Confederation of Indian Industry India Development Foundation

I D F
Confederation of Indian Industry India Development Foundation
I D F
This is a study prepared for the Confederation of Indian Industry (CII). We acknowledge the
comments and suggestions received from CII's Advisory Committee on National Innovation
Mission, the IBM team and, officials from the Ministry of Science and Technology. This study is
the outcome of numerous discussions held with various people covering industry, academics,
practitioners, policymakers, students, parents, NGOs, etc. The names of specific individuals
are listed at the end of the report. All remaining errors are the authors' responsibility.
Innovate India: National Innovation Mission
India Development Foundation
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Confederation of Indian Industry
I D F
Confederation of Indian Industry
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Innovate India: National Innovation Mission
Messages 1
Dr. A. P. J. Abdul Kalam, President of India 1
Mr. Kapil Sibal, 3
A Citizen's Charter Aimed At Encouraging Innovation In India 5
Executive Summary 9
Background 13
Hon'ble
Minister for Science & Technology and Earth Sciences, Government of India
1. Defining innovation and the innovation process 17
2. The Innovation Situation in India 25
2.1 Developing a framework to measure and monitor innovation 25
2.2 Human capital and education 28
2.3 Technology 31
2.4 Service Infrastructure 33
2.4.1 IPR and the innovation process 34
2.4.2 Data Protection 35
2.5 Organizations, incentives and linkages 36
2.6 Government and Public sector: Innovation and intervention 38
2.7 Society and consumers 41
3. Designing and Building an Innovation Eco-system - A dynamic system 43
3.1 Innovation ecosystem - a static representation 43
3.2 A dynamic innovation ecosystem - value generation and destruction 44
3.3 A dynamic innovation ecosystem - what incentives? 46
4. Innovation strategy, roadmap and monitoring the eco-system 49
4.1 The Gap-current and future states of the innovation ecosystem 49
4.2 The Strategy 51
4.3 The road map and milestones 54
5. Specific recommendations 59
Tables 65
1. Innovation Situation in India - Quantifying Indicators using Indicators : Education 67
2. Innovation Situation in India - Quantifying Indicators using Indicators : Expertise 69
3. Innovation Situation in India - Quantifying Indicators using Indicators : Innovation
Related Output 71
Annexures 73
I. Examples of Innovation 75
II. Details on the Data Collection and Compilation Methodology 77
III. Consultations : CII Advisory Committee on National Innovation Mission 81
List of Respondents 83
INNOVATE INDIA: CONTENTS
MESSAGES
Dr. A. P. J. Abdul Kalam
Hon'ble President of India
Innovate India: National Innovation Mission 1
I am happy to know that the Confederation of
Indian Industry is bringing out a Report on "Innovate
India" on the occasion of its Annual General Meeting on
May 22-23, 2007 at New Delhi.
I am sure the Report shall work out a strategy and
action plan for making India into an innovative society,
which will lead the nation to become economically
developed.
I extend my warm greetings and felicitations to
all those associated with the Confederation and wish the
Report all success.
(A.P.J. Abdul Kalam)
New Delhi
May 18, 2007
|-l-
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PRESIDENT
REPUBLIC OF INDIA
MESSAGE
la|+ ( a|u|l=l -|| l la|+ l
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MINISTER FOR SCIENCE & TECHNOLOGY
AND EARTH SCIENCES
GOVERNMENT OF INDIA, NEW DELHI
Innovation is a major driver of progress in any country, playing
pivotal roles in economics, business and technology.
Innovation is necessary in products, processes or services,
and is indispensable for organizations to remain competitive.
Open economy leads to competition, but if it lacks innovation,
the purpose of opening the economy may not be served.
Countries have benefited only by managing the innovation and
leading the innovation in knowledge driven sectors of
economy. Innovation-based economic development is thus
the key for progress now even in developing countries.
Desired frameworks are being put up by these countries for the
purpose.
Often interactive learning paves the way for innovation.
However, the institutional framework influence one to one or
group to group interaction - in fact in such establishments
human interaction is governed by a set of rules, code of
communication, language and culture. These vary from
country to country and even within the country. The NIS
(National Innovation System) of any country thus has an
important role to play in enhancing the pace of innovation. The
policies are important and important is their evolution, which
mostly depends on the succession of demand on the society
and resources available on disposal to achieve the desired
goals.
India too is innovating and is moving ahead to become
knowledge superpower. Socio-economic structure which
facilitates innovation is building up. Stakeholders are playing
enabling role. However, new policies and programmes that
would enable high quality accelerated growth through
innovation are needed with such mechanisms, which would
enable innovation across firms and organizations unfettered
by boundaries.
This report entitled Innovate India addresses indeed some of
the issues and suggests remedial measures. I take this
opportunity to congratulate all those involved in this initiative,
which is timely. I am sure the report will be instrumental in
building Innovative India in a Team India spirit..
(Kapil Sibal)
New Delhi
May 15, 2007
Kapil Sibal
Minister for Science &
Technology and Earth Sciences,
Government of India
Innovate India: National Innovation Mission 3
A CITIZEN'S CHARTER AIMED AT
ENCOURAGING INNOVATION IN INDIA
We, the citizens of India, resolve to make India a
Knowledge superpower by taking a leadership role
in the twenty first century. We wish to capitalize on
the favourable demographics in the country and
seize the moment to leverage the explosion of talent
and entrepreneurship to foster innovation and
catapult this dynamic young country to the status of a
leading nation. There is an urgent need for India to
bring in an environment that supports innovation. We
call upon industry, policymakers and parents to take
proactive steps to catalyze the immense human
potential that is being unleashed within India. The
need is to ensure that these steps involve the entire
population. It is important to build on the continued
success of the service sector, the more recent robust
growth in industry and extend this to the agricultural
sector which supports the most vulnerable sections
of our population. Let us overcome the bottlenecks
that prevent India from reaching its tryst with destiny.
It is for all of us to make India a hotbed of innovation
and fresh thinking.
We must create the minds that will ignite the fires of
innovation and develop the expertise that will keep them
burning. Research institutes must generate an environment
that fosters imagination and provides incentives that reward
successes and overlook failures. Schools, colleges,
universities and vocational institutes must develop training
programmes that encourage problem solving with local
resources. Flexible curricula must respond to changing
realities with teachers being rewarded for the challenges
they throw at students.
The demographic transition in India has given us a young
population ready to take on a globalizing world. It is only fair
that we give them the tools and the environment in which
they can realize their dreams -- an environment that allows
them to freely experiment with new ideas and do so without
fear of failure and, tools that help them explore new
grounds, walk new paths, and take new risks.
Let us reform the education and training system to have the
same impact on society that de-licensing in 1991 brought to
the economy.
Human Capital and Creativity
Innovate India: National Innovation Mission 5
Collaboration
IPRs
Flexibility
For innovation to be fostered and taken forward, it is
essential to have a platform that engenders collaboration. A
necessary condition is the need for common platforms and
standards that enable innovation across firms,
organizations, individuals and groups unfettered by
national and organizational boundaries. Standards ensure
competition and facilitate the growth of networks. Standards
also enable multi- disciplinary approaches to problem
solving. We need to take a proactive approach and show
dynamism and openness in the setting of domestic and
international standards.
Let us work towards the generation of open networks that
allow people to move in and out at will with their ideas
protected by law. We will make collaboration a most
rewarding activity.
One of the critical institutions for R&D and subsequent
applications is the protection of Intellectual Property.
Patents and other IPRs encourage innovation, ensure
returns to the innovator and, at the same time, put all
knowledge in the public domain. India already has a state of
the art legislative mechanism for the protection of IPRs, but
it is important to be dynamic in this regard, ensure new IPRs
are quickly recognized, data privacy ensured, business
methods respected and know-how protected to the fullest
extent possible. If networks are to be the foundation for
collaboration, new forms of shared IPRs are required. At the
same time we must work towards an IPR mechanism that
reduces delays and compensates owners fully against
trespass.
An innovative environment requires flexibility in all factors of
production - capital, management and labour. Capital
market flexibility in India has already shown impressive
results. An efficient managerial market encourages
entrepreneurship. A mobile and flexible workforce is not
only productive, it is also innovative. Towards this, we
quickly need to amend bankruptcy laws and labour laws,
encourage entry and venture capital funding, and allow for
easy exit for businesses with support to labour during the
process of transition.
Innovate India: National Innovation Mission 6
There is an urgent need to
develop an environment in
I ndi a t hat wi l l f os t e r
innovation and help catapult
the country to a leadership
position in the next few years.
This can be achieved only if we
f ocus on ref ormi ng t he
education system, encouraging
creativity, providing open
networks, providing flexibility
of labour and capital, ensuring
transparency and devising a
strong intellectual property
regime. Needles to say, an
incentive system that helps
foster research is essential.
Our regulatory authorities need to recognize the new
challenges and harness India's potential by doing away with
several outdated rules and regulations that were relevant
for a different culture in a different country.
On this front, we recognize that the government has been
making the right moves. The Right to Information Act has
already worked wonders on various fronts. This year's
budget signals the government's sincerity even more as it
declares its commitment to e-governance. We encourage
the government to take this forward and ensure promptness
in service delivery through reforms in public services and
through increased use of technology in service delivery that
must reach the length and breadth of the country. Towards
this, it would be really important for the country to ensure
that its institutions that are responsible for technical
education, higher education and research be made
accountable and responsible for meeting their objectives. It
is also important that the education sector be as free as
other sectors in the economy to be able to open universities
and institutes and provide training to the vast number of
students passing out of our schools. We commit ourselves
to further encourage and participate in this move towards
openness and transparency.
wish to underline the need for urgency in bringing
in these changes. If India does not move towards an
innovation eco system quickly, it will very soon lose
any advantages it may have gathered in the last
couple of decades. A new attitude needs to be
brought in that would accept, incubate and strongly
encourage innovation in India. We all need to
together ensure that the young Indian today thinks
afresh, does not fear failure and is rewarded for
thinking out of the box. We reiterate our commitment
towards building this new India.
