersecurity, amongst themselves and in the Indo-Pacific region. The underlying premise
was that strengthened fintech and cyber capacity can help the developed world and developing regions
like the Indo-Pacific. The Quad has the financial heft, talent and markets to achieve these goals.

KEY FINDINGS

1. China’s Progress in the Financial Sphere• In the last decade, China has made tremendous progress in new financial technologies and innovation.
It has excelled in moving credit from physical collateral to informational collateral.
• This progress rests on three pillars: a) Software dominance (Alipay/WeChat payments interface);b) Hardware dominance (Made in China 2025 and 5G dominance); and c) Capital & tech acquisition(Tencent/Ant Financial/China Investment Corporation).
• This ecosystem caters to Chinese citizens and diaspora. But if executed well, it can be extended toother countries in the Indo-Pacific to integrate them in the Chinese financial ecosystem.
2. Development & Progress of IndiaStack• IndiaStack is an open-source set of modular, interoperable building blocks used with a biometricidentity (Aadhaar) and connected to bank accounts. It enables digital payments, government subsidies.
The cashless payment layer of IndiaStack has enabled innovations such as the revolutionary Unified
Payments Interface (UPI) – a real-time payment system that today averages 2 billion transactions permonth. Other innovations like the Data Empowerment and Protection Architecture (DEPA) requires
service providers such as insurance companies, lending firms and banks to obtain consumers’permission before using their data for secondary business activities – a protection often lacking in
the digital economy. Through DEPA, India is trying to bring consensual data use to a scalable level.
• During the pandemic, this tool has been tested across India’s vast, diverse population on a continental
scale with food rations for migrant workers and a national vaccination programme.
• DEPA has attracted serious interest from Japan and Australia as both explore opportunities to delivercredit through bank, fintech and public infrastructure.

26

•An improved identity layer of the IndiaStack is a modular and open-source identity platform,
better known as MOSIP or Aadhaar Version 2.0, which can help governments implement a digital,
foundational ID in a cost-effective manner.30 Such a framework could prove useful to developing
countries. India and Japan have discussed the possibility of implementing MOSIP in third countries
like Morocco, Sri Lanka and the Philippines.

3. Regulatory Risks & Challenges to Fintech• As fintech has expanded, so have regulations. Instead of consolidation and interoperability, there
is growing fragmentation of regulations and technical standards across different countries. Poorly
designed or inconsistent regulations and differing standards can constrain innovation and derail
fintech. It can also amplify cyber threats.
• It is necessary to establish uniform principles such as integrity, accountability, transparency, andprivacy and security.
• India’s financial orientation is defined by two guiding principles: almost-zero cost transactions
and strict exchange controls. India exercises strict control over its capital account convertibility.
This is out of sync with other central banks’ open capital accounts, including the Quad countries. It
has implications for fintech collaboration: Any Quad fintech initiative based on particular national
currencies can have only limited interoperability. Such initiatives may be attempted for B2Btransactions, but not B2C or C2C models.
4. Crypto Assets• China has unveiled an ambitious plan for a digital Yuan and a central bank digital currency (CBDC).
Despite the regulatory push, the digital Yuan hasn’t taken off. Nonetheless, China’s initiatives on
digital currency are expected to drive other countries’ CBDC initiatives.
• Private digital currencies are also proliferating. These are essentially financial assets, rather thancurrencies.
• Crypto assets are popular because their decentralised nature allows users to operate free of supervisionby centralised, government regulators. They have been used for many innovations in the financial sector,
such as peer-to-peer lending, crowd-funding and streamlined migrant remittances.31• Some investors use private digital currencies for speculation and hedging. In many countries,
criminals utilise these currencies for illegal transactions on digital black markets and ransom
payments. For instance, during the ransomware attack on its pipeline in May 2021, Colonial Pipelineof the U.S. paid $4.4 million ransomware in bitcoins to the Darkside criminal syndicate.
• Greater use of the CBDCs will require that consumers be confident that they provide the necessary
protections for in-person and online transactions, interoperate seamlessly across payment types
and take advantage of the capacity for existing network to facilitate broad and frictionless merchantacceptance.

30 “About MOSIP?” MOSIP, https://www.mosip.io/about.php. Identity platform is a service used by organisations to manage use of
and access to citizen/user/customer identity details for various purposes. Foundational IDs are national ID systems such as population
registers and national ID cards which can be used as a proof of legal identity. Both are useful tools for developing countries as they
develop their national ID programmes based on digital technology.
31 Flore, Massimo, “How Blockchain-Based Technology Is Disrupting Migrants’ Remittances: A Preliminary Assessment”, Publications
Office of the European Union, 2018, https://core.ac.uk/download/pdf/186490943.pdf

27

Table 3: Current state of CBDC in Quad countries
COUNTRY

CBDC Position

U.S.

The Federal Reserve is exploring issuing a digital dollar. No official plans announced
for next steps.

Japan

The Bank of Japan is running a proof-of-concept study on CBDC feasibility.

Australia

Initially explored CBDC a few years ago but concluded that it wouldn’t provide
enough incremental value to proceed. May consider looking into CBDC in the future.

India

Exploring options to introduce a CBDC. It will soon introduce a Cryptocurrency andRegulation of Official Digital Currency Bill, 2021 in the Parliament.
Source: GatewayHouse Research

5. Cybersecurity• Cybersecurity threats to financial systems are steadily expanding. Adversarial nation-states areengaging in debilitating attacks against critical financial infrastructure. Many countries use proxies
to engage in cybercrime for profit.
• Global costs of cybercrime now total over $1 trillion since 2018 – just more than 1% of global
GDP.32 Growing cyber threats can threaten the security of digital payment systems and could erode
consumer trust and impede the acceptance of fintech-based products.
• India is currently one of the fastest growing fintech markets globally, but it also the weakest link in
the Quad’s cybersecurity. India’s centralised storage of the Aadhaar database can act as a honeypot,
enticing cybercriminals and hackers.
• While the Quad countries have shared cyber threat perceptions, significant differences remain. Data
localisation is one such issue. India has mandated payment companies to store transaction-related
data in India. A key reason was the Indian government encountered repeated difficulties in accessing
cybercrime-related data stored on servers abroad. Varying legal practices further complicated the
problem, despite the existence of Mutual Legal Assistance Treaties. India’s preference for data
localisation runs contrary to other Quad countries’ preference for free flow of data – as expressed
through their support for the Osaka Track for global data governance at the G20 Summit in 2019.33• Currently, there is no adequately enforced global mechanism to detect cyberattacks and assess cyberand privacy risks to financial systems. There are several financial guidelines like the Basel norms set
by the Bank for International Settlements and standards set by the Financial Stability Board (FSB)
that protect the international financial system, yet comprehensive international coordination on
cybersecurity has not yet materialised – a lack that is hurting the Quad countries since they are someof the world’s leading digital economies.
• A core element of cybersecurity is the security of digital infrastructure based on reliable hardware.
The Quad and other countries have national security and espionage concerns vis-à-vis Chinese
hardware, which dominate the global market. Yet very few cost-effective and viable alternatives
exist for these countries.

