Moving India Up The Innovation Ladder

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Innovation

Written by Onkar Sharma

Tuesday, 10 March 2009 15:05

India is in dire need of a strategy to move up the Global Innovation Index, where it is currently losing ground.

Innovation is being increasingly acknowledged as a mantra for success, globally. But unfortunately, Indian industry is not faring too well on this front. The country's drop from No 23 to No 41 in the latest edition of the Global Innovation Index is indicative of the Indian IT industry's dismal track record with innovation. While the Indian IT industry is trying to think out of the box, the pace at which it has been innovating is perhaps not good enough to match its counterparts from countries like Slovakia, Slovenia, Estonia, and the Czech Republic, which have overtaken India in this race to innovate.

Why innovate?
Innovation practices are directly linked to the economic and market roles of a particular segment. Hence, the Indian IT industry desperately needs an innovation push, especially in these difficult economic times. "Innovation is extremely important in our industry. Industry grows because of lower cost, process maturity and quality. Innovation is the instrument that empowers us to do all this. Consumers will demand your products as long as they are affordable and of decent quality. To maintain affordability and quality, industry has to understand the role innovation can play," believes Ganesh Natarajan, chairman, NASSCOM.

But merely raising a hue and cry about innovation may not yield any results. What is needed are a few initiatives in this field. "An individual should be knowledgeable enough to innovate. And knowledge creation (which is the key to innovation) demands the basic infrastructure in place, first," avers Manas Fuloria, co-founder and executive vice president, Nagarro Software. Unfortunately, ICT (information and communication technology) penetration is very low in the country. To expand its reach, there is a need to build up basic infrastructure that could act as a fundamental framework to support innovation goals and projects. Besides, literacy rates also need to be improved.
"India has weaknesses in several areas -- general infrastructure, ICT penetration, literacy rates and other aspects that need to be improved quickly," remarks Soumitra Dutta, dean of external relations, Roland Berger Professor of Business and Technology, INSEAD, who played a key role in preparing the Global Innovation Index report. On a positive note, Dutta observes that it is not that India is not improving; it is just that other countries may be improving at a faster rate.

The role of start-ups and SMEs
Start-ups and SMEs (small and medium enterprises) have a major role to play in improving the country's innovation graph. Start-ups, especially those from the technology sector or those producing technology-intensive products and services, are ideal bases for innovative activities. Start-ups know they have to survive in the market. Moreover, they have nothing to lose. While big companies usually make incremental improvements to existing products, start-ups, in order to create a new market base, innovate to disrupt the market with better and cheaper products.

Prof Dutta adds, "Start-ups are often created by innovative people who are able to bring their ideas to fruition within small teams that are driven by an ambition to change things." In short, a certain obsessive ‘madness', a must for innovation, is usually exhibited by individuals running start-ups.

NASSCOM agrees and believes that start-ups have the potential to deliver the best technologies in the future. The industry body, however, realises the importance of venture capital for start-ups.
Prof Dutta points out that it is essential that the venture capital industry flourishes in India, as young businesses and start-ups not only need capital that understands and supports risk, but also require the presence of business angels and experts who can provide appropriate management guidance and link them to the global business environment.

Investments in R&D and research education
Research and development expenditure in India is almost pathetic. It can be gauged from what science and technology minister, Kapil Sibal last year told Parliament. According to him, in India there are 156 researchers per million people as against the 7000 researchers per million in Scandinavian countries and 4,700 per million in the US. Of the total GDP (gross domestic product) in India, the R&D spend is only 0.8 per cent compared to 1.23 per cent of China and 3 per cent in developed countries. Of this 0.8 per cent expenditure, 80 per cent comes from the public sector alone, with the private sector contributing a mere 20 per cent.. In the US and China, the public sector has only a 30 per cent share. If innovation is to flourish in India, the private sector has to increase its role and increase its R&D participation in the country. Here the government's role becomes even more important as it can offer tax incentives to companies with big R&D budgets. Expressing concern over the state of R&D in the country, Prof Dutta says: "India is not investing enough in R&D. While R&D activities are increasing over time in India, they need to be increased significantly if India wishes to lead in innovation globally."

As the industry faces an acute shortage of PhDs in the IT domain, it is also important that the Indian university system nurtures researchers. "There needs to be a greater focus on PhD education within universities and more focus on supporting research to attract the best professors. There also needs to be greater collaboration between industry and academia to make the university research more relevant," Prof Dutta stresses.

"Research education in IT is important. But the approach needs to go beyond the number of papers published. The key focus in building R&D infrastructure is to bring in innovation, and not sourced models with a few changes to win patents," insists Anurag Seth, managing director, K-micro, India.

Rural engagement and commercialisation
Experts believe that there is a lot of unrecognised innovation going on across rural India, but impediments like illiteracy and corporate reluctance need to be overcome for it to flourish and come to the fore. There is a need to identify rural talent, and offer an adequate platform for its ideas. V. Swaminathan, CIO, National Innovation Foundation, also feels the need to take innovative practices in rural areas to the market. Private companies can play a significant role in this by focusing their attention on villages and commercialising the ideas that emerge from these areas.

Professor Dutta seconds the thought. "India needs to continue to invest in people at all levels, starting from children receiving primary education to employees in corporations," he says.

A populous and diverse country like India should logically occupy a higher place in the innovation ladder. The strength of a nation lies not in being one of the biggest markets but in being the biggest innovator. Ultimately, it is innovation that has the potential to make an organisation, an industry and above all, a nation, prosper.