Transparency
We
Innovate India: National Innovation Mission 7
Shanker Annaswamy
Co-Chair, CII Advisory Committee
on National Innovation Mission
Managing Director, IBM India (P) Ltd.
R. Seshasayee
President, CII
Lt.Gen (Retd) S. S. Mehta
Co-Chair, CII Advisory Committee
on National Innovation Mission
Director General, CII
Sunil B Mittal
Vice President, CII
T. Ramasami
Secretary, DST
Innovation has been defined as the intersection of invention
and insight that leads to commercial and social value. In
India, there are many instances where innovation, as
defined, has occurred and is occurring. However, these are
not enough, given the size of the country and the number of
problems India is grappling with as it embarks on a path of
rapid, sustainable and inclusive growth. Higher growth in
India is the outcome of its productive energy, of which, there
were many instances prior to 1991. However, industrial
delicensing in 1991 unleashed this energy. To sustain the
consequent growth, we now have to unleash India's
innovative energy, taking it beyond sporadic instances and
making it integral to all productive activity.
A careful analysis of the innovations suggests that the
translation of new ideas into value generation is not a simple
process. Though innovation starts with the idea and ends
with value, there are a number of intervening steps that an
innovator has to go through. There are no roadmaps that a
person with ideas can follow to reach one's destination.
Hence, to nurture innovative ideas, it is essential to have an
innovation eco-system that opens up a large network of
roads on which an innovator may possibly travel.
In other words, instead of directing innovation, the eco-
system has to enable it. A number of enablers can be
identified and they cover, among others, institutions, laws,
infrastructure, mind-sets, incentives and culture. For
instance, while outstanding researchers may happen in
spite of the system, the level of an average researcher
improves with a good research environment. In this context,
the number of PhDs in India is far less than it should be and
dwindling. The research environments in universities and
institutes must attract researchers back into their fold and
employment opportunities for such PhDs must be made
comparable to what they can otherwise get.
Not only should we produce more PhDs in existing
disciplines, we should get some of them in new disciplines
also. This will mean the development and implementation of
new courses that will develop skills required in the future.
One example is the new initiative being talked about
regarding a services science syllabus. Some of the best
minds in the best universities and organizations are taking
exploratory steps in this direction. We need to develop and
adopt some of our own.
EXECUTIVE SUMMARY
Innovate India: National Innovation Mission 9
Focus on our problems and solutions starts at the schooling
stage - freedom and encouragement to try, nurture
experimentation and out of the box thinking, and allow
failure. This mind-set of experimentation must extend to
skill generation and its continual upgrading. Vocational
training and modular courses are therefore important too.
Capacity for imparting education and skills must be
augmented while allowing for competition amongst the
providers.
An innovator must be empowered to experiment and fail. It
is not enough to make entry easy for start-ups with venture
capital and small business loans, though they are essential.
Simultaneously, the social and economic costs of failure
must be brought down. Failed entrepreneurs must be able
to exit easily. Labour from these units must get support
during transition. While flexibility in reallocating resources is
desirable for all producers, it is a must for start-ups and
young firms where the failure rate is high.
The other characteristic of innovation, and this is becoming
more and more important in the global world, is that it works
best if groups of people, or organizations, come together.
And, equally significant, innovation is no longer restricted to
the R&D laboratories of large organizations.
For such collaborations to succeed, two things are
essential. First, proper recognition has to be given to all
those who participate in an innovative venture --- be it in
research, commerce or in social initiatives. India should
think innovatively on a patent regime that supports open
collaboration. Shared patents such as patent commons are
one example.
Second, to maximize the number of individuals and
organizations participating in the process, common
platforms need to be built so that a collaborator can move in
and out of the process seamlessly. The operative word here
is open; no one knows from before who one's collaborator
will be. Defining and developing standards for technology
and services will enable people to work on common
platforms, reduce duplication of effort and enhance
compatibility.
One such common platform stems from e-governance
filing online tax returns encouraged small businesses to
embrace information technology for taxes and then beyond
Innovate India: National Innovation Mission 10
Innovation happens when
something new that has value is
created. What restrains us from
creating new ideas? Are we
satisfied with the state we are
in, or are we afraid of failure?
The former is certainly not true
since India is grappling with
achieving inclusive growth
while the latter unfortunately
seems to be true. The fear of
failure seems strange in a
country that is known for its
entrepreneurial spirit.
Translating new ideas into
value involves a number of
steps that can be successfully
carried out provided the
enablers, such as institutions,
l a w s , i n c e n t i v e s ,
infrastructure, etc, are in place.
At t he s ame t i me , an
environment has to be provided
where people are encouraged
t o exper i ment and not
penalized harshly for failure.
An ecosystem has to be
provided that has a base
network over which other
networks are built. This will
i ncrease t he number of
participants involved in the
process and help develop
standards for technology and
services.
to other aspects of their businesses boosting efficiency and
transparency. Such innovation leadership, especially from
the government, has multiplier effects.
This eco-system of open networks, private or public, has to
be supported by a base network or an Indian Innovation
Network. We recommend a paradigm shift in the nation's
goal-setting (like what happened in 1991 when the
economy was opened up) that is not to drive innovation
but instead generate an attitudinal change in people's mind-
sets like greater tolerance to failure, going off the beaten
track, looking for solutions encountered in daily life, etc. It
will also encourage the public, government and other
organizations to create an innovative eco-system in
whatever they control. Most importantly, it will foster
experimentation.
Simply put, if we do not innovate, we perish.
Innovate India: National Innovation Mission 11
The objective of this monograph is to work out a strategy
and consequent action plan that enables India to become
an innovative society. The first aim is to understand what
breeds innovative ideas among large groups of individuals
and organizations in society --- the institutions, culture,
attitudes, incentives, etc. The second is to work out
strategies to develop an eco-system that makes innovation
an integral part of what everyone, or every organization,
does every day.
It is important to grasp the urgency of making India an
innovative society. About 65 per cent of the population is in
rural India where the major activity is agriculture.
Unfortunately, agriculture adds only 19 per cent to GDP. In
addition, there is a large amount of under-employment, or
disguised unemployment, in rural India which supplies
more than 50 per cent of the Indian labour force. In general,
development leads to shrinkage of the agricultural labour
force and growth in the industrial labour force but, in India,
the organized industrial labour force has been declining.
The service sector has been growing but the more
productive jobs in this sector require training and skills that
are not usually available in rural labour. Lack of any
employable skills, at a time when the economy is on a
growth fast track, can lead to socio-economic disruptions.
This can have serious consequences for social and political
stability in a democracy.
The world is fast globalizing and so is India. This opens us
up to competition in a way that has never been seen before.
Our competitors like China have moved far ahead of us and
other developing countries are fast catching up. Two
decades ago India was insulated from the world economy;
today social and economic shocks outside India have
immediate implications for our economy. If we are prepared
for such unforeseen shocks, it can become an opportunity
for growth and development; if we are unprepared it can
lead to serious dips in economic activity and consequent
destabilization of serious proportions.
The need of the hour can be summed up as follows:
greater industrial growth to generate employment;
rural development through rural industrialization
and other non-agricultural activities;
harnessing of youth power to enable the realization
of the demographic dividend and the prevention of
major social disruptions; and
BACKGROUND
Innovate India: National Innovation Mission 13
the delivery of basic services to the vast majority of
the under-served population. Our biggest and most
valuable resource is our population and they must
be enabled to solve their problems. Increasing the
scale of what we have been doing so far will not be
sufficient. We need to think out of the box and this
can be done only if our eco-system rewards
innovation.
It is not enough to see how other societies have innovated
and implement their experiences for India. This is because
India is inherently different from other innovating societies.
It would not be enough to take the innovation strategies of
other societies (US, China, Taiwan, etc.) and adopt any one,
or a combination of these, in India. To highlight some of the
differences, consider the fact that the US school system
produces a relatively low number of students with science
and mathematics capability. Yet, rectifying this is not among
the most urgent actions recommended for boosting
innovation in the US; what is highlighted instead, and
repeatedly, is the R & D capacity and the number of
scientific papers produced. This apparent anomaly is
explained by the intake of foreign born students at the
university level, quite a few of whom stay back in US. In
India, on the other hand, the pool of potential students for
college degrees (and for future innovators) is the pool of
Indian students graduating from the Indian school system.
Hence, the US focus on enhanced research in universities
and colleges cannot work in India unless we increase the
(potential) pool of quality students and researchers
graduating from the school system in India. India's focus on
building the innovation eco-system must, therefore, start at
the lowest levels and go all the way up to enhancing
research capability.
The Chinese have made great leaps in their contribution to
scientific research. One way they have done so is by
allowing a different salary scale for returning Chinese
scholars who have already established their reputation
abroad, compared to home bred scholars who have not
established an international reputation in research.
Simultaneously, many of its enterprises, though competing
with each other, are set up by local governments and are
essentially state owned enterprises. India, on the other
hand, will face tremendous political opposition from the
academic community to any attempt at dual salary scales
and much of its enterprise activities are in private hands. In
Innovate India: National Innovation Mission 14
Taiwan, most of the patents are owned by small scale
enterprises while India's enterprises are starved of credit,
1
technology and skilled labour. In this report, we keep in
mind this difference in the Indian environment and use it as
the backdrop within which initiatives have to be undertaken
to develop an innovation eco-system.
