Innovation in India
Indian manufacturers unlike their Chinese counterparts have never been big on innovation. Traditionally, Innovation has very rarely made to the checklist list of any manufacturer who intends to set-up his business. It is only after the business is setup, stabilised and has gained substantial foothold in the market that the businesses tend to look for innovation. Even so, the innovation primarily is not in the final product rather it is in the manufacturing processes and cost cutting methodologies. There are multiple reasons for this trend.
I recently read an article on the Mint about the new book by George Yip & Bruce McKern about China’s spending towards research and development China’s Next Strategic Advantage: From Imitation to Innovation. According to the duo, China’s annual spending on research and development is about 2% of its GDP of which only about 30% is contributed the Government. Comparing the same with India’s spendings, India spends less than 1% of its GDP on innovation. More importantly as of 2009, the latest data available on National Science & Technology Management Information System (NSTMIS), most of the spending on Research & Development i.e., nearly 59% of the spending in India is done by the Central & State Government.
The Global Innovative Index (GII) also paints a similar picture (The Global Innovation Index 2015: Effective Innovation Policies for Development is a report resulting from a collaboration between Cornell University, INSEAD, and the World Intellectual Property Organization (WIPO) as co-publishers, and their Knowledge Partners). The study was conducted for 141 countries. The study this year concentrated on the countries’ efficiency in policy making for development to understand how policy has been leveraged by some of the innovation achievers among the developing countries, allowing them to outperform their peers.
According to the report India has been outperforming its peers in the Central and Southern Asian countries within the lower middle income economy. However in the overall ranking it is placed at 81 and has been consistently falling in its ranking from 62nd in 2011. India’s peers in the region include Bhutan, Sri Lanka, Uzbekistan and Pakistan. In the lower middle income group worldwide, out of 34 countries India is ranked 8th with Republic of Moldova, Vietnam and Armenia forming the top 3. India ranks at a respectable 42nd rank in Gross Expenditure on R&D (GERD) as a % GDP.
Now, when I look at these rankings I’m thinking ‘Are these the nations we are intending to compete with?’ I don’t think so. That quite clearly shows the gap in India’s economic and financial aspirations and the technological reality. Further in the report there is a separate chapter on India ‘Policies to Drive Innovation in India’ on India which clearly states that one the reasons for India’s low ranking is non availability of data.
“Because India’s rank in the GII has gradually declined over years, it may be misconstrued by many that India has performed poorly in terms of its innovation capacity building, but this would probably be a wrong analysis.”
Therefore, it’s not all doom and gloom in fact it is the other way around. In this current group India has been outperforming for the past 4 years consecutively. This is a result of gradually increasing focus from science to technology to innovation to entrepreneurship. The other reasons for India’s growth as an innovator includes the development of a stable foundation for scientific, technological, and business education by setting up centers of excellence such as the Indian Institutes of Science (IISC), the Indian Institutes of Technology (IITs), and the Indian Institutes of Management (IIMs). Here India is ranked at a very high 22 worldwide. These premier institutions have prospered over time and produced some of the most brilliant minds on the world stage. Despite many challenges, average scores at top universities in India has been a strong point for its superior innovation ranking, not only among its peers but also among all nations. The other important segment in which India has leapfrogged, leaving others in its category behind, is its mobile networks, information technology, and broadband.
According to GII data, the input parameters in which India has consistently performed poorly during the last four years are political stability, ease of starting a business (Ranked 122), tertiary inbound mobility (Total is the number of students from abroad studying in a given country, as a percentage of the total tertiary enrollment in that country) (ranked 112) and environmental performance (ranked 126). These are weaknesses well known to businesses within and outside India. These are issues which the Indian Government has identified and is intending to resolve them at the earliest.
With the new majority Government now being settled and established coupled with the hope and a promise of a better policy framework India is bound to improve in the regard of political stability. This government has also promised and has been actively work on making starting a business in India a much easier affair. With regards to enrollment of foreign students in India, that would require a massive developments in infrastructure in order to attract more students from the developing or developed countries. However India’s environmental performance is a matter in which improvement initiatives are non existent. The Prime Minister’s interest and passion towards Solar Energy and other forms of clean energy is promising, however concrete actions and policy’s remains to be seen. The Government’s treatment of NGO’s (domestic & foreign) setup for the for environmental protection by making it difficult for them to operate in India citing that these are against India’s economic interest puts the nation in bad light.