32 Zhanna Malekos Smith, Eugenia Lostri and James A. Lewis, “The Hidden Costs of Cybercrime”, CSIS-McAfee, December 2020,
https://www.mcafee.com/enterprise/en-us/assets/reports/rp-hidden-costs-of-cybercrime.pdf
33 Ambika Khanna, “Decoding data localisation”, Gateway House, 4 July 2019, https://www.gatewayhouse.in/data-localisation/

28

Table 4: Bilateral cyber cooperation among Quad countries
India-U.S.

• 2016: Framework for the U.S.-India Cyber Relationship• 2016: United States-India Cyber Dialogue

India-Australia• 2020: Framework Arrangement on Cyber and Cyber‑Enabled Critical
Technologies Cooperation• India-Australia cyber policy dialogue

India-Japan• 2020: Cybersecurity agreement with focus on 5G technology and criticalinformation infrastructure

U.S.-Japan• Cybersecurity cooperation covered under existing mutual security treaty

Australia-Japan• Australia-Japan Cyber Policy Dialogue

Australia-U.S.

• 2020: Cyber training Capabilities Project Arrangement
Source: Gateway House Research

RECOMMENDATIONSThe Quad can enable policies, principles, standards and benchmarks to create a trusted and cyber secured
ecosystem of fintech that other countries can adopt too.

1. Identify common data protection standards: To ensure security and privacy and enable futureinteroperability, the Quad can conceptualise common data- protection standards, especially at the
Bank for International Settlements in Basel and the South East Asian Central Banks Centre in Kuala
Lumpur. These fora can be used to create a new standards ecosystem which must be anchored in
the principles of transparency, security, accountability, individual control and rights, integrity, anddata minimisation. A sinking fund to support and help countries adopt common data standards andreporting practices can be a start; such a fund also could give traction to promising initiatives like
India’s DEPA.
2. Push technology in the “West” of the Indo-Pacific: Fintech-based digital payment systems areunder-developed in Africa, but potentially can provide a low-cost, high-impact banking model that
leap-frogs legacy banking structures. The Quad countries can offer their technological expertise andIndia’s MOSIP model.
3. Encourage wider accession (including by India) to the Budapest Convention on Cybercrime:
The 2001 Budapest Convention is the most robust and mature international mechanism to address
cybercrime, including by allowing lawful access to data stored outside a country’s jurisdiction. All
the Quad countries except India are among the 67 signatories.34 Working through its reservations
about data jurisdiction will enable India to accede to the Budapest Convention and join hands withthe other three Quad countries to encourage more countries to accede to the convention. This will
facilitate cross-border investigations in cybercrimes.
34 India was not part of the drafting process for the Budapest Convention. India has generally opposed treaties that have beendrafted without its consultation. Therefore, India, along with China and Brazil, has argued that the Convention remains a treaty draftedby Europe, reflecting its priorities. India is also particularly opposed to the Clause 32 (b) of the Convention which talks about “transborder access to stored computer data with consent or where publicly available” and specifically states that a party may, without theauthorisation of another party, “access or receive, through a computer system in its territory, stored computer data located in anotherParty, if the Party obtains the lawful and voluntary consent of the person who has the lawful authority to disclose the data to the Party
through that computer system.” India perceives this clause as discriminatory and inimical to its sovereignty.

29

4. Utilise financial means to encourage non-Chinese hardware: Cost considerations are important,but security concerns will ultimately prevail in addressing the use of Chinese hardware and systems.
To ensure that the countries make the right choice, the Quad can consider using its financial andmarket might to promote usage of the best available non-Chinese hardware.
5. Stress-test the resilience of the digital and financial infrastructure: Resilience of the financial
sector is essential. Regular stress-tests are necessary to assess the ability of computer networks andpayment systems to handle cyberattacks or incidents. Just like military exercises, the Quad countries
can undertake joint exercises similar to military exercises to simulate a sustained targeting of thefinancial sector. This will help them develop a response to persistent, offensive cyber operations anddata breaches and identify areas requiring capacity strengthening.

30

4. COOPERATION ON SPACE & 6G
Information Communications Technology (ICT), the backbone of the digital economy, is fast evolving
globally. The developing economies, home to large and densely-settled human populations – andtherefore massive markets – are becoming increasingly connected. A recent study estimates 59.5% of
the total global population are internet users. Between January 2020 and January 2021, when most of
the world was reeling under the economic impact of COVID-19, the number of internet users increased
316 million, a 7.3% growth rate.35
Growing ICT networks and ensuring internet penetration has become national policy for both developing
and developed economies. They seek to raise their stakes in the global digital economy, estimated to hit$23 trillion by 2025 – more than twice the $11.5 trillion of 2017. That means the digital economy willbe 24.3% – one quarter – of the total global economy by 2025.36
In recent years, the People’s Republic of China (PRC) has progressed dramatically in the research anddevelopment (R&D) of certain applications of ICT. It now ranks first in number of Patent Cooperation
Treaty (PCT)37 applications in digital communications, second in innovations in computer technology,
and third in audio-visual technologies.38 Although the number of PCT filings, which represent a
growth rate of 10.6% since 2018, do not represent qualitative intellectual property (IP) progress, it
demonstrates strides that the PRC has taken to consolidate its position as an IP-generating nation. It
has surpassed the US, Japan, Germany and South Korea. Of the 10 top PCT applicants in the world, four
- Huawei Technologies, Guang Dong Oppo Mobile Telecom, BOE Technology Group, Ping An Technology– originate from the PRC.39
The PRC’s robust intellectual property progress has facilitated its geoeconomic outreach via the Digital
Silk Route, the technology-arm of the Belt and Road Initiative. Its aggressive penetration of newer
markets as fifth-generation (5G) ICT are being deployed has aggravated the US-China trade war. With
technology companies now in the late-stage R&D of sixth-generation (6G) ICT technologies, the hostility
will deepen.

35 S. Kemp, “Digital 2021: Global Overview Report”, Retrieved from https://datareportal.com/reports/digital-2021-globaloverview-report
36 Huawei Technologies & Oxford Economics (2017), “Digital Spillover: Measuring the true impact of the digital economy,”
Retrieved from https://www.oxfordeconomics.com/publication/open/284959#:~:text=The%20value%20of%20connectivity%20
is,15.5%20percent%20of%20global%20GDP.&text=By%20then%2C%20we%20expect%20the,24.3%20percent%20of%20
global%20GDP
37 Patent Cooperation Treaty of 1970 is an international legal treaty that offers a unified procedure for inventors and innovatorsof member nations for filing patent applications
38 WIPO Statistics Database, September 2020, accessed on 15 May 2021, https://www.wipo.int/edocs/infogdocs/en/
ipfactsandfigures2019/
39 WIPO Statistics Database, September 2020, accessed on 16 May 2021, https://www.wipo.int/export/sites/www/ipstats/en/
docs/infographic_pct_2019.pdf

31

Figure 2:
The People’s Republic of China has
begun to top PCT patent applicationsin Information Communications
Technology domain globally.