This monograph is the result of the efforts of many people.
To begin with, an Advisory Committee was formed along
with the research team entrusted with completing this
report. After the structure was loosely decided upon, a
number of interactions took place between the research
group and people hailing from different walks of life. These
interactions happened both individually, and in groups.
Different versions of the report were circulated for inputs to
a large number of stakeholders.
More precisely, the exercise began with putting down initial
thoughts and then brainstorming with experts from various
spheres. The initial brainstorming led to more focussed
interactions via roundtables and formal discussions. As we
collected opinions and re-organized our thoughts, we
produced interim reports. These reports were circulated
and feedbacks obtained. We reflected, considered and
debated more. At each point, our thinking and organization
of thoughts got more refined. The following report is an
outcome of this process. However, it is not a treatise on
innovation or, definitive steps on how to develop an
innovative eco-system. Instead, it is the start of a thought
process which, to be fruitful, must be refined further with
inputs coming in from all who want to see an innovative
India.
In particular, the report
identifies innovation and the processes that lead to
innovation;
takes stock of where India is in terms of innovation;
designs an innovation eco-system, bench-marking
US and relevant countries;
identifies the potential gaps that need to be bridged
and draws up a roadmap for getting to the eco-
system; use the eco-system mapping to continually
monitor and inform us how quickly we are closing
the gaps; and
makes specific recommendations for various
stakeholders and milestones.
Innovate India: National Innovation Mission 15
1
What Ails the SME Sector? IDF Report sponsored by DFID-India, March 2004
To foster innovation in the
country, we need to start from
the lowest level --ensuring high
quality education in schools to
d e v e l o p i n g r e s e a r c h
capacities. We have a huge
advantage as far as the
p r o p o r t i o n o f y o u n g
population to the total is
concerned. We need to tap this
youth talent and aspiration by
not only ensuring that they are
a part of the education system,
but also creating an ecosystem
that makes innovation an
integral part of everyone's
lives. Before we get into how to
create an enabling ecosystem,
let us identify what innovation
is and see what characterises
innovation.
Innovation is a new idea or a new way of doing something
that is value generating. The National Innovation Initiative
(NII) of the U.S.A. defines innovation as the intersection of
invention and insight, leading to the creation of social and
economic value. Insight provides the basis for application
of the invention. Then, the solution must be tested and
demonstrated to be useful and viable, and finally, it must be
commercially or socially produced. Only then is social and
economic value created.
If we accept this definition, India has innovated in a number
of different ways. Using insight to solve everyday problems
abounds in the form of jugaad that translates into
experi mentati on wi th a probl em-sol vi ng focus,
resourcefulness, a quick-fix solution that overcomes
current constraints and is effective in the short run. The
creativity and insight intrinsic to jugaad can be harnessed
and extended to solutions that are durable, scalable and
commercially, or socially, applicable. Such extension to
value-generating solutions will require using science,
technology, research, invention and then marrying these to
insight.
An outstanding recent example of an Indian innovation is
the pre-paid SIM card for cell-phones. This was devised as
a means to address provision of service amidst limited
budgets. Given that much of Indian labour gets paid daily,
weekly or fortnightly, it is difficult for them to undertake
lumpy payments at longer intervals than their income
periods. So, one needed more divisibility in the payment
stream, something that is more in keeping with their income
periods. The pre-paid card addressed this issue in a unique
manner. It allowed low up-front cost and a fixed monthly pre-
payment for the service. Starting initially with monthly
validity and few rental-talktime choices, this service has
expanded in scope and variety to serve different customer
needs. From buying the initial SIM card and re-charge
coupons from designated stores, the system has moved to
one where these cards have become available from a large
number of stores and users can re-charge them from their
homes. It is an excellent example of a service that has
consistently enhanced convenience with affordability. It has
improved customer satisfaction, expanded the cell-phone
users' market, increased revenues and profits. At the same
time, it has improved social value by connecting people all
over the country. In short, it has generated considerable
value in a country where people are culturally averse to
1. DEFINING INNOVATION AND INNOVATION PROCESS
Innovate India: National Innovation Mission 17
When you invent something,
and use your insight to apply
the invention, the result is
'innovation'. You can come up
with quick - fix solutions
(jugaad) in the short run, and
can extend these solutions to
value generating ones using
your i nst i nct and your
calculations! We study some
examples of innovation in the
Indian context and what
c h a r a c t e r i z e s t h e s e
innovations.
running up huge pending bills (as would be the case with
post-paid connections) and where a large number of people
get paid small amounts but at more frequent intervals of
time.
Another example is that of Sona Koyo Systems. It is one of
the auto component suppliers to Maruti Suzuki, the Indian
joint venture of Suzuki Motors. With the entry of auto majors
such as Daewoo Motors, Hyundai Motors, and Visteon with
Ford Motors and, along with them other foreign auto
ancillaries in the Indian domestic market, domestic auto
ancillaries were compelled to upgrade themselves to ward
off competition. Sona Koyo through its tie-up with Koyo
Seiki of Japan had access to a strong R&D base. Sona
Koyo successfully adopted Total Quality Management
(TQM) and Total Productive Maintenance (TPM) practices
on the shop floor. From this overall environment of
manufacturing excellence, built to keep competition at bay,
emerged an improved product. Sona Koyo redesigned the
steering system used for a Maruti-Suzuki small car (the
Alto) --- combining three components into one --- and
reduced the weight of the system by 15 percent. The
company is now supplying steering systems to auto majors
other than Maruti Suzuki such as Toyota, Mitsubishi, and
Hyundai in India. It is also building up exports and moving
up the value chain. The innovation of the improved steering
system established Sona as a place for manufacturing
excellence with the skills to re-engineer existing products to
save costs.
The first example was a pure Indian initiative, while the
second was a partnership between an Indian and a foreign
player. An example of a foreign company using Indian
resources to innovate within the country is the McDonald's
chain. To succeed in a very competitive snack-foods market
in India, the McDonald's food chain introduced new variants
(for McDonald's but similar to other Indian forms) of
vegetarian (aloo) patties for their burgers. This form of
jugaad has been institutionalized in the form of a
McDonald's food development centre in Mumbai. The
prototypes developed here have been adopted for mass
production and retailing, and commercialized profitably
across McDonald's outlets in India and other countries.
Government institutions have also been innovative. To
combat illiteracy, the government has been running adult
education programmes and, for out-of-school children,
Innovate India: National Innovation Mission 18
alternate education systems. However, despite such
programmes, these persons remained out of the purview of
formal education. The National Open School provided
persons who were hitherto out of the formal schooling
system, another chance to enter it, take modular courses,
pass the standard board examinations and obtain regular
certification. This is also an example of an innovation that
produces social and economic value.
To combat lack of skills, the CII's skills initiative identifies a
menu of skills (plumbing, electrical work, car maintenance
and repairs, beauty services, baking services) that a
candidate can enrol for; helps each candidate to make a
good match; provides training of about six months; a
monthly stipend of INR 5000 and, most importantly,
provides certification from an internationally established
institution and an initial placement through its member
industries. The certification is established via a smart card
provided to each person which any prospective employer
can verify using the internet/web. Thus, the employability of
the labour force is enhanced by creating more brown (rust)-
collar workers, marketability is enhanced within India and
abroad due to certification, and the cost per person is much
lower than in public programs such as the NREGA (INR
10,000 per person).
This is an innovation that needs a bit more elaboration. For
one, it integrates the Indian labour market. Currently, a
skilled plumber in one part of the country cannot be
employed outside the immediate neighbourhood simply
because there is no way the plumber can credibly signal his
expertise. Graded certification by an internationally reputed
institution, which is not involved with the training process,
allows the plumber to credibly communicate his skill level to
an unknown employer. This enables the private sector to
find optimal locations without having to worry about the local
availability of labour.
To provide healthcare, not only new cures via biotechnology
based drugs and therapies but also new ways of ensuring
healthcare delivery are required --- both financing (health
insurance) and cost-effective means of delivery. The
reverse pharmacology approach to new drug discovery
would reduce cost and time to produce new drugs relative to
the current process in advanced economies. In U.S.A,
where health insurance is widely available, almost one-third
of the health expenditure is due to paperwork. With the use
Innovate India: National Innovation Mission 19
The Prepai d SI M Card
highlights the solution to the
problem faced by people using
cell phones, who did not have
enough incomes to pay for the
post paid connection. Using
their partnership with a foreign
player, the Sona group came up
with an innovation in the face
of stiff competition to survive in
the Indian market. Not only did
they survive, they are now one
of the leading suppliers of
steering systems in the country.
Some government initiatives
such as the adult education
programme, CII's initiatives in
skill development and the
Aravind Eye Care system
highlight the point that is it
possible to create both social
and economic value by using
creativity and insight and
harnessing these to come up
wi t h v al ue ge ne r at i ng
solutions.
of information technology, devices such as the health smart
2
card will enable (i) bypassing or reducing these costs, and
(ii) patients to have more control over their health
information through secure, private, and portable medical
records.
Providing high performance at a low price is possible.
Leveraging the population size and following a hub-and-
spoke model, the Aravind Eye Care System provides
surgery services cataract operations at low costs. While
the US costs are USD 2500-3000 per surgery, Aravind Eye
Care costs USD 50-300 per surgery. High quality is also
achieved comparing UK national survey on adverse events
during cataract surgery versus Aravind Eye Care on five
indicators, Aravind Eye Care incidence of adverse events is
lower.
