Indian Economy Project Innovation Business Essay

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Table of Contents 2

What is Innovation 3

Trends in R & D sector: 3

Trends in Patenting: 4

Innovation in Indian Context 4

The Rise of Innovation In India 5

Provisions in the Eleventh Five-year Plan (2007-2012) 5

Our strengths in Science and Technology: 5

Our weaknesses in Science and Technology 5

NKC recommendations to attract and retain talent in sciences and mathematics 6

Recommendations 7

What is Innovation

According to Theory of Economic Development, it defines Innovation as "the commercial or inĀ­dustrial application of something new - a new product, process or method of production; a new market or sources of supply; a new form of commercial business or financial organisation ". The innovativeness of the Indian Economy can be measured by various indicators of performance:

Global Innovation index : Rank of India has improved from 58 in 2002-06 to 54 in next 4 years and expected to improve in future also

Innovations in service sector : Many processes and technology has been invented in the service sector especially health care segment

Knowledge intensity : Increase in Knowledge intensity and other knowledge oriented institutions in India

FDI : Increase in foreign direct investment from India that also includes technology based acquisitions made by India

Competition : Competition with other firms in innovation in technology and its usage

Trends in R & D sector:

India has maintained a consistency in Government expenditure in the investment made on R & D sector. It was 85 percent in the year 1990-91 which has been gradually dropped down to 63 percent in 2005-06. (Figure 1). R & D investments account for 30 % by the business enterprises. Business Enterprises tend to present the results of their research more quickly as compared to government sector where the results are not up to the requirements, many times. Higher education sector is not a source of technology for the industry. Indian Institute of Science, the Indian Institutes of Technology and a host of over 300 universities, constitutes only a very small share of the total R&D performed within the country.

Major Players in R & D sector are: Pharmaceutical firms and the automobile sector (Figure 2). R & D investments of private sector pharmaceuticals registered an increase of almost 35% per annum.

Figure 1.

Figure 2.

Trends in Patenting:

According to USPTO, More than 50 % of the patents that are issued in the US go towards non-US entities. It takes an average time of two years between application of Patent and Awarding of the Patent. India accounts for about 1/3rd of the patents applied and awarded by BRICS in the US (Figure 3). MNC's have taken over the number of patents in comparison to domestic investors. In 1991, Domestic Patents have overtaken the MNC patents, but the situation has been reversed in 2007, when the latter has overtaken, due to inclination towards outsourcing mode, and applying for the patent on this basis. The major Indian players that have applied patents in US were CSIR, pharmaceutical sector, IT sector. IT services are more innovated in US and other countries because these companies are product oriented, rather being service oriented. (Figure 4).

India's CSIR is one of the most notable performers in terms of PCT applications. Number of triadic patents is a good indicator of country's innovative performance. India and China accounts for largest share in these patents.

Innovation in Indian Context

Between 2003 and 2007 the R&D intensity in India has increased by a slight margin between from 0.80% to 0.88% of GDP, the share of the business enterprise sector in gross domestic. Expenditure on research and development (GERD) leapt from 18% to an estimated 28%. As the government share of GERD remained stable at 0.61% of GDP over the same period, the 10% rise in the GERD/GDP ratio can be attributed to the dynamism of the private sector. There is tremendous increase in the number of foreign R&D centre. Indian companies have been investing abroad and acquiring important technology-based companies. For Instance Tata - British Giant Corus, Bharat Forge's - Germany, the UK and the USA, Suzlon's takeover of wind turbine companies in Germany. The interesting fact is that it was only in 2008 that the word innovation appears for the first time in the National Innovation Act 2008.

The Rise of Innovation In India

India has improved its Global Innovation Index. There has been many instances instance of innovation in majority of the service sector, especially in health-care sector. We have observed that the knowledge-intensity of India's overall output has also expanded. The FDI to Indian market has increased from US$ 2 million in 1993 to about US$ 19 billion in 2009

Provisions in the Eleventh Five-year Plan (2007-2012)

There were provisions for a massive rise in the public outlay for S&T of 220% over the previous plan. The plan identified appropriate industry and university and encouraged collaboration among them. It was decided to set up globally competitive research facilities. There were 10 national level flagship programmes which were planned to be launched. New models of public-private partnership are to be developed in higher education, Linkages with advanced countries are to be encouraged, But the draft Act is yet to come before Parliament and, as such, remains of purely academic value for the moment.

The report envisions the future of India as an economic power house 20 years from now and sees a transformation of Indian society dominated by educated citizens. In that case, it becomes important for us to concentrate today on Science and Technology so that we can reap in the benefits of economic growth and take India to a new growth trajectory.