32

KEY FINDINGSSpace-based 6G, in the era of China’s Digital Silk Road and BRI-Spatial Information Corridor, canIntensify Technopolitical Wars

Nations that intend to dominate certain technologies pursue R&D a generation or two ahead of its
deployment, a process that includes accruing IP, controlling technology standards and ultimately
deploying new products in the market. Moving from IP development to deployment of new technologies
can take spans years or even a decade. It is a high risk-high-reward investment that requires an ability
to endure long technology-gestation periods. While 5G is only now being deployed in some parts of theworld despite its popular prospects, strategies and business plans for 6G ICT technologies have alreadybeen initiated in many places.
Figure 3: The exhaustive IP generation landscape of 6G ICT technologies {referred from [5]}What makes 6G special? 5G is not fully equipped for numerous new Fourth Industrial Age applications.
These Industry 4.0 applications include virtual tourism, virtual surgeries, virtual education, smart homes,
work-from-anywhere, virtual and augmented reality (VR-AR), unmanned aerial vehicle networks, drone taxi,
vehicle-to-everything (V2X), internet-of-things, smart city, e-medicine, holographic conferencing, disaster andemergency management, and smart clothing. Operating these will eventually demand higher bandwidth datatransmission than currently available – bit rates between 100-1000 Gbps, moving from the gigahertz (109)
into the yet unexploited terahertz (1012) spectral ranges, with a latency of under 1 microsecond, and superiorreliability performance. 5G cannot perform at these levels, hence the need for 6G.40

40 A. Yazar, S.D. Tusha, H. Arslan, “6G Vision: An Ultra-Flexible Perspective,” ITU Journal on Future and Evolving Technologies,
Volume 1, Issue 1, December 2020. https://www.itu.int/dms_pub/itu-s/opb/itujnl/S-ITUJNL-JFETF.V1I1-2020-P09-PDF-E.pdf

33

Figure 4: 6G ICT is more flexible (numerous rounded options) than its predecessor generations
offering many enabling capabilities (oval options), each with tremendous applications{referred from [5]}.

6G most likely will not represent an incremental evolution in ICT from 5G technology. It will involve
data-transmissions taking place through space and aerospace platforms.41 It may operate flexibly
across various wavelength ranges of the electromagnetic spectrum (microwave, millimetre wave,
terahertz, and visible light). And it will involve other changes in ICT technologies, including innovations
with flexible encryption for coexisting radar and cellular network wavelengths; flexible, heterogenous
networks (that includes cell-free networks, flying access points, space-aerial-terrestrial-underwater
network integration); and secure, green, and intelligent communications with integrated sensing. These
innovations will be crucial for providing last-mile connectivity and internet access to global internet
users, bringing the those who are still without internet connection into the connected fold. Therefore,
the potentially multi-trillion-dollar 6G ICT market may see an even more intense technopolitical contest
than the ongoing one for 5G.
The PRC claims to have made some progress with 6G. In November 2020, it claimed to have launched
the world’s first 6G experimental satellite, which was jointly developed by Chengdu Guoxing Aerospace
Technology, UESTC, and Beijing MinoSpace Technology.42
41 S. Song, M. Choi, Y. Goh, J. Yun, W. Yoo, W. Yang, J. Jung, J.M. Chung, “Analysis of wireless backhaul networks based on
aerial platform technology for 6G systems,” Computers, Materials and Continua, 62(2), 473-494. https://doi.org/10.32604/
cmc.2020.09052
42 https://news.cgtn.com/news/2020-11-07/China-sends-world-s-first-6G-communications-test-satellite-into-orbit-VdUnqnhFde/
index.html

34

The PRC is known to be a fast mover in developing and deploying ICT technologies, giving it acompetitive edge in setting technological standards for those who follow. The PRC’s ICT scientists areusing use 6G as a core element of their national vision to attain a Ubiquitous Intelligent Mobile Society
domestically.43 PRC also aims to make 6G an important constituent of the space arm of its Belt and Road
Initiative, which it describes as the Space Information Corridor (SIC).44 The PRC can seek to introduce
Chinese characteristics into the forecasted global ITU-R IMT-2030 standards of the International
Telecommunications Union (ITU).45 Such introduction, which could promote China’s national interests
over those of other countries, must be vetted internationally, not accepted uncritically.
The PRC-led and Beijing-headquartered Asia-Pacific Space Cooperation Organization (APSCO),46 theUnited Nations Economic and Social Commission for Asia and the Pacific (ESCAP),47 and the United
Nations Office for Outer Space Affairs (UNOOSA) are important stakeholders of PRC’s BRI-Space
Information Corridor (Table 1).48 The PRC does not work directly on its 6G aspirations through these
multilaterals, but indirectly engages them in broad capacity-building domains that are linked to thedevelopment of 6G. It could aim to use capacity-building through space multilaterals to engage its BRI
partners so they will become a captive market for 6G telecommunications when market deployment
begins in the second half of the 2020s. Their involvement could be particularly important in addressing
ground-based components of the aerospace-based 6G.

43 S. Chen, Y-C. Liang, S. Sun, S. Kang, W. Cheng, M. Peng, “Vision, Requirements, and Technology Trend of 6G – How to Tackle theChallenges of System Coverage, Capacity, User Data-rate and Movement Speed,” 2020, https://arxiv.org/pdf/2002.04929.pdf
44 “Chinese satellites will build Belt and Road in space,” Oxford Analytical Daily Brief, 7 November 2019, https://dailybrief.oxan.com/
Analysis/GA247596/Chinese-satellites-will-build-Belt-and-Road-in-space
45 “Beyond 5G: What’s next for IMT?” ITU News, 2 February 2021, https://www.itu.int/en/myitu/News/2021/02/02/09/20/Beyond-5GIMT-2020-update-new-Recommendation
46 Retrieved from the Asia-Pacific Space Cooperation Organization website, accessed on 15th May 2021, http://www.apsco.int/upload/
file/20180703/201807031400255205.pdf
47 Retrieved from the Department of Economic and Social Affairs Sustainable Development – UN-ESCAP website, accessed on 15th
May 2021, https://sdgs.un.org/un-system-sdg-implementation/economic-and-social-commission-asia-and-pacific-escap-24510 ; “A Studyof ICT Connectivity for the Belt and Road Initiative (BRI): Enhancing the Collaboration in China-Central Asia Corridor,” Working Paper
by the Information and Communications Technology and Disaster Risk Reduction Division of the UN-ESCAP, available at: https://www.
unescap.org/sites/default/files/ICT_BRI_final%20v3_2.pdf
48 J. Hui, “The Spatial Information Corridor Contributes to UNISPACE+50,” September 2017, Retrieved from the UNOOSA website,
accessed on 15 May 2021, https://www.unoosa.org/documents/pdf/copuos/stsc/2018/tech-08E.pdf

35

Table 5: China’s proactive engagements in multilateral bodies to promote its
Belt-and-Road Initiative – Space Information Corridor megaproject
Multilateral
Organization

