India was ranked 52 among 130-odd economies in the recently released Global Innovation Index 2019. Nevertheless, its performance was commended as it topped the Central and South Asian region for the ninth consecutive year and its growth — from 81st rank in 2015 to 52nd this year — is the fastest by any major economy. What is also significant is that India continues to outperform on innovation relative to its gross domestic product (GDP).

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Key areas that need emphasis:

• Funding:
  • The funding scenario is still in nascent stage in India.
  • Researchers need to depend upon Government funding which has been very low. Our investment in R&D is a paltry 0.7 per cent of GDP.
  • Private funding is abysmal in India, whereas there is only transfer of innovations from their home countries.
  • FDI in India has focused on setting up back-end offices for R & D centers in developed countries.
• Poor R&D:
  • Insufficient scientific research in India’s private sector seems to be part of the problem. The large pharmaceutical sector, for example, remains dominated by the fabrication of generic products rather than original formulations.
  • As per UNESCO Institute of Statistics data, India spends 0.8% in GDP on R&D, which is notably less than China’s 2% or the 2.7% of the US 0r 4.2% of Israel.
  • Physical as well as other enabling infrastructure is missing to help in research capabilities.
• Policies :
  • Government is the single largest enabler for the innovation ecosystem.
  • Government’s role in encouraging R&D and helping companies start is vital to ensuring success.
  • Weak industry-academia linkage: Unlike western countries, there is disconnect between industry needs and academics creating a vacuum in research and innovation.
  • Issues regarding Intellectual Property rights (IPR): Weak enforcement of IPR rules prevent the development of innovation ecosystem in the nation.
  • There is a severe backlog and high rate of pendency for domestic patent applications. According to reports there is a backlog of almost 2 lakh patents pending examination due to manpower shortages.
• Bureaucratic inefficiencies:
  • Firstly, there are a large number of procedures to be followed and clearances to be obtained to start and operate a business.
  • Secondly, each of these procedures can take an inordinately large amount of time.
  • Policymakers should invest in human intellectual capital and create a knowledge-based economy.
• Weak Education System:
  • Indian education system is very weak especially when it comes to educating about entrepreneurship.
  • Students hardly get to know about entrepreneurship during their school studies.
  • Finding a team with right approach could be challenging for entrepreneurs especially when they are looking for people of non-tech skills.
  • Today, Israel spends 7 per cent of its GDP on education.
  • A large section of the country’s public research is concentrated in national research centres such as the S. N. Bose Center, the Raman Research Institute and organizations such as the Indian Association for the Cultivation of Science. In comparison, research at universities has been neglected.
• Corruption:
  • While under no circumstances, corruption can be justified, it is a bitter truth that it is rampant in many government departments.
  • Even private sector is not spared by bribes, unwarranted objections.
  • The urge to make illegal money, immense misuse of power, frivolous publications and patents, faulty promotion policies, victimization for speaking against wrong or corrupt practices in the management, sycophancy, and brain drain
• Labour:
  • Lack of manufacturing capability in India has been attributed to red tapism and corruption, but the low productivity of labour is also a big factor.
  • Stringent labour laws governing lay-off of employees make it very difficult to fire workers in case of non-performance or during times of financial distress when it becomes imperative to lay-off workers to maintain the financial viability of the business operations.
• Ecosystem Limited to Big Cities:
  • The startup ecosystem in India is limited to big cities including Bangalore, Delhi, Bangalore, Pune and Chennai etc.
  • There are very few resources that are actually working toward strengthening the startup ecosystem.

Way forward:

• The Economic Survey recommends doubling national expenditures on R&D with most of the increase coming from the private sector and universities.
• Improve math and cognitive skills at school level.
• There is a need to encourage investor-led research. In this direction, the Science and Engineering Research Board (SERB) has already been established. It is a promising start that needs to expand with more resources and creative governance structures.
• R & D should focus on technology and extension services that are directly related to common people.
• Engage private sector, state government and Indian Diaspora.
• The private sector should be incentivised to undertake and support R&D through CSR (Corporate Social Responsibility) funds.
• Growing strength of India’s economy and increasing anti-immigrant atmosphere in some Western countries has the potential to attract back scientific Indian Diaspora.
• Schemes like Ramanujan Fellowship Scheme, the Innovation in Science Pursuit for Inspired Research (INSPIRE) Faculty scheme and the Ramalingaswami Re-entry Fellowship, Visiting Advanced Joint Research Faculty Scheme (VAJRA) should be enhanced to leverage the scientific Diaspora

Conclusion:

Many experts have faulted India’s innovation that focuses on getting products and services to people at an affordable cost, rather than aiming for global leadership. They are wrong. Solving India’s challenge will eventually open opportunities for Indian enterprises globally.

Case study: Israel, which came into being around the same time as India in 1948, has a lot of lessons to offer for its ally — especially when it comes to converting challenges into a competitive advantage. With a population of just 8.5 million, it has a very small domestic market.

Though located in an area that is home to earliest of civilisations, its enterprises cannot look at broadening its market by exporting to neighbouring countries as Israel is surrounded by enemies. That apart, it is endowed with very little natural resources including water. Its 22,000 square kilometre area is predominantly arid, fit to grow almost nothing.

Any other country with such adversity would have given up and become dependent on allies for survival. Not Israel. Its policy-makers decided early to invest in human intellectual capital and create a knowledge-based economy. By doing so they hoped that Israel could become home to technology focussed industries that do not depend on natural resources that their country sorely lacks while, at the same time, offering products that could be easily exported (despite an unfriendly neighbourhood) to meet the demand anywhere in the world.