Looking at India's past we see that there have been scientific discoveries done by Indian scientists like Sir CV Raman, JC Bose etc. which have been highly relevant to the technology but unfortunately the West has been responsible for productizing these discoveries. We have lacked the so-called ecosystem for innovation that is required to offer end-to-end solutions.

Our strengths in Science and Technology:

1. India has a young population. The median age is 25 years and things are expected to stay that way for considerable time to come.

2. Focus on scientific education: According to a national survey, mathematics has been reported to be one of the most popular subjects among school going students

3. Many Indians have been behind the scientific discoveries which fuel technological growth today e.g. Cryptography algorithms used today are based on mathematics research done by Ramunujan

Our weaknesses in Science and Technology

1. Lack of innovation ecosystem: The road from idea to product is complex and hence calls for development in other fields, expertise in manufacturing, marketing and financing areas. Some of the areas where we lack and the steps to be taken to rectify this are:

a) We must promote venture funding

b) Tax incentives to people taking up innovative but risky projects

c) Government fund to invest in new ideas

d) Removal of bureaucracy

e) Changes in education curricula to promote creative thinking

2. Revamp S&T advisory committees by intervention of PM or Cabinet. The private sector should be incentivized to assist these committees.

3. Stagnant investment in R&D: The investment in R&D as % of GDP has remained stagnant and this trend should be changed to fuel growth in Science and Technology. National Science and Engineering Research Board can be an engine of change.

4. Bureaucracy and Corruption in public institutions which is affecting the productivity of the country

Based on the current scenario, there also a need to focus our research on basic sciences geared towards solving our pressing problems of

a) Water scarcity

b) Energy independence: Alternate sources of energy have to been explored using science to resolve the energy crisis.

c) Food security

The public-private sector partnership can only work if the private sector has an incentive to invest. We can draw the interest of private sector by focusing on our current pressing problems which affect the private sector productivity and help them achieve higher gains.

NKC recommendations to attract and retain talent in sciences and mathematics

Revitalising basic infrastructure in institutions

Investment for upgrading the staff and the facilities at institutes

'Centers of excellence' need to be identified

Arrangements to share faculty and resources

Increase in scholarships to cover more students

Undergraduate seats should be increased in good institutes

Autonomy and flexibility to be provided to the institutes

Attracting and retaining quality teachers

Recognition to be provided teachers at all levels

Avenues to be encourage discussion on new pedagogical tools

Better linkage between schools, colleges and research institutions

Mentoring program for young faculty

Teacher training to be improved at all levels

In-service training programs to be introduced

Use of technology for interacting with the best of the professionals

Change in science and mathematics pedagogy

More technology intensive teaching aids can be chosen to make the teaching more engaging

Teacher bodies like the Indian Association of Physics Teachers should be financially supported

Master and graduate degrees in sciences to promote career flexibility

A four year Bachelor in Science degree instead of 3 year degree

Imparting interdisciplinary skill sets for better opportunities

Integrated courses till PhD should be provided

Science curriculum need to be in line with the changing world scenario

Reduce study load at higher secondary level

Books to be written by teachers who have knowledge of ground level situation

More stress on hands on exposure

Increase research component at all levels

Evaluation system needs to encourage scientific thinking

Memory, comprehension and creativity should be given equal importance in evaluation

Continuous assessment round the year at the school level

Special needs of tribal children - Tribal schools should be equipped with teachers who are trained in suitable pedagogical methods

Quality science educational material in be made available in local languages

Educational material in local languages will assist self learning for non English medium students

However scientific terms should be retained in English so that the migration to English medium is easier

Re-brand and promoting careers in basic sciences

Hike salary to reflect shortage of manpower

Collaborate with research institutes and industry for campus placements

Publication of employment opportunities for the science bachelors

Launch a large scale science awareness program aimed at students and their parents

Science talent cells - bring all popular science activities under one umbrella for rapid implementation

Mobile labs to be used to reach the rural students and teachers

Solicit industry participation in promoting sciences

Seminars providing exposure to students regarding the opportunities in industry

Longer internships in the industry

Mutually beneficial partnership can be worked out between universities, NGOs and industries to promote science


To improve the degree of Innovation India needs to improve in the following aspects

Improvement in the Infrastructure facility available at various institutions should be done rapidly so as to improve the rate of innovation

Qualified teacher needs to be recruited incentivized and retained so as to infuse the spirit of development and innovation among the youth.

The Science curriculum needs to be modified so that it caters to the industry needs and attracts more number of bright students.

The industry participation to promote science needs to encourage so that the public-private partnership implementation becomes easy and would be win-win situation for both the parties.