Broad Cooperation
with PRC

Specific ICT Projects

Specific Space
Projects

United Nations
Economic and Social
Commission for Asiaand the Pacific

Transport; Tradeand Investment; ICT;
EnergyAsia-PacificInformation
Superhighway

Asia-Pacific Plan of
Action on Space
Applicationsfor Sustainable
Development

United Nations
Office for Outer
Space Affairs

Satellite Navigation,
Telemedicine, teleeducation, railtransportation, port
management, fossil
fuel industry, peacemaking, emergency
rescue, counterterrorism

Broadband China

Data Collection
Satellite System

Asia-Pacific Space
Cooperation
Organization

Disastermanagement,
telemedicine, ICT,
satellite navigation

Research on
AtmosphericEffects on Ka-Band
Rain Attenuation
Modelling
Project; Researchon Ionospheric
Modelling throughStudy of Radio Wave
Propagation

COMSAT-based
Telecommunications
Network;
Radiometric
Calibration ofSatellite Sensors
Project; International
Satellite Navigation
Monitoring andAssessment Service
Project

Source: Gateway House

The countries that comprise the Quadrilateral Security Dialogue (Quad), the Quad Plus (which currently
includes Vietnam and South Korea) and the D-10 Strategy Forum,49 also have initiated 6G R&D throughpublic-private partnership (Table 2). However, many of these initiatives lack an over-arching strategic
imperative akin to the PRC’s BRI-SIC megaproject.

49 Retrieved from the D-10 Strategy Forum page on the Atlantic Council website, accessed on 15 May 2021, https://www.
atlanticcouncil.org/programs/scowcroft-center-for-strategy-and-security/global-strategy-initiative/democratic-order-initiative/d-10strategy-forum/36

Table 6: Some Concrete 6G national projects led by Quad,
Quad+ and D-10 nations (under prep)
Quad/Quad+/D-10

Concrete
Strategy

PublicStakeholders

PrivateStakeholders

Australia‘Secure G’
Connectivity
Test Lab – Digital
Economy Strategy

Minister of Digital
EconomyvariousIndia

Department of
Telecommunications

variousJapan

Ministry of Internal
Affairs andCommunications

NTT DoCoMo

Industrial Technology
Research Institute(Taiwan)

AT&T • Apple • Bell

United States

Next-G Alliance

NC State University
Johns Hopkins
University – Applied
Physics Laboratory
Purdue University

Booz Allen Hamilton
Charter Communications
Ciena • Cisco • Dell
Ericsson • Facebook
Global Foundries
GoogleHewlett Packard EnterpriseIntel • Interdigital • JMA
Keysight Technologies
LG • Lockheed Martin
Mavenir • Mediatek
Microsoft • Mitre
NI • Nokia • Offino
Qualcomm • Radisys
Samsung
Sharp Laboratories
T-Mobile • Telnyz • Telus
US Cellular • Verizon
Viavi Solutions

37

Quad/Quad+/D-10

Concrete
Strategy

PublicStakeholders

PrivateStakeholders
VMWare • Xilink
Cohere Technologies
NTT DoCoMo (Japan)
Futurewei (Huawei affiliate)
Mobile Experience
NEC (Japan)

South Korea

European Union

Hexa-X

Ministry of Scienceand ICT

Samsung Research

University of Pisa (Italy)

Nokia Solutions and Networks(Finalnd)

University of Oulu (Finland)
Universidad Carlos III de
Madrid (Spain)
Technische Universität
Kaiserlautern (Germany)
Technische Universität
Dresden (Germany)
Politecnico di Torino (Italy)
SZTAKI (Hungary)
CEA (France)
Chalmers University ofTechnology (Sweden)
Aalto University (Finland)

SK Telecom

Ericsson AB (Sweden)
Atos Spain SA (Spain)
B-COM (France)
Ericsson Arastirma (Turkey)
Ericsson Magyarorszàg(Hungary)
Intel Deutschland (Germany)
Nextworks (Italy)
Nokia Solutions and Networks(Germany)
Orange (France)
Qamcom Research andTechnology (Sweden)
Siemens (Germany)
Telecom Italia (Italy)
Telefonica (Spain)
Wings ICT Solutions (Greece)

DigitalSingleMarketEuropean Commission

various(NextGeneration
Internet)

38

RECOMMENDATIONSThe Quad has a strong interest in promoting democratic development, standardization and deployment
of 6G.
1. Instil a democratic ethos in R&D and deployment of 6G. The Quad aspires to create an Asian
Arc of Democracy.50 Sustaining a democratic ethos in the real world depends on the maintenance andresilience of ‘freedom of expression’, ‘free market’, ‘free media’, transparency, and pluralism. All theseare dependent on democratization of communications and information networks and technology
development. Hence, democratization of 6G should be a crucial undertaking in the larger QUAD and
QUAD Plus agenda.
2. Establish an ICT Sub-Working Group within the Quad Critical and Emerging Technology
Working Group. In March 2020, the US initiated the first Quad+ discussion with the participationof Vietnam and South Korea.51 The same meeting also saw the constitution of the Quad Critical andEmerging Technology Working Group.52 An ICT Sub-Working Group under the ambit of this Working
Group, can be contemplated. Such a sub-working group can initiate track-1 diplomatic discussions withparticipation of ICT R&D, deployment, regulation and facilitation experts nominated by the participating
governments. Expertise can represent telecommunications, space launch, space situational awareness,
patents, electromagnetic spectrum including 6G stakeholder agencies, departments and ministries. The
country representatives in the sub-working group can discuss methodologies to reduce monopolistic
technoeconomic control over ICT.
3. Quad Strategy for 6G Technology Standards: As visible in Figs. 2 & 3, 6G R&D, standardizationand deployment needs cross-sectoral oversight spanning various departments, ministries, or agencies
nationally and internationally. The Quad requires cooperation on a domestic and grouping-wide 6G
regulation-plus-facilitation architecture for executing international cooperation. In the PRC, the BRISIC is governed at the top by the National Development and Reform Commission (NDRC), focusing on
policy and economics, while the State Administration of Science, Technology and Industry for National
Defense (SASTIND), focuses on science, technology innovation, and intellectual property. The Quadcan initiate a dialogue on 6G technology standards at a track-2 level. The telecommunication standard
bodies of Quad and Quad+ nations recognized in the 5th Generation Partnership Project (5GPP),
along with their public scientific agencies that deal with aerospace, space, electronics, engineering,laboratories, spectral allocation sectors, can co-ordinate to share best practices and understandconvergences and divergences.