In a country with a decentralized governance structure and
as large as India, there is often a problem with implementing
social programmes targeted at weaker sections of the
population. Identifying pockets of such populations and
monitoring assistance to these is a difficult task. In part, this
has led to leakages from the social programmes such as
poverty al l evi ati on programmes to undeservi ng
beneficiaries. Small area estimation (SAE) is a relatively
new technique that leads to generation of poverty maps or
estimates of poverty at local levels, as local as villages.
These estimates can be further combined with GIS maps to
provide a powerful tool to policy-makers and programme
implementers to improve effectiveness of programmes. The
3
technique is under pilot testing in India.
Is there a common pattern to these examples of innovation?
If we can isolate these characteristics, it will help us in
identifying what are the features that enabled them and,
hence, give us pointers on what needs to be done to make
these examples happen more often and more pervasively.
Some of the characteristics that we have been able to
identify are given below. These characteristics are more or
less present in all the examples cited above.
Innovation is cross-disciplinary and arises from
the intersection of different fields or spheres of
activity. For example, the pre-paid SIM card arose
2
Health Smart Card, IDF Presentation, India Development Foundation, Gurgaon,
Haryana, 2006.
3
Small Area Estimates of Selected Welfare Indicators, IDF, November 2005.
Innovate India: National Innovation Mission 20
from the need for connectivity, customers'
constrained budgets, technological factors (SIM
card with deducting balance, recurrent SIM card re-
charging over the phone), distribution mechanisms
(company outlets to third party retail outlets),
marketing (new packages of rental and talk-time),
and a responsive regulatory authority TRAI
(changed regimes from license fees to revenue
sharing enabling telecom firms to survive, innovate,
and grow).
It is collaborative, requiring openness, active
cooperation, communication, and feedback among
scientists, engineers, and designers and between
creators and users. Innovation rests on invention
and hence hinges on research and development.
India has a number of state research institutions
(CSIR etc.) and some private ones (TIFR).
Research and development efforts are expanding
and becoming increasingly collaborative in an
attempt to systematically innovate in India and for
India both through product development and
through collaborative research with Indian
academia. For example, the new food items of
McDonal d' s are successful due to such
cooperation. The on-demand business model
practised by IBM is also predicated on active and
open collaboration between the service-providers
and the clients; in India, a notable success of this
collaboration is the outsourcing model followed by
Bharti-Airtel.
I t i s becomi ng gl obal i n scope, wi t h
breakthroughs coming from centres of excellence
around the world and the demands of millions of
new consumers. A high-powered research team
from International Development Enterprise (IDE)
observed Maharashtra cotton farmers using
drinking straws in a novel way for drip irrigation and
developed a material that is more suited for this
activity. It is now distributed worldwide as a
commercial product with an in-built technology that
is more appropriate for small and marginal farmers.
Also, the maintenance of the system can be carried
out within the village, creating indirect employment
within the village. Thus, in addition to being
commercially useful, it generates social value by
Innovate India: National Innovation Mission 21
targeting poor farmers and rural labour.
Innovation is not something that is triggered in
R&D laboratories alone. A major stimulus arises
from workers and consumers embracing new ideas,
technologies and content, and demanding more
creativity from their creators. The CII skills initiative
is a novel experiment wherein non-government as
well as non-employer training is being accepted as
worthwhile by workers. Similarly, farmers have
accepted and embraced internet based information
in e-choupals. With the increasing spread of internet
and screen-based reading, e-books and e-
newspapers may become a reality reducing the
need for paper and helping to protect our trees and
the environment.
It is diffusing at ever-increasing rates, with
adoption times (by a quarter of the population in
U.S.A.) dropping from about 50 years for the
automobile to 20 years for the television set to less
than 10 years for the internet. The adoption gap of
new technologies between U.S.A and India is
shrinking rapidly with some new products being
launched in India before U.S.A. (e.g., smaller cars).
Innovation follows from an ability to experiment.
The Government has an important role here, of
fostering an enabling environment for innovation
through active policies and through the creation of
enabling institutions. To give a simple example of
how the government can carry out its functions in an
enabling fashion, consider an economy that could
commercially operate activities. However, some of
these activities, let us say of them, decided under
some deci si on maki ng r ul es ( el ect ed
representatives or constitutionally or dictatorially),
society wants stopped. These could be activities like
trading in narcotic drugs for instance. The
government has two options --- it could pass a law
allowing only the good activities, or a law that bans
the activities. In a static world, both options have
identical outcomes. However, in a dynamic,
innovative world, the two approaches are not
equivalent (in outcomes). In a changing world, new
activities are discovered. The st activity in a world
that allows the activities will never be
experimented with; a society that bans the activities
Innovate India: National Innovation Mission 22
will allow experimentation with new activities. For
instance, TRAI's role in telecom industry specified
what could not be done and, hence, enabled many
new initiatives in the telecom sector.
Innovation can be a direct result of government
actions. Governments as providers of public goods
have to be innovative themselves --- about public
administration and service delivery (for instance,
promotion of the development of the health smart
card and the National Open School) --- both aimed
at generating social value and greater inclusion. In
particular, where benefits of innovation are not
uniformly distributed, governments enable hitherto
non-beneficiaries to develop capacity to absorb
innovations and realize gains.
Measuring and monitoring innovation is a challenge since it
is only after commercial and/or social success, or value
generation, that an idea or an invention can be recognized
as an innovation. However, as the list of common
characteristics mentioned above suggest, innovation is not
a simple one-step cause-and-effect observation, but a
series of steps that individually have no value but is of
immense significance if all the steps are synchronized with
each other. It is an entire process chain starting from
demand or problem identification, passing through an
existing invention or a new idea that till now may have
appeared unrelated to the identified problem, insight into
the process that generates the problem, application of the
idea to change this process, developing and designing the
prototype solution, demonstrating the power of the solution
through controlled experiments, fine-tuning the solution to
make it cost effective and, finally, replicating and scaling up
the solution to large-scale commercial or social
deployment. Clearly, any attempt at devising a strategy for
promoting innovation must take into account this entire
process. It requires a monitoring system that ensures that
for each step the relevant resources and institutions are in
place.
This is because an important feature of any innovative
process is the inherent uncertainty in the types of steps that
may be taken as well as in the final outcome, or solution,
itself. In other words, the process and the end-product get
defined only after the solution is in place. There is no
guarantee that an idea at any of the stages may actually
Innovate India: National Innovation Mission 23
The common characteristics of
innovative ideas that have been
successful are:
Comi ng t oge t he r of
different disciplines
Building of networks
Touching customers from
around the world
Moving beyond research
labs
Getting consumers to adopt
the idea at a rapid pace
Experimenting with ideas
till they reach a value
generating point
Government playing an
enabling role
Should all innovations have
one or more of t he s e
c h a r a c t e r i s t i c s ? N o t
necessarily. Innovation will
succeed if any two or all the
above characteristics that
enable an innovation to
succeed are synchronised well.
translate into an innovation. Thus, failure is also an inherent
feature of the innovation process. In short, innovation
cannot be decreed, or a blueprint developed for it. It is,
therefore, necessary to devise an eco-system that ensures
that all possible steps that could lead to a solution are
available to the innovator. An innovative economy is, of
necessity, an enabling one rather than a prescriptive one.
And, hence, the monitoring process must focus on how
enabling is the eco-system.
An important aspect of innovation is the use of new
technologies to solve age-old problems. For instance, the
mobile phone technology suddenly made it possible to add
commercial value to the Kerala fishing communities'
activities and social value by giving connectivity to large
sections of the poor and remotely placed people in India.
Among the major technologies contributing to and
underlying innovation today are information technology,
nanotechnology, and biotechnology. Measuring progress in
development and leveraging of key technologies is an
important component of the innovation process. Key areas
of innovation go beyond products and services to business
process design, business model, organization and
management. We are progressively moving from an
industrial-services economy to an economy driven by
innovation in much the same way as we earlier moved from
agrarian economies to industrial and industry-services
economies, where new technologies along with new
organizations for enterprises unleashed a whole new set of
solutions to festering problems.
As manufacturing and international trade have been the
engines of growth for the industrial economy, internet and
electronic exchange are the engines for service-economy
growth. In this context, an innovation economy might be
driven by services based innovation and network based
exchange of information on ideas and processes. The
networks may be closed or internal as in an automobile
maker networked with its auto ancillaries across all its
locations (Suzuki Motors with ancillaries such as Sona
Engineering in India and Koyo Seiki in Japan) or an IT-
solutions provider networked with both customers and
service-providing partners (IBM networked with its clients
as well as partners - vendors, consultants, universities to
identify/sense demand and provide on-demand solutions)
or it may be open or external (e.g., e-Bay or the internet
itself).
Innovate India: National Innovation Mission 24
In India, growth, productivity, higher standards of living, and
emerging leadership in a world with globalization along with
removal of poverty have been driven largely by investment,
both in industry (notably, automobiles, mobile phones,
consumer non-durables such as beverages and snacks)
and services (IT, banking and financial services, consulting
etc.). Investment, including foreign investment, is powering
India and helping to catch up with the advanced economies.
Since economic reforms in 1991, the expansion has been
accompanied by efficiency gains and enhanced quality in
Indian businesses. For further growth and more importantly
sustained growth, while continual efficiency and quality
improvements will be necessary these may no longer be
sufficient for the competitive edge. Being as efficient and as
good as the best may not be good enough. Achieving
inclusive growth with wide-spread rise in living standards
will increasingly be possible only with innovative
approaches --- identifying gaps in the range of products and
services available, finding new ways to satisfy these gaps,
formulating a plan to implement the idea, and executing the
plan. Tinkering with existing products and services or
following others in the global arena may not help much in
either sustaining high growth or in solving the challenges
facing India.
