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Understanding The Innovation Landscape In India

The times ahead present both a challenge and an opportunity for Indian companies to become R&D leaders and make a quantum jump in terms of high-value offerings at the global scale

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India boasts of a young, increasingly educated, workforce in a booming economy with a government that is desirous of enabling an environment conducive to faster economic growth and development.

Over the last few years, a strong narrative is building up around research and innovation; something that had been virtually non-existent within policy corridors earlier.

New start-ups with innovative ideas are being encouraged by the government and businesses are trying to acquire more and more patents to lead the race for competitive advantage. Academic institutions, such as the Indian Institutes of Technology (IITs) are also shifting their focus from non-commercial research and patents to ones that have commercial viability and appeal. Taking the lead on innovation will go a long way in putting the Indian economy on the forefront of the world's developmental story.
 
Sincere efforts have paid off in terms of improvement in the country's performance on competitiveness and innovation. India lies at the 40th position on the Global Competitiveness Index (GCI) 2017, which is a jump of 31 ranks from 2014. Similarly, India lies at the 60th place on the Global Innovation Index (GII) 2017, which is again a jump of 21 spots from the 2015 rankings. India also ranked first in terms of the largest percentage improvement made by any country measured on the sixth edition of the 2018 U.S. Chamber International Intellectual Property (IP) Index. Ranking 44 out of 50, for the first time India has broken free of the bottom ten percent of economies measured. India's performance is further evidence of a country whose innovation-driven economy is on the move.

The Global Entrepreneurship Summit (GES) held last year in Hyderabad brought together 1500 entrepreneurs from around the world along with PM Modi and Ivanka Trump, U.S presidential adviser.  The conversations and discussions at the summit showcased an India that is ready to scale up innovation and entrepreneurship in the country.

However, India still lags considerably in terms of an R&D and Innovation ecosystem (research publications, patent productivity, R&D budget, etc.)  as compared to the leading global economies such as USA, Japan, S Korea, China, and the major European countries.  For example, the number of patents filed in India is around 17 per million people. This patent productivity is considerably low as compared to the figures in other countries like Japan (3716), S. Korea (4451), USA (910), and China (541). Another example is the EU Scoreboard 2016, in which only 22 Indian companies are listed among the Top 2500 R&D spenders. These companies belonged to three sectors:

pharmaceuticals and biotechnology, automobiles, software and computer services. This implies a narrow state of R&D spending in India when compared with global companies. There also remain some fundamental challenges that our country needs to address, in order to make the radical advancements that are necessary to drive innovation.
 
The first challenge relates to the significant investments that are required in patenting activity and the perception among Indian companies of the limited role of patents in gaining competitive advantage.  Patenting involves a considerable investment of time, cost and capital and there is a general belief that returns are not commensurate with investment. Moreover, India still lacks a world-class Intellectual Property Rights (IPR) ecosystem. There is a need for a two-step action plan in this case. First, the Government of India needs to focus on setting up a higher number of incubators, accelerators, and centers of excellence to drive the innovation ecosystem in India. Immediate steps are also required to enable the ease of patenting in India by streamlining the resource constraints and strengthening IP rights.  

The second challenge relates to the socio-cultural mindset and the sheer scarcity of talent that has the aptitude, motivation and appropriate skill required for research work. The socio-cultural mindset persuades highly skilled students to opt for a secure, high-paying job rather than taking up research as a career option. Also, the university system in India lacks any focus on research and innovation in line with the changing market landscape and technologies. Institutions like the IITs and the Indian Institute of Science (IISc), Bangalore are among the very few in India that focus on continuous research and innovation. A number of steps are needed here. The government need to strengthen the innovation ecosystem in India by ensuring pay-outs and recognition for graduates taking up research as a career. The government should collaborate with leading academic institutions and launch courses aligned with the futuristic skill related needs of corporate India. Finally, the government should aim at bringing the IITs into the top 50 ranking of the global academic institutions.
 
The third challenge involves complexity in the commercialization of patents, primarily by start-ups. The primary reason can be attributed to the lack of awareness and confidence of licensees, on the functionality of new technology without first trying a prototype. So, there arises a significant challenge for these start-ups to get access to initial funding and mentoring for building a working prototype of their inventions. As previously discussed, public and private incubators, start-up investors and accelerators can play a major role in facilitating the access to funding, industry expertise, market linkages and early prototypes.
 
To conclude, India is at an exciting point of inflection, when it comes to a viable research and innovation ecosystem. More and more companies in India are realizing the significance of innovation over imitation and have started looking at "R&D" as a long-term strategic investment. There is an increasing focus on the collaborative mode of research by building research and innovation oriented partnerships with universities, global companies and government institutions.  
 
The times ahead present both a challenge and an opportunity for Indian companies to become R&D leaders and make a quantum jump in terms of high-value offerings at the global scale.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


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Dr Amit Kapoor

The author is Chair, Institute for Competitiveness, India

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SANDEEP GOYAL

The author is Fellow with Institute for Competitiveness, India

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