50 R. Sikri, “India’s Foreign Policy Challenges,” Distinguished Lectures – Ministry of External Affairs, Government of India, 30
January 2017, https://www.mea.gov.in/distinguished-lectures-detail.htm?611
51 “Foreign Secretary’s Conference Call with counterparts from Indo-Pacific Countries,” Ministry of External Affairs, Governmentof India, 20 March 2020, https://mea.gov.in/press-releases.htm?dtl/32592 Foreign+Secretarys+Conference+Call+with+counterparts+from+IndoPacific+Countries
52 “Fact sheet: Quad Summit,” The White House – Briefing Room, 12 March 2021, https://www.whitehouse.gov/briefing-room/
statements-releases/2021/03/12/fact-sheet-quad-summit/

39

4. Seek multilateral Cooperation on Space Situational Awareness for 6G Satellite Constellations:
The Quad nations can stimulate co-operative mechanisms for sharing space-situational awarenessdata to avoid collision of satellites in 6G constellations. The cooperation mechanism can provide
a regulatory foundation for satellite ground-stations in each other’s sovereign territories. Suchcooperation will radially extend not only into the International Telecommunications Union and the
3GPP, but also allied space and aerospace technology standards bodies and through UNOOSA, UNESCAP, UN-CTAD, Group of 77 (G77), Group of 24 (G24), and the newly formed Space20 under theGroup of 20 (G20) multilateral.
Table 7: Much of Asia and all of Africa and South America, which are among the world’s biggest
telecom markets, currently are not represented in Indo-Pacific QUAD Plus and D-10 . Leaving
these regions out would give monopolistic 6G technology companies and service providers
unregulated access to these markets
Quadrilateral
Security Dialogue

Quadrilateral Security
Dialogue Plus (QUAD+)

D-10 Strategy
Forum

Australia

Australia

Australia

India

India

Canada

Japan

Japan

FranceUnited States

United States

Germany

New Zealand

India

South Korea

Italy

VietnamJapan
South Korea
United Kingdom
United States
European Union
Indonesia (o)Poland (o)Spain (o)40

5. COOPERATION ON UNDERSEA COMMUNICATION CABLES
Today, more than 95% of international internet data, including cloud and digital communication, aretransmitted through undersea, fibre-optic cables, making these cables critical infrastructure for every
nation. The world’s reliance on undersea cables – and hence cables’ strategic significance53 – willcontinue to grow in the years ahead.
The Quad Undersea Communication Cable Working Group was formed to identify areas where Quad nations
can cooperate to provide trusted connectivity to digitally underserved nations in the Indo-Pacific, and tocollaborate in multilateral forums to formulate technology standards and legal frameworks.
KEY FINDINGS

1. Importance of Undersea Cables
Undersea fibre-optic cables are the backbone of the global economy, transmitting $10 trillion in financialtransactions each day. The Indo-Pacific region, the most populous region in the world with 60% of
global GDP and the world’s fastest growing economies, is also home to the fastest growing undersea
communication cable networks.
Table 8: Internet growth 2018-2023
Parameter

Global2018

Asia Pacific

GlobalNumber of Internet Users

3.9 billion

2.1 billion

5.3 billion

Networked devices

18.4 billion

8.6 billion

29.3 billion

Mobile subscribers

5.1 billion

2.7 billion

5.7 billion

Fixed Broadband Speeds

45.9 Mbps

62.8 Mbps

110.4 Mbps

2023

Source: Cisco Annual Internet Report (2018–2023) White Paper

While satellite communication is increasing connectivity in remote areas, undersea cable connectivity
will continue to be the chief driver of internet growth in years to come due to its affordability andgreater bandwidth. Between 2018 and 2020 alone, international bandwidth used by global networks
more than doubled to exceed 2,000 terabits per second (Tbps). Over the next three years, $8 billion
in new investment is expected to finance more than 60 new cables totalling more than 290,000 km in
length. Among the drivers of this growth are the developing world’s transition to 5G, which will greatly
increase its needs for bandwidth, and the developing world’s efforts to bring connectivity to the nearly
half of the world that is currently not online.

53 The United Nations, in 2011, described submarine communications cables as “critical infrastructure” that is “vitally importantto the global economy and the national security of all States.” https://www.un.org/en/development/desa/population/migration/
generalassembly/docs/globalcompact/A_RES_66_231.pdf

41

2. Major Players
Japan’s NEC, U.S.-based SubCom and France-headquartered Alcatel Submarine Networks are the world’s
top three suppliers of optical cables, with more than 90% of market share. They also own much of thetechnological elements of undersea networks (both wet and dry components) across the entire spectrum,including subsea geological survey, cable laying and repair capabilities. China’s Huawei Marine Networks,
rebranded as HMN Technologies in Oct 2020, is an up and coming fourth player.
Table 9: Undersea communication cable systems – Major Players
Country

Company

Fibre Optic Cable supplied (Kms)U.S.

SubCom680000Japan

NEC300000FranceAlcatel

330000China

HMN Technologies

65000

Total length of submarine cables laid is 1.3 million kms
Source: Gateway House Research

China aims to capture 60% of the world’s fibre-optic communications market by 2025. That goal is
directly linked to its global plans for the Digital Silk Road, and Belt and Road Initiatives. Beijing, throughthe Made in China 202526 and China Standards 2035 initiatives, aspires to lead both in advanced
manufacturing and standard-setting related to it.27
China began focusing on the undersea cable infrastructure market in 2007. It adopted a three-fold approach:•

Maintenance and Upgrades: In 2007, China’s Huawei Technologies entered into a joint venture(JV) with the U.K.’s Global Marine. With more than 150 years-experience in the installation andmaintenance of subsea telecommunications systems, Global Marine was an ideal partner for Huawei,
which in 2006 was the fastest growing vendor of optical networks, and ranked No. 2 with an 11.3%
global market share. The JV led to the creation of Huawei Marine Networks, thus providing Chinaa foothold in the business of maintaining and upgrading existing cable systems. Gaining from thisexperience, Chinese companies now have scaled-up their capabilities and have built or repaired
almost a quarter of the world’s approximately 400 submarine cables. These include – pre-2010
upgrades to a major submarine cable connecting the U.S. and Canada, as well as a cable connecting
New York City and London.

54 Jayne Miller, Just Look at All Those Cables: The 2021 Submarine Cable Map is here, 24 May, 2021, available at : https://blog.
telegeography.com/2021-submarine-cable-map
55 Douglas Broom, Coronavirus has exposed the digital divide like never before, Apr 2020, available at: https://www.weforum.
org/agenda/2020/04/coronavirus-covid-19-pandemic-digital-divide-internet-data-broadband-mobbile/
56 US Chamber of Commerce, Made In China 2025: Global ambitions built on local protections, 2017, available at : https://www.
uschamber.com/sites/default/files/final_made_in_china_2025_report_full.pdf
57 Hearing before the committee on small business and entrepreneurship United States Senate, Made in China 2025 and thefuture of American Industry, Feb 2019, available at : https://www.govinfo.gov/content/pkg/CHRG-116shrg35699/pdf/CHRG116shrg35699.pdf