So, does India have innovative approaches? Is the Indian
society oriented towards innovating? The examples in the
earlier section suggest that indeed it is so. However, are
these mere pockets of innovation with gains being limited
mostly to these pockets or are these innovations occurring
across many spheres with gains being wide-spread? To
begin answering these questions, we require a systematic
framework that allows us to evaluate where we are in terms
of innovation, where we would like to be given our goals and
objectives, and how do we get there. The first step in this
direction is to have a set of indicators that can help quantify
the extent and depth of innovative processes in India.
We identify several factors than can either enable or
impede innovation; these are listed below. We
provide a list of indicators based on these factors
that can be either enablers of, or their absence
barriers to, innovation. Indicators give us a sense of
what exists and to what extent they exist. The
2.1 Developing a framework to measure and
monitor innovation
2. THE INNOVATION SITUATION IN INDIA
Innovate India: National Innovation Mission 25
We have entered the phase of
gearing ourselves towards
being an innovative economy,
but to achieve inclusive
growth, we need to come up
with increasingly indigenous
a n d v a l u e g e n e r a t i n g
solutions.
4
enablers we have identified are:
Human capital
o Education system
o Expertise and skills
o Creativity and application
o Innovation leadership harnessing and
nurturing
o Empowering workers in a changing world
o Value systems, culture, and attitudes fear of
failure and risk-bearing
Technology
o Promoting frontiers of technology
o Leveraging technology
o Building frontier multi-disciplinary research
capabilities new curricula like services
science is an example.
o Pr omot i ng s t andar ds t o enabl e
collaboration
Service infrastructure
o IPR, patents, and data protection
o Financial markets, venture capital and risk-
taking
o Land, infrastructure and innovation
infrastructure
Organizations and incentives
o Innovation orientation in organizations
Structure of hierarchy in organizations
Incentive structure in organizations
Promoting innovation leadership
o Research organizations
o Linkages between industry/services-
researchers-academia
Government and Public sector
o Innovation orientation
o Policy and regulatory structure
4
This list is the outcome of our own investigations as well as the direct
suggestions of participants (drawn from various walks of life) at our roundtables
and what we could cull out from the discussions there. Professor Rishikesha T.
Krishnan of IIMB has been especially helpful with his comments and we have
also drawn on his published work.
Innovate India: National Innovation Mission 26
o Public administration
Society and consumers
o Attacking local issues/challenges e.g., small
customer budgets
o Being glocal thinking global and acting
local
We illustrate the importance of the enablers in the
innovation process by using the example of the
business process outsourcing (BPO) industry-
service in India. Business process outsourcing grew
out of data entry processes conducted in locations
such as India for clients in advanced economies
such as the U.S.A.; data would be processed and
shipped in electronic media at a fraction of the cost
in U.S.A. Processing of routine and repetitive back-
office transactions, however, was a daily
requirement and could not be batch processed in
remote locations and then shipped back. However,
with the advent of the internet and using the time
difference between U.S.A. and India, such
transactions could be processed and sent back by
the next business day. This idea spawned the initial
demand for BPO services. The technology ---
internet --- was an enabler. Given the demand and
the technology, the initial innovators (e.g., GE's
BPO, now Genpact) envisaged organizations with a
relatively flat hierarchy and a variable pay structure
with performance based incentives. They required
the knowledge workers to accomplish the task. The
problem was night shifts --- getting employees to the
BPO unit and back to their homes at odd hours when
no commercial transportation was feasible.
The idea of pick-up and drop-off facility emerged.
Though seemi ngl y i nnocuous, thi s smal l
component of the business process design in
providing BPO services was a new way of doing
something already being done (getting employees
together at the production-service location). Indian
laws could have been an impediment. For industrial
workers, women were not allowed in night shifts. For
commercial workers, hours were restricted to late
evening (around 7:00 p.m.). The government could
have intervened, enforced any of these laws, and
Innovate India: National Innovation Mission 27
choked off the emerging growth in BPO; the
government stayed away and in this way (specifying
only what cannot be done, not what can be or how;
also amending what cannot be done as the
economy and society changes) also acted as an
enabler. Further, society itself responded by
allowing young workers, including girls, to venture
out of their homes at night. This enabling
environment helped to make the initial BPOs a
success and generated economic value. The
virtuous cycle continued, more BPOs formed, more
workers were employed and more value was
generated. The innovation of pick-up and drop-off
facility continues to help expand the value
generation spiral.
Each enabler in itself is important. The absence or
the inadequacy of any one can impede innovation --
- technology, government, entrepreneurial insight,
society in the above BPO example. It is their
synergistic interaction that helps produce
innovation and generate value.
Based on data, prior studies, and the roundtables,
we present the indicators relating to human capital
(please see tables 1 3) below.
o Education system
Number of high school graduates
Proportion of high school graduates in
population aged 18-24
Number of science and technology (S&T)
graduates
Proportion of science and technology (S&T)
graduates in population aged 20-24
o Expertise and skills
Number of science and technology
doctorates
Personnel in research and development
(R&D) establishments
o Creativity and application
Number of scientific and technical journal
articles
2.2 Human capital and education
Innovate India: National Innovation Mission 28
As we move towards an
economy that is innovation led,
t he st andard f act ors of
production (land, labor and
capital) become less concrete.
The factors used for enabling
innovation are availability of
human capital, technological
inputs, service infrastructure,
orientation and incentive
structures in organizations,
and the role of the government,
public sector, consumers, and
society assumes importance.
The synergy among these
f ac t or s he l ps produc e
innovation that is value
generating.
Number of citations (of papers)
Number of patent applications filed
Number of patents granted
Number of new designs
On education, the picture that emerges from the
indicators (see Table 1) is that in terms of basic
education (schooling up to class 12), India's
performance is very low. The proportion of high
5
school graduates in the relevant population group
of age 18-24 is as low as 2.5 per cent and remains
below 4 per cent. This is similar to China but is much
below the data found for U.S.A. (28 per cent to 34
per cent in various years). However, since the
population size is large, in absolute numbers, India
has not been severely constrained --- in 2003-04
India had 5.6 million graduating from high school,
China 5.5 million, and U.S.A. had 8.9 million.
While India is constrained at the general schooling
level (that could potentially impact innovative
activity in terms of diffusion of innovations), in terms
of an indicator for higher education, namely, the
number of science and technology (S&T)
graduates, India produces over 2 million S&T
graduates every year or over 2 per cent of the
relevant population group aged 20-24. This is
comparable to both China and U.S.A. that also
produce about 2 per cent S&T graduates; however,
in terms of numbers, both India and China
outnumber U.S.A.
The situation is reversed when it comes to
expertise. We have chosen the number of S&T
doctorates as one of the indicators for expertise
(while S&T graduates are included in higher
education). India produces less than 10,000 S&T
doctorates while U.S.A. produces around 400,000
S&T doctorates.
This disparity in expertise is reflected in innovation
related output or our enabler category 'creativity and
application'. In year 2001, India produced 11,000
S&T related journal articles, China produced about
20,000 and U.S.A. produced over 200,000 articles.
Innovate India: National Innovation Mission 29
5
The data for India relates to high school enrolments. Data on actual graduates is not
yet available. Drop-out rates are reported to be about 60 per cent.
Even though our Science and
Te c h n o l o g y g r a d u a t e s
( i n d i c a t o r s o f h i g h e r
education) are sizeable, the S
and T doctorates, which are an
indicator of expertise, are
abysmally low. This translates
into lower innovation related
output as compared to China
and the US. Experts believe
that dismal numbers in higher
education, and, hence quality
arises from a weak schooling
system that does not encourage
creativity and questioning.
Similarly, in terms of the number of patent
applications filed, for the year 2002 when data for all
three countries are available, India filed about 9000
applications, China about 180,000, and U.S.A.
about 380,000. For the number of patents granted,
India has approvals around 2000 versus over
100,000 for China.
Design is considered as the glue between
inventions (or, new ideas) and commercial
application. Design helps to convert ideas and
research based products/services into tangible and
effective offerings. Through designs, an idea and
invention can be customized to achieve a high
degree of fit for the target audience and cultural
milieu. Hence, output of designs is a relevant
indicator for innovation. India's record on the
number of new designs is abysmal 39 versus
53,000 for China in the year 2002.
Thus, the human capital pyramid in India narrows at
higher education levels in science and technology,
that is, for graduates and post-graduates; narrows
drastically for doctorates in science and technology.
This translates into weaker (intermediate)
outcomes, in terms of the number of scientific
articles/papers written, the number of applications
for patents, and the number of patents granted. At
first glance, the lower human capital attainment of
the population may have some bearing on the
intermediate innovation outcomes relative to both
the U.S.A. and China.
The views of stakeholder-participants expressed in
the Innovate India roundtables corroborate the
evidence above. There is a widely held belief that
the bottom of the innovation pyramid, the school
education system, is weak in India (the bulk of the
population has education attainment below the
elementary level). Improving education attainment
and further improving skill levels is therefore
imperative to make persons employable and able to
absorb innovations (e.g., adapt and work with new
technologies).
Among those who make it to higher education, there
is a strong preference for engineering, technology
Innovate India: National Innovation Mission 30
and medical streams. Most, however, want to keep
away from pursuing careers in the basic sciences.
This also shows up in the drop in the number of
doctorates produced, adversely impacting the level
of research and development in India.