42

•

•

New Projects: China’s initial foray focussed on short-haul projects (less than 2,000 kms) in shallow
coastal waters that are less technology-intensive. But the 12,000 km PEACE (Pakistan and East Africa
Connecting Europe) cable currently being laid by HMN Technologies – starting from Pakistan, runningalong Africa’s east coast, and ending in Marseilles, France – represents a significant upscaling of Chinese
capabilities. This cable’s landing into Europe, especially in a NATO member, is a cause of concern.
Meanwhile, the Institute of Peace and Conflict Studies and the Netherlands-based Leiden Asia Center
estimate that China, in its pursuit of greater autonomy, has become a landing point, owner, or supplierfor 11.4% of undersea communication cables globally, and more than twice that (24%) of planned
cables. In Asia, China’s share is close to 30% of existing cables and more than half of planned cables.
Cable Consortiums: While HMN Technologies is installing multiple submarine cables throughout
the world, China Unicom, China Telecom, and China Mobile (three state-owned telecommunications
companies) are joining cable ownership consortiums. Such consortiums give Beijing-owned firms
significant voting power in awarding construction contracts61 and also access to international players
within the telecommunication sector to further deepen the Digital Silk Route in the Indo-Pacific tocreate China-centric digital connectivity in the region.
Table 10: Chinese ownership in cable consortiums
Company

Consortium System Ownership

China Unicom

40

China Mobile

54

China Telecom

33
Source: Gateway House Research

2. Why do Undersea Cables Matter to the QUAD
Though the majority of the currently recorded threats to undersea cable infrastructure are classified as
unintentional, like fishing and trawling, the growing technological capabilities and geo-technical competition
between nations pose an ever-growing risk of intentional threats such as sabotage and eavesdropping. Now
that remotely operated unmanned systems are relatively accessible, the threat to critical infrastructure fromboth state and non-state hostile actors with relatively modest financial resources has increased substantially.
The use of drones in the September 2019 attack on the Saudi Arabian Aramco oil facilities, destroying nearly
50% of the country’s global supply of crude oil, should serve as a stark reminder. Mitigating threats fromunmanned systems in undersea environment will be even more difficult.
In May 2009, China for the first time declared62 at the UN its sovereign rights and jurisdiction over thewaters, seabed and subsoil in the South China Sea on the its ill-defined ‘Nine Dash Line.’ Recently, one
official Chinese Communist Party outlet explained, “although undersea cable laying is a business, it isalso a battlefield where information can be obtained.”63
61 David Feith and Lara Crouch, Commanding Depths: China’s Bid to Dominate the Cloud—Under the Sea, Jun 2021, available
at: http://thf_media.s3.amazonaws.com/2021/China_Transparency_Report.pdf
62 Submission by the People’s Republic of China to the Commission Establishing the Limits of the Continental Shelf, 7 May 2009,
available at: https://www.un.org/Depts/los/clcs_new/submissions_files/mysvnm33_09/chn_2009re_mys_vnm_e.pdf
63 Nadia Schadlow and Brayden Helwig, Protecting undersea cables must be made a national security priority, Defence
News, July 1, 2020 available at: https://www.defensenews.com/opinion/commentary/2020/07/01/protecting-undersea-cables-must-be-made-a-national-security-priority/#:~:text=Huawei%20Marine%2C%20a%20Huawei%20subsidiary,world’s%20approximately%20400%20submarine%20cables.

43Additionally, the Chinese government has approved plans for a massive undersea surveillance network inboth the East and South China Seas. Although the systems are officially intended to monitor environmental
changes, experts acknowledge that they will have “national defence” applications, which could include
tracking the movements of foreign submarines. The plan includes a number of unspecified sensors on
the ocean floor, connected via optical cables to a central processing and monitoring facility in Shanghai.
China also has a fleet of 60 oceanographic research and survey vessels; the Indian Navy has stated that at
any given time, four to five Chinese research vessels operate in the Indian Ocean region (IOR).
Fishing and shipping activities account for nearly two-thirds of all damage to existing cables.
TeleGeography (a US-based telecommunications market research and consulting firm) and theInternational Cable Protection Company (a U.K.-based private consortium of telecom providers,
undersea-cable manufacturers and cable ship operators) categorise these instances as “unintentional
threats.” China now has the world’s largest fishing fleet, an established maritime militia and enhanced
subsea domain awareness in the region – all of which can improve its capabilities in multi-domain
warfare and espionage. The line between intentional and unintentional threats for subsea cables could
easily be erased. In 2020, Chinese dredgers damaged undersea cables connecting Taiwanese islands onfive occasions. Taiwan’s state-owned Chunghwa Telecom said it spent about $2 million to fix the cables.
It also hired a local fishing boat to conduct daily patrols to ensure safety of the cables.
Notwithstanding these threats, Quad countries have other concerns. Unlike western and developed nations,which increasingly focus on issues of data security and trust involving undersea cables, underserved markets
in Africa and Pacific islands are still concerned about the need for basic digital connectivity. China will look to
gain market share and undercut global competition in this sector through state-supported discounted bidding.
The extent to which Chinese firms are able to undercut competition was visible in the recently suspended
World Bank-led East Micronesia cable system where HMN Technologies had emerged as the lowest bidderwith a margin of 20% under its nearest competitor.
In August 2020, China also launched the Year of Science, Technology and Innovation Cooperation plan with
Russia70 – an established player identified by NATO as having significant undersea surveillance capabilities.71
This Russia-China plan has identified more than 1,000 areas of cooperation in fields such as robotics, materials
science, information technology, artificial intelligence, and others.

64 Joseph Trevithick, South China Sea Underwater “Environmental” Sensor Net Could Track U.S. Subs, May 2017, available at:https://www.thedrive.com/the-war-zone/10906/south-china-sea-underwater-environmental-sensor-net-could-track-u-s-subs
65 Chen Yu, There are more or fewer marine survey ships in my country, December 19, available at: http://digitalpaper.stdaily.
com/http_www.kjrb.com/kjrb/html/2017-12/19/content_384309.htm
66 Telegeography, Submarine 101, available at: https://www2.telegeography.com/submarine-cable-faqs-frequently-asked-questions
67 Miren Gutierrez, Guy Jobbins, China’s distant-water fishing fleet: scale, impact and governance, June 2020, available at:https://odi.org/en/publications/chinas-distant-water-fishing-fleet-scale-impact-and-governance/
68 Dr. Andrew S. Erickson, Testimony before the House Armed Services Committee Seapower and Projection Forces Subcommittee, September 2016, available at: https://docs.house.gov/meetings/as/as28/20160921/105309/hhrg-114-as28-wstate-ericksonphda-20160921.pdf
69 Yimou Lee, China’s latest weapon against Taiwan: The Sand Dredger, Feb 2021, available at: https://www.marinelink.com/
news/chinas-latest-weapon-against-taiwan-sand-485108
70 Foreign Minister Sergey Lavrov’s interview with Chinese media, Moscow, March 22, 2021, available at: https://www.mid.ru/en/
foreign_policy/news/-/asset_publisher/cKNonkJE02Bw/content/id/4646592
71 Russian submarines have allegedly been prowling the routes of transoceanic internet cables. NATO officials have also highlighted an uptick in activity by the Yantar intelligence vessel (commissioned in 2015 – two more under construction) that acts asa mothership for a small fleet of deep-sea mini-submersibles. Yantar can act as a mothership to Rus- (AS-37) and Consul- (AS-39)
class deep diving submersibles, which can operate at depths up to 6000 meters. For context, the average depth of the ocean
floor is about 3,700 meters. Yantar can also be used as a mothership for ARS-600 deep diving manned submersible, which canoperate at 600 meters.