India's system of learning by rote may be destroying
India's innate creativity captured in jugaad. We
need to promote a culture of innovation that takes
the creativity and systematically exploits it to
produce value. From the deliberations with experts,
it also emerged that value systems and culture feed
into attitudes and attitudes respond to the economic
environment and incentives. Just as the non-
resident Indians have done well in a more open and
enabling economic environment the world over, so
have the resident Indians whenever they have had
such opportunities. This is manifest in the telecom
industry, the IT and IT-enabled services sectors, and
now in retail services.
Developmental efforts in frontier fields such as
information technology, biotechnology and
6
nanotechnology exist in India; however, application
to India's non-commercial needs is low. To leverage
technology to solve problems that generate social
value, promoting experimentation within an
enabling environment is very useful. For instance,
the pilot studies done for the health card referred to
earlier was made possible because of the support
given by India's National Aids Control Organization
(NACO) and the doctors and management of
private and government hospitals.
The biotechnology field is on the rise in India with
both investment and number of employees
registering double-digit growth over the past few
years. Two issues crop up. One, relative to U.S.A.,
employees in biotechnology lag far behind; in 2004,
Indian biotechnology companies employed about
11,000 persons compared to about 187,000 by US
companies. Hence, the gap in technology
2.3 Technology
Innovate India: National Innovation Mission 31
6
Nanotechnology promises new cancer treatment, cheaper and purer water, but the latest
products offered to public were more airtight balls, transparent sun block lotion and stain
resistant trousers. Meridian Institute (www.nanoandthepoor.org), quote from Dr.
Mashelkar's presentation, 2006.
deployment exists and needs to be bridged.
Second, while the base of personnel employed is
low in India, the supply of trained persons lags
behind even more.
Successful leveraging of technology is intricately
related to the level of human capital. This is
becoming more and more evident in the current
service sector dominated global economy.
Knowledge and skill in classical disciplines,
devel oped i n an i ndustry-manufacturi ng-
commodity world, are fast becoming insufficient to
improve productivity and growth. The importance of
services in delivering value has to be recognized
and existing curricula need to be re-worked
emphasizing the issues faced in the service sector.
For instance, a motor vehicle can be treated as a
commodity that allows people to commute to work.
On the contrary, a motor vehicle may be treated as a
means to deliver a service --- transportation to and
from work. Then, along with the details of a vehicle,
one will need to know how to optimize on the
provision of a public transportation system.
We need people who are knowledgeable about
business and information technology and the
human factors that go into a successful services
operation, in addition to the technicalities and
rigours of the basic training they currently get in the
old disciplines. This will determine the new waves in
computer science, engineering, IT, business
management and administration, operations
research and, industrial and systems engineering.
This will give us an opportunity to be among the
7
pioneers in tomorrow's world.
An important enabling element in promoting and
leveraging technology for innovation is the
development of standards. Already, industries are
gover ned by t echni cal and t r ansact i on
specifications. When similar specifications are
adopted widely, they become standards. It is this
adoption of standards that enabled innovative value
addition in many spheres --- electrical appliances
and electronics, telephone and TV networks, credit
and debit cards, global financial markets --- and by
Innovate India: National Innovation Mission 32
7
Harvard Business Review lists services-science among the "Breakthrough Ideas for 2005.
Technology plays a leading
role in fostering innovation.
However, for the technology to
succeed, we need skilled
people in that domain and
development of standards as
these enable people to work on
common platforms and reduce
duplication of work.
extension, all the other business and public services
that use them. This will enable people to work on
common platforms, reduce duplication of effort and
enhance compatibility. Since innovation is a
collaborative endeavour among various people and
the outcome of putting together insights from
various disciplines, it is imperative that what
happens somewhere can be used somewhere else
by a different person. Such standards have to be
accepted by all and cannot be the exclusive
preserve of any one company, or entity.
The Bureau of Indian Standards (BIS) is the prime
Indian outfit involved in the development of
technical standards (popularly known as Indian
Standards), product quality and management
system certifications and consumer affairs and, is
nurturing the standardization movement in the
country. While BIS has initiated several steps
towards enhancing the efficiency of its operations
and upgrading of services, there is ample scope for
collaboration with private industry, academic
institutions and international standards bodies. BIS
should look beyond its boundaries and actively
participate in the formulation of international
standards. Indeed, given the growth of the Indian
economy, and its emerging role in the new
technologies, India can take a leadership role in
such activities.
One of the key resources for innovation that is in
short supply is finance. Many stakeholders feel that
there is a dearth of venture capital funding outside
the sphere of IT and IT-related sectors. A key gap
seems to be early stage funding. However,
anecdotal evidence garnered from the roundtables
suggests that in the past two-three years, there has
been entry of new venture capitalist funds in India.
Lack of finance for new companies is a big barrier to
innovation. Recall that innovation can be observed
only after it has generated value. Whether, or not,
something is of commercial value can be gauged
only after the activity is undertaken. On the other
hand, as we have pointed out earlier, innovation is
no longer the reserve of big company R&D
2.4 Service infrastructure
Innovate India: National Innovation Mission 33
A p a r t f r o m p h y s i c a l
infrastructure, innovation
requires adequate service back
up. This includes financial
r e s o u r c e s , p r o v i d i n g
i n t e l l e c t u a l p r o p e r t y
protection, linking public and
private players, researchers
and academi cs and t he
innovator's ability to take risks
laboratories. So, how does a new company with an
innovative idea but no commercial track record get
off the block if no one is going to finance it?
Infrastructure constraints affect not just general
economic activity but also innovative activity. An
innovation infrastructure --- innovation hubs linking
industry, services, researchers and academics;
innovation extension centres for SMEs, national
and regional alliances --- is largely missing in India.
In India, the industrial policy of import
substitution had envisaged a great deal of
effort and investment in innovativeness.
However, because of poor I PR
implementation, Indian industry could only
obtain out-dated foreign technology instead
of state-of-the-art technologies. Coupled
with licensing and labour laws, this policy of
poor IPR implementation ensured that most
of the manufacturing sector remained
capital intensive and yet technologically
archaic. A notable exception is that of the
pharmaceuticals industry that did benefit
from this policy, and grew from rudimentary
to world-class generics industry.
Recent trends in biotechnology and
information technology have brought to the
forefront a set of issues in the law and
economics of intellectual property. These
issues have to do with the problem of
rewarding multiple inventors in a setting of
8
cumulative innovation. That is, is it possible
to provide optimal incentives for innovation
simultaneously to the producer of a first
generati on product and a second-
2.4.1 IPR and the Innovation Process
Innovate India: National Innovation Mission 34
8
See Headley (1995) for an interesting discussion of the political/legal history of the idea of
extending droit de suite to cover scientific inventions during the earlier part of the
twentieth century. This idea essentially foundered on a reluctance to impose compulsory
licensing on inventors into the far future and the consequences such a move might have for
the publication of the results of scientific research. total welfare), but it is very difficult to
identify potential partners ex ante in practice.
9
Scotchmer (1996) shows the following: Ex post licensing agreements, entered into after
the cost of first innovation is sunk can increase the profits available for the two innovators,
but cannot achieve the first best, because it is impossible to give the total surplus to each
party separately using this (or any other) mechanism, as would be required to invent each
of the innovators separately. Ex ante cooperative R&D investment (RJVs), entered into
before the R&D cost is sunk generally will achieve a more efficient outcome (in terms of
total welfare), but it is very difficult to identify potential partners ex ante in practice.
A robust IP regime helps foster
innovation and provides
incentives to people to create
and use new technology. One
way to stimulate ideas and
creativity is to assure that the
owner has monopoly rights
ov e r he r c re at i ons or
inventions for a temporary
duration.
generation product that builds on it? The
9
answer in general is no. The first invention
creates an externality for the second
inventor and therefore may be worth
developing even if the expected cost
exceeds its value as a stand-alone product.
However, broad patent rights for the first
inventor to ensure innovation do not leave
enough profit for the second inventor. One
solution to this problem is internalizing the
externality via licensing.
India's intellectual property regime, post the
2005 amendments, is comparable to that of
advanced economi es. Apar t f r om
infrastructural issues that remain, the
institutional framework is also in place.
However, the absence of laws against data
exclusivity may pose a serious threat to
innovation in India. This threat arises
because intellectual protection of databases
is a critical issue for science, research,
innovation and creativity, given the
proliferation of information services.
Advances in technology have made digital
databases an essential resource for
innovation. The central issue here is that of
the balance between the concerns raised by
database creators regarding the provision of
incentives and protecting investment in new
database products and services and, that of
safeguarding customary access to the data
by the scientific, education and research
communities. Indeed, the ability to access
existing databases and to extract and
analyze selected portions of them is an
integral part of the scientific process.
Further, digitization and the potential for
instant, low-cost global communication
have opened tremendous new opportunities
for the dissemination and use of scientific
and technical databases in developing
countries. This has vastly reduced the time
between the production of research output
2.4.2 Data Protection
Innovate India: National Innovation Mission 35
and its dissemination to the global scientific
community. Developing countries can,
therefore, in principle, start with, and
contribute to, the same knowledge base as
the advanced societies. While this is an
important opportunity for India, it will not be
possible if rights on the data use are not
properly specified. In India, there is no
protection to data.
While the IT industry has flat organizational
structures in place to promote both an easier flow of
information and ideas in the workplace and,
incentives such as stock options to reward
performance, organizations in other sectors may be
slow in adopting these flexible structures. Further,
even though these may perform effectively in their
current activities, they may not be doing enough to
promote an innovation culture in their organizations.
In part, this may be due to inadequate innovation
leadership within organizations.
In academic and research organizations, such
mechanisms are crucial. Most academic institutes
of higher learning in India are government funded
and have a tendency to follow bureaucratic
practices in their setup. For instance, one of the top
Indian institutions, with global reputation, took six
years to initiate a specialized Masters programme.
The fact that the programme was a successful one
is evident in the fact that the graduates of this
course, once started, were much sought after by
global and domestic companies, as well as by the
very best doctoral programmes in the world. The
reason for the delayed adoption of the course was a
prime example of the lack of an enabling framework
we have referred to earlier. The charter of the
organization specified the courses it could offer and
this charter was worked out more than 50 years ago!
So, until the charter was changed, the new
programme could not be started.
Another drawback to innovative research is the
incentive structure in these institutions. Most
university departments have the post concept ---
2.5 Organisations, Incentives and Linkages
Innovate India: National Innovation Mission 36
number of professors, number of associate
professors and lecturers with . The problem here is
that a young over-achieving lecturer has to wait for a
professor to retire so that an associate professor
can be promoted and open up a vacancy for the
lecturer to move up. This obviously destroys the
incentive to perform well at lower levels. Promotion
to higher levels should depend on the work done
and not on who, or how many, have been promoted
before.
The other major problem with higher learning and
research institutes in India is that many, or most, of
these are outside the university system. They have
more resources for research compared to what
most universities can even dream of. By being
outside the university system, this not only
duplicates infrastructure, it keeps teaching
10
separated from research. A famous physicist
narrated the following story during his farewell
ceremony from the college where he had always
taught. He had applied for a job at a university after
finishing his PhD. At the job interview, given his
excellent thesis work, the interviewers were rather
concerned that he wanted to give up a research
career and wanted to teach! The physicist taught in
an undergraduate college throughout his career and
is internationally reputed for his research work done
while he was teaching in this college. His
undergraduate students have later turned out to be
some of the leading researchers in the world of
physics. Unfortunately, he was an exception rather
than the norm.
India's R&D expenditure has been stagnant at about
0.9 per cent of GDP for ten years now. In the mean
time, China's share has doubled to 1.4 per cent and
they have a much larger GDP than India. Our share
of total industry R&D is about 35 per cent, much
lower than most major economies, including China,
where the share is about 65+ per cent. Importantly,
most countries spend between 15-35 per cent of
national R&D in the university system, with China at
around 10 per cent and rising fast. Even by
generous estimates, we spend about 4 per cent and
the bulk of national R&D is still done in autonomous
Innovate India: National Innovation Mission 37
10
These institutes do have teaching programmes but they are mostly for doctorate students.
laboratories. Unless we address this fundamental
issue, all discussion of connecting public research
with industry is going to remain a peripheral activity.
Research organizations in India, both public and
private, have been akin to ivory towers pursuing
excellence in research but without substantial
application to India's problems. In addition to the fact
that universities lack adequate resources and
incentives, they have limited interaction with other
stakeholders, namely other academics, industry
(producers), consumers, and government so that
India's issues have remained largely un-addressed.
Linkages among inventors and researchers
(generating new ideas or new ways of doing things),
entrepreneurs, venture capitalists, and industry-
services are quite poor.
While the goal of research and development is a
laudable one, there is a broader philosophical issue
about what triggers innovation. More specifically,
what is the role of the State in any innovation
process? Both theoretically, and empirically
through cross-country comparisons, the answer is
fairly obvious. Economies based on competition,
choice and market forces consistently out-perform
those where there are extensive State controls and
intervention. Often, such State intervention was
based on notions of market failure. But there are
two reasons why such a diagnosis was often
misplaced. First, market failure was assumed,
when there was no such evidence. With advances
in technology and possibilities of unbundling, many
classically cited instances of natural monopolies are
no longer natural monopolies. In fact, they are
unnatural monopolies thanks to entry restrictions
imposed by the State. Second, in interventions
based on notions of market failure, the costs of State
failure tended to be under-estimated. This is not to
deny a role for the State in core governance areas
like health, education, some elements of physical
infrastructure, preservation of rule of law and
protection of property rights and an efficient dispute
resolution mechanism.
Indeed, there is an additional role for the state ---
2.6 Government and Public Sector: Innovation and
Intervention
Innovate India: National Innovation Mission 38
We need to link academic and
research institutions with other
industry, government, and
consumers so that research
g e t s l i n k e d w i t h i t s
applications. This will allow
for people to work together and
understand each other's needs
better.
fostering an enabling environment for innovation
through active policies and through the creation of
enabling institutions. We have already discussed
how a positive list (permitting the good activities)
can be worse than a negative list (banning the bad
activities). The permit raj is an example of the first
option. In a certain world (with no innovation!), both
approaches lead to the same outcome. In an
uncertain world, where new activities get developed
with time, the first approach will slow us down for we
will need to change the law before we can start a
new activity. This will kill experimentation, the basis
for innovation. The issue is not how one decides on
good and bad activities but, once decided, have the
bad activities been stopped in an appropriate
fashion.
This idea is well explained by the court initiative to
bring down pollution in Delhi. The prescription of a
clean fuel, compressed natural gas (CNG), helped
to curb and reduce vehicular pollution in Delhi and
the decision was widely appreciated. However, the
specificity to CNG in the law precludes the adoption
of better fuels. Such adoption would require a
change in the law; the costs of innovation in this
case become much higher.
There is a temptation to control and direct resource
allocation, both public and private. In the 1950s, in
India, this drove State intervention in sectors
regarded as core infrastructure sectors, such as
coal and iron and steel, and the State ended up
producing everything from cycles to cement.
Simultaneously, for the private sector, a system of
licensing was introduced. The 21st century has
variously been described as a knowledge century
and India's strengths, in terms of both a
demographic dividend and core competencies in
education, skills, science and technology, have also
been talked about. However, if these are natural
comparative advantages, is there a case for State
intervention to specifically push specific forms of IT
or BT? Or is there a case for removing existing
licensing controls in sectors like education and
health, so that the demographic and knowledge
dividends are actually tapped?
Government may focus on being an enabler,
Innovate India: National Innovation Mission 39
providing infrastructure and key public goods such
as health and education, law and order, and good
governance. The private sector is robust and is
already innovating. The government could help by
innovating in public administration, e.g., e-
governance may help to leverage technology and
make its use wide-spread.
In this context, it is important to change certain
mindsets among our policymakers. When any
proposal for change is suggested, the usual
question asked by any policymaker is whether it has
been tried elsewhere. This, by definition, rules out
any innovative solution. Not surprisingly, micro-
finance institutions did not develop in India and we
are now spending huge resources to support such
institutions once the world started talking about
such institutions in Bangladesh.
As an example, consider the world-acclaimed
DOTS (Directly Observed Treatment: Short course)
treatment of tuberculosis. It was developed in India
by the Tuberculosis Research Centre, Chennai. The
study, known worldwide as The Madras Study,
showed the efficacy of treating tuberculosis patients
as outpatients (under direct supervision) and called
for a shift in public policy away from sanatoria.
However, this approach was not approved by the
Government of India as there was a lack of
precedence for DOTS in other countries of the
world! Years later, when this strategy was accepted
by most nations of the world, and endorsed by WHO
as a sure cure for tuberculosis, the Government of
India gave a green signal to DOTS to be
11
implemented in India.
A similar cautious mind-set has been holding back
improvements in India's financial sector. The desire
to get regulations in place before institutions can
trade in new instruments developed elsewhere may
have the same results that we had in product
markets during the license raj. That system
hampered and delayed product and process
innovations. Similarly, a regulation, and hence,
permission first approach may result in Indian
Innovate India: National Innovation Mission 40
11
Review of the Revised National Tuberculosis Control Programme, IDF, February, 2006.
Governments play a key role in
transforming societies. The
need therefore is to formulate
policies that ensure the supply
of technically trained human
resources and technological
infrastructure, and provide
incentives to foster and not
impede innovation.
12
Gangopadhyay, Shubhashis and Praveen Mohanty (2003), Appropriate Regulatory
Institutions for Industry and Finance, ABCDE symposium volume.
financial markets following the expertise and
knowledge of the regulators, rather than being led
12
by the creativity of the financial innovators.
While consumers provide the stimulus for demand
in many cases, society's response gives a boost to
the value generation spiral of innovation or renders
it stagnant and could even lead to value destruction.
However, the view from roundtables is that as in the
case of value systems and culture, society's
responses may be endogenous to the impulses of
incentives and economic environment. If we get the
economic and innovative impulses right, then
society and consumers (demand) will respond in
tandem.
Competitive pressures have compelled Indian
businesses, both large and small, proactively and
successfully to adopt new ways of production and
doing business. While being efficiency-conscious
and innovative has helped enterprises to withstand
competition and generate value, to continue value
generation and be business-leaders, innovation
itself will have to be sustained and not be sporadic or
confined to some pockets. Thus, innovation in India
will be required to extend its span.
from urban to rural business; from services to
manufacturing, and beyond to agriculture; from
private business to public sector enterprises;
from enterprise (productive activity) to social
sectors (education and training, health) and to
attitudes (values, culture and mind-set);
from regulatory structure (trade, licensing,
patenting, infrastructure communications,
transport, ports, railways and roads, power and
energy, water, irrigation) to public administration
(taxation, procurement, subsidies and transfers,
poverty removal and other social programs, law,
order and general governance); and,
from enterprise (closed group) to networks
(open groups)
Innovative ideas originating from research labs,
2.7 Society and Consumers
Innovate India: National Innovation Mission 41
For innovation to succeed,
soci et y has t o respond
positively to it. This can happen
only if the innovation is such
that it is in consonance with the
economic environment. So,
when t he rural soci et y
accepted the echoupal model of
ITC (buying grains directly
from the farmer instead of
mandis using ICT) it was
because they found some
benefits in it. Without their
support and partnership, the
model would not have been
such a roaring success.
research institutes and universities, workers and
individuals must be systematically harnessed
through links with business --- seed money, venture
capital, venture counselling --- and commercial
application. An eco-system for making India an
innovative society has to be developed such that the
number of innovations and contribution to growth
and well-being might be maximized.