44

The high density of undersea cable networks in the South China Sea, China’s excessive jurisdictional
claims, its extensive underwater surveillance infrastructure and its apparent intent to tap undersea
cables for “national defence” and the National Security Law that mandates individuals and organisations
to assist in state intelligence all pose a serious risk to international underwater communication cableinfrastructure in the region. China understands the problem. The Chinese National Security Law
incidentally limits foreign access to the information and communications technology (ICT) market in
China on national security grounds.72
Figure 5: Undersea Cables in the Indo-PacificSource - TeleGeography

3. QUAD Cooperation on Undersea Communication Cable Infrastructure
The Quad is in a strong position to leverage its inherent strengths and complementarities. NEC and
SubCom are established leaders in this sector. India sits strategically at the head of the Indian Ocean
and is fast emerging as a hub for data flows in the Indo-Pacific, thanks to its increasing domestic digitalconnectivity infrastructure and data consumption. In the next three years, at least eight new cable systems
that will transit through India are expected to be commissioned. The Indian-led Coalition for Disaster
Resilient Infrastructure,73 which includes each Quad nation, France, U.K., and Germany, offers a readyplatform to review undersea communication cable infrastructure for improved disaster resilience.74
Australia has been at the forefront of efforts to create regulatory frameworks75 for the protection ofundersea cables and for cybersecurity of critical infrastructure.76
73 Coalition for Disaster Resilient Infrastructure, available at: https://cdri.world/
74 In December 2006, a magnitude 7.0 earthquake struck off the southwest coast of Taiwan. Eight submarine cables were cut
after the earthquake and its aftershocks, catastrophically disrupting internet services in Asia by up to 90% at few places.
75 Telecommunications Legislation Amendment (Submarine Cable Protection) Bill 2013, Parliament of Australia, 46, 2013–14, 27
February 2014, available at: https://parlinfo.aph.gov.au/parlInfo/download/legislation/billsdgs/3022582/upload_binary/3022582.
pdf;fileType=application/pdf
76 Australian Cyber Security Strategy 2020, available at: https://www.homeaffairs.gov.au/cyber-security-subsite/files/cyber-security-strategy-2020.pdf floor is about 3,700 meters. Yantar can also be used as a mothership for ARS-600 deep diving manned
submersible, which can operate at 600 meters.

45

Terrestrial 5G networks have received justified attention concerning risk and trust issues associated with
Chinese-origin tech supply chains. But that attention has been confined largely to terrestrial telecom
networks and stop at the water’s edge. Far less attention has been given to the competition for development
and security of undersea cable networks, even though they may pose more economic and national security
risks than the terrestrial ones since undersea cables handle 95% of global internet traffic and 5G networks
are expected to carry just 25% of global mobile data traffic by 2024.77
Unlike the 5G systems where China has a lead, non-Chinese players like SubCom, Alcatel and NEC
which provide end-to-end solutions, currently dominate the undersea cable tech ecosystem. With somesignificant cooperation, the Quad can keep the advantage over China.

RECOMMENDATIONS

1. Identify undersea cables as an element of cooperation under The Quad Critical and Emerging
Technology Working Group announced78 in March 2021.
2. Strengthen the Digital Connectivity and Cybersecurity Partnership79 to include financing
of undersea cable infrastructure in the Indo-Pacific region, with specific focus on connectivity toemerging markets. Every future cable laid in the Indo-Pacific must explore the feasibility of extending
connectivity to other remote islands in the region as part of development finance assistance. The
Quad can also plug into the G7’s Build Back Better World (B3W) initiative80 that has identified valuesdriven, high-standard, and transparent infrastructure partnership in digital technology as one of the
focus areas, catering to the infrastructure needs of low- and middle-income countries.
3. Establish an Independent Infrastructure Provider (IIP)81 as a public-private-partnership that will
provide affordable financing as well as services for the design, build, operate and management of new
cable projects. This will increase competitiveness and drive affordability in providing much needed
digital connectivity within the Indo-Pacific region, without the burden of ownership, maintenanceand operation.

77 Ericsson Mobility Report, 2018, available at: https://www.ericsson.com/assets/local/mobility-report/documents/2018/ericsson-mobility-report-november-2018.pdf
78 Quad Summit Fact Sheet, White House Press Release, 12 March 2021, available at: https://www.whitehouse.gov/briefing-room/statements-releases/2021/03/12/fact-sheet-quad-summit/
79 US Department of State, Digital Connectivity and Cyber Security Partnership, available at: https://www.state.gov/digital-connectivity-and-cybersecurity-partnership/
80 Fact Sheet: President Biden and G7 Leaders Launch Build Back Better World (B3W) Partnership, 12 June 2021, available at:https://www.whitehouse.gov/briefing-room/statements-releases/2021/06/12/fact-sheet-president-biden-and-g7-leaders-launchbuild-back-better-world-b3w-partnership/
81 Suvesh Chattopadhyaya, What does it take to be Independent Infrastructure Provider (IIP) in India to develop Submarine
Cable System, 27 February, 2019, available at: https://www.submarinenetworks.com/en/insights/what-does-it-take-to-be-independent-infrastructure-provider-iip-in-india-to-develop-submarine-cable-system46

4. Invest in capacity building for realigning manufacturing supply chains within the Quad andQuad Plus (U.K. and France) for each element of the undersea cable infrastructure ecosystem.
5. Create next-generation technology standards, and consult on international legal frameworks
that promote not just improved interoperability and cyber-resilience, but also increased
disaster- and climate- resilience of undersea communication cable networks. Equipping
undersea cables with sensors to help monitor and forewarn climate change and geological events
must also be explored.
6. Challenge PRC’s increasing ascendency in organisations that focus on developing technicalspecifications for ensuring interoperability of telecommunication systems. Two of theseinclude - the Third Generation Partnership Project (3GPP) where Chinese companies hold about
25% voting rights and the International Telecommunications Union (ITU)82, where PRC has gained
leadership of the telecom advisory group. This would entail coordinated action on selection of
secretariat positions and standards-setting working groups.
7. Develop capacity and establish a Quad/Quad Plus maritime command83 that will focus
on non-traditional maritime issues including a separate undersea cable security program84
that will address security, monitoring and emergency repair mechanisms. Such formalised
cable security program will help cut down response and repair timelines to cable faults within the
Quad countries, which otherwise are delayed due to substantial regulatory compliance mandated byindividual countries.
8. Include attack on undersea cables as part of naval drills during the annual Malabar exercise.

82 Over the past decade, China has acquired considerable technical standardization power. The Belt and Road Initiative (BRI)
comes with elements of standards. In 2015, China’s main macroeconomic agency, the National Development and Reform Commission (NDRC), issued its first “Action Plan for the Harmonization of Standards along the Belt and Road”. At the end of 2017,
the NDRC published another action plan setting further benchmarks to be fulfilled by the end of 2020. As part of the plan, Chinabegan to translate its domestic technical standards into foreign languages to facilitate their adoption in third countries. By September 2019, China had signed 90 bilateral agreements on technical standardization cooperation with 52 countries and regions.
At the governance level, China is taking on more and more leadership positions in international technical standardization organizations. While still considerably behind Germany, the US, France, the United Kingdom and Japan, China is gaining more andmore of the influential secretariat positions on Technical Committees, Subcommittees and Working Groups in the International
Standardization Organization (ISO), the International Electrotechnical Committee (IEC), International Telecommunications Union(ITU) and the Third Generation Partnership Project (3GPP), another international technical standardization organization focusedon telecommunications standards. Tim Rühlig, China, Europe and the New Power Competition over Technical Standards, 2021,
available at: https://www.ui.se/globalassets/ui.se-eng/publications/ui-publications/2021/ui-brief-no.-1-2021.pdf
83 In Oct 2020, NATO Secretary-General Jens Stoltenberg said, “We have also established a new NATO Atlantic Command in
Norfolk, and one of the new tasks of this new North Atlantic Command is also to look into how to protect, how to monitor threatsagainst undersea infrastructure,” available at: https://www.euractiv.com/section/defence-and-security/news/nato-seeks-ways-ofprotecting-undersea-cables-from-russian-attacks/
84 The U.S. Cable Security Force (CSF) Program is a newly-authorized program intended to maintain a fleet of active, commercially viable, privately owned United States-flagged cable vessels to meet national security requirements and to maintain a UnitedStates presence in the international submarine cable services market. The CSF will consist of two vessels. In Jan 2021, the U.S.
Maritime Administration (MARAD) requested applications from owners and/or operators of eligible vessels to enroll such vessels
in the Cable Security Fleet (CSF), available at: https://www.transportation.gov/regulations-fr/notices/2020-29159

47

6. Conclusion
Today’s geopolitical situation has given rise to conditions that threaten the free, open, rules-based
international order – and hence represent long-term, multi-dimensional challenges to the interests,
values and principles of the four democracies that comprise the Quad and to their partners. A purely
military response is not enough. Economic and technological threats also need to be identified andsuitable remedies crafted.
The five areas chosen for this Task Force review – Pharmaceuticals, Critical Minerals, Fintech andCybersecurity, Space and 6G, and Undersea Communication Cables – offer immense potential for intraQuad collaboration to protect the democratic ethos of the international system against actors whoseek technology power without committing to these principles of freedom. It is advisable for the Quadgovernments to bring the five sectors within the purview of the three Working Groups established by
the March 2021 summit and to consider carefully all the Task Force recommendations.
While governments are obviously the main players in this process, they cannot succeed without theengagement and commitment of the private sector, business leaders, the R&D community, media
and civil society. Hence, this Task Force strongly advises that approaches anchored in Public-Private
Partnerships are likely to produce optimal results with minimum investment and within minimum time.
Clearly, the Task Force is proposing a long journey. Those who do not believe in the principles of freedom,democracy and cooperation will try to come up with countermeasures in response to the Quad’s efforts.
This cannot be a one-time effort. It will have to be continuous and steady over the long term.
Gateway House, which is proud to have been the catalyst and sustainer of the Task Force’s work, plansto reassess progress in the implementation of the Task Force’s recommendations, examine the evolving
situation, and then develop a fresh set of ideas and plans in two years by re-activating the Task Force in
September 2023 for a follow-up assessment.

48

7. Appendix: Acronyms
3GPP

3rd Generation Partnership Project

5G

Fifth Generation

5GPP

5th Generation Partnership Project

6G

6th Generation

AAGR

Average Annual Growth RateAPI

Active Pharmaceutical Ingredient

APSCO

Asia Pacific Space Cooperation Organization

B2B

Business to Business

B2C

Business to Consumer

B3W

Build Back Better World

BRI

Belt and Road Initiative

C2C

Consumer to Consumer

Capex

Capital Expenditure

CBDC

Central Bank Digital Currency

COVAX

COVID-19 Vaccines Global Access

COVID-19

Coronavirus Disease

DEPA

Data Empowerment and Protection Architecture

DPA

Defense Production Act

ESCAP

Economic and Social Council for Asia Pacific

FSB

Financial Stability Board

G20Group of 20

G24Group of 24

G7Group of 7

G77

Group of 77

GAVI

Global Alliance for Vaccines and Immunisations

49

GDP

Gross Domestic Product

HMN

Huawei Marine Network

ICT

Information and Communications Technologies

IEA

International Energy Agency

IIP

Independent Infrastructure Provider

IOR

Indian Ocean Region

IPIntellectual Property

IPRIntellectual Property Rights

ITU

International Telecommunications Union

JV

Joint Venturekm

Kilometre

KSM

Key Starting Materials

MERS

Middle East Respiratory Syndrome

NATO

North Atlantic Treaty Organisation

NdFeB

Neodymium Magnets

NDRC

National Development and Reform Commission

PCT

Patent Cooperation Treaty

PEACE

Pakistan & East Africa Connecting Europe

PEPFAR

U.S. President’s Emergency Plan for AIDS Relief

PPE

Personal Protective Equipment

PRC

People’s Republic of China

R&D

Research and Development

SARS

Severe Acute Respiratory Syndrome

SASTIND

State Administration of Science, Technology and Industry for National Defense

50

SCRI

Supply Chain Resilience Initiative

SIC

Space Information Corridor

tbps

Terabytes per second

UN

United Nations Organisation

UNCTAD

United Nations Conference on Trade and Development

UNOOSA

United Nations Office for Outer Space Affairs

UPI

United Payment Interface

US

United States of America

V2X

Vehicle to Everything

VR-AR

Virtual Reality-Augmented Reality

WHO

World Health Organisation

WTO

World Trade Organisation

51

8. Appendix 2 : List of Figures
Figure 1: Exports of Pharmaceutical Products by Quad Countries

16

Figure 2: The People’s Republic of China has begun to top PCT patent applications inInformation Communications Technology domain globally.

32

Figure 3: The exhaustive IP generation landscape of 6G ICT technologies

33

Figure 4: ICT is more flexible (numerous rounded options) than its predecessor generations
offering many enabling capabilities (oval options), each with tremendous applications

34

Figure 5: Undersea Cables in the Indo Pacific4552

9. Appendix 3: List of Tables
Table 1: Trends in Cobalt Production

23

Table 2: Cobalt Refinery Production 201624

Table 3: Current state of CBDC in Quad countries

28

Table 4: Bilateral cyber cooperation among Quad countries

29

Table 5: China’s proactive engagements in multilateral bodies to promote its Belt-and-Road
Initiative – Space Information Corridor megaproject

36

Table 6: Some Concrete 6G national projects led by Quad, Quad+ and D-10 nations (under prep)

37

Table 7: Need for an inclusive Indo-Pacific QUAD+ and D-10 with representation from Asia,
Africa and South America, which are among the biggest telecom markets.

40

Table 8: Expected internet growth 2018-2023

41

Table 9: Undersea communication cable systems – Major Players

42

Table 10: Chinese Ownership in Cable Consortiums

43

53