Innovate India: National Innovation Mission 42
We develop a system that is enabling as opposed to
directive, based on the current state of innovation enablers
and based on expert views of myriad stakeholders. As
explained above, the system must be enabling as it is
inherently evolving in nature.
The enablers human capital (HK), technology
(Tech), other key resources (Other resources),
organizations and incentives (Organizations),
government and public sector (Govt.), and society
and consumers (Society) all together form the basis
of the innovation ecosystem. The enablers
discussed earlier and shown here are all required to
work in synchronization for an invention or an idea to
13
take birth and go through the various stages to
reach the form of an innovation. Any factor that is
lagging will become the weakest link dragging all the
others down. As the various examples highlight, the
seed of innovation can arise from a consumer
problem (connectivity), from a human capital issue
(skilling), from technology (internet), from
organizations (hierarchy), or from use of other
resources. These are represented by the spokes in
the wheel of the ecosystem.
3.1 Innovation ecosystem - a static
representation
3. DESIGNING AND BUILDING AN INNOVATION ECO-SYSTEM
A DYNAMIC SYSTEM
Innovate India: National Innovation Mission
13
The stages of the innovation process are - demand/problem identification, invention/new
idea, insight invention*insight solution-generation (prototype) demonstration of the
solution piloting of the solution large-scale commercial or social deployment
43
The innermost circle represents a primary economy
wherein value is generated through production and
barter or limited trade. The next circle represents the
industry-services based economy where value is
generated through production and trade, both made
possible through markets. The value generated in
the industry-services economy is far greater than a
primary/agrarian economy, partly because markets
associated with this stage allow specialization and
engender effi ci ency. Hence, consi derabl e
importance is attached to the development of
markets.
The third circle represents the innovative economy.
While this produces products and services as
before, the key difference is the way it operates.
Now, along with markets, networks are crucial.
Markets fostered value generation by allowing
discovery of price, marginal benefits and costs, and
hence marginal or individual rewards for individual
effort. Innovation, resting on ideas, depends upon
group effort where contributions to the development
of an idea will be difficult to apportion if not
impossible. The group that nurtures the idea and
takes it to fruition is represented by a network, which
may be wholly internal to an organization or, as is
becoming increasingly evident, have external
members too. Thus, in an innovative society,
networks will be crucial. Organizations may
metamorphose into a network or a network of
networks. How will networks interact with each
other? Will markets predicated on identification of
marginal benefits and costs suffice? This important
issue will be dealt with later.
If the enablers work in tandem and support each
other, a virtuous spiral of value generation is
obtained. It is pictured below. An example is the
BPO sector in India (see section 2.1 for a
discussion). Recall that a key enabling feature of the
BPO sector's success is that society responded by
allowing young workers, including girls, to venture
out at night to operate the night shifts at BPO units.
This freedom to work is accompanied by security
3.2 A Dynamic Innovation Ecosystem - Value
Generation or Destruction
Innovate India: National Innovation Mission 44
The enablers that foster
innovation in any society are
the spokes in the wheel of the
innovation ecosystem. What
links the spokes are the
networks that are crucial for
the idea to be developed.
considerations of night travel. If parents and
guardians are not assured of the safety of their
wards, they may react and prevent their wards from
joining BPO units. Acceleration of any such trend
might pose a threat to the growth of the BPO sector
and could even lead to a reverse spiral of value
destruction. This is represented by the spiral
superi mposed upon the stati c i nnovati on
ecosystem structure. Thus, the innovation system is
inherently dynamic. If it is not moving ahead and
generating value, there might be a risk of value
stagnation and reduction.
Innovate India: National Innovation Mission 45
Among systems to describe innovation are the
usual supply-demand models. While the supply-
demand representation is apt for an industry-
services economy, in characterizing the innovation
economy, it does not highlight the importance of
networks or how these networks will function.
Further, in the innovation ecosystem developed
here for India, while we incorporate both supply and
demand factors, we also emphasize the role of
these factors supporting each other in nurturing an
idea, developing it into an innovation and, thereby,
generating value. Moreover, to promote an
innovation habit in India, change in supply factors
human capital, technology, venture capital,
infrastructure are likely to be more important.
In an economy defined by marginal contributions
and costs, marginal reward to individuals sufficed to
elicit effort and output/value. Ideas and inventions
are rewarded via patents. For innovations
developed by one entity or one group, patents are
an appropriate mechanism. However, in the world of
ideas developed jointly that cannot be separated
into smaller contributions, this structure of
incentives will be inadequate. Who should get the
patent? One mechanism that has emerged is
shared intellectual property rights or shared-IP.
Forms of shared-IP include patent pledges and
patent commons. A patent pledge is a public
commitment by the patent holder not to sue other
parties for infringement, typically, in support of a
specific purpose/use. Patent commons are
communities that have access to patent resources,
also, usually for a specific purpose/use. This would
be an appropriate mechanism where the innovation
arises from within a network developed in
collaboration among the members of the network.
There is, however, a gap in the incentive structure
where the innovation arises from developments
across more than two networks. The openness of
the innovation process will enable another network
(or organization) to co-opt the rewards from an
3.3 A dynamic innovation ecosystem - WHAT
incentives?
Innovate India: National Innovation Mission 46
Networks help in adding value.
A dy nami c i nnov at i on
ecosystem creates a spiral of
value generation. If one of the
enabling factors does not work,
there is a risk of value
stagnation and reduction.
innovation. Whether this network shares those
rewards with the other co-producing networks is a
grey area. Intellectual property under this openness
is not adequately protected. A mechanism to share
rewards within a group/network and across
groups/networks where contributions are inexactly
defined is required. One option is a two-track patent
regime wherein shorter patents are granted,
especi al l y f or t echnol ogi es wi t h a hi gh
obsolescence factor and short duration protection.
This provides an opportunity to small innovators to
register and protect their ideas for a shorter duration
14
and at a lower cost.
For instance, IBM and seven leading U.S.
universities have recently announced new open
software research projects under a programme
designed in conformance with the Open
Collaboration Research Principles, a set of
guidelines announced previously to help promote
an open approach to overcome university-industry
intellectual property challenges. Under IBM's new
Open Collaborative Research program, results
developed between IBM Research and top
university faculty and their students for specific
projects will be made available as open source
software code and all additional intellectual property
developed based on those results will be openly
published or made available royalty-free. The
programme is intended to accelerate the innovation
and development of open software across a breadth
of areas, thus enabling the development of related
industry standards and greater interoperability,
while managing intellectual property in a manner
that enhances these goals.
Mechanisms that support the operation of networks
are
Standards
Contracts and contract enforcement
Reputation capita
Standards will allow for portability and hence more
rapid diffusion of any innovation. If members within
a network or across networks devise contracts to
Innovate India: National Innovation Mission 47
14
From comments made on an earlier draft by Mark Dutz, The World Bank
Encouraging networks can
lead to conflicts. It is necessary
to build a robust IP protection
regi me. Al s o s t r i ngent
standards, enforcement of
contracts, and leveraging of
reputation capital are some
factors that help networks
operate smoothly.
share unknown gains in some ex-ante determined
manner, these contracts requi re speedy
enforcement and resolution in case of disputes.
Finally, the market for ideas and innovation will
operate across networks through reputation capital.
Any member or any network found to be reneging on
its commitments will be a pariah. This would still not
ensure prevention of theft of an idea or an
application in the first place. Reputation capital will
work best for repeated transactions or exchanges.
Innovate India: National Innovation Mission 48
To enthuse India to be more innovative, a grand challenge
that fires the imagination of the youth and the productive,
and, galvanizes them for a push toward innovating might be
quite helpful. Such a challenge could be landing an Indian
on the moon. However, it is important for the rallying cause
to be connected to the people to matter to the masses, to
have the potential for eliciting their contribution to the
rallying cause, to have the actual achievement make a
difference to the masses. India has had several of such
issues that have successfully been deployed in the past.
Examples are Dandi march by Mahatma Gandhi for no tax
on salt by the British government, garibi hatao or remove
poverty by Prime Minister Indira Gandhi, and to a lesser
extent, the technology missions by Prime Minister Rajiv
Gandhi, or the polio drops campaign using celebrities such
as actors Amitabh Bachchan and Shah Rukh Khan.
Following the lead set by Prime Minister Manmohan Singh
in his Bharat Nirman programme, a possibility could be
Pyas bujhao or quench thirst, that is, ensure safe drinking
water to all in India --- find new ways to accomplish this, use
technology to not merely increase efficiency but to leapfrog
over current solutions, build partnerships to leverage
technology and to increase speed to market/delivery.
A rallying focus to achieve the goal of an innovative society
is a good starting point. To sustain the momentum thus
generated, a sound strategy needs to be in place. Given the
status --- the current state, the desired state, and the gap ---
we can draw up a set of objectives to be achieved in terms of
both process and outcome indicators, and, characterize
these in terms of targets to be achieved in a specified time-
frame. The strategy will then help to draw a roadmap and
also in specifying milestones to be accomplished along the
way. Regular monitoring will inform which areas are
lagging, learn and anticipate emerging weakness,
determine what corrections to apply, e.g., monitoring the
price level in the economy, anticipating the impact of fuel
price rise, and reducing the propagation of the oil price rise
to a rise in costs across the economy.
Defined by the enablers, the state of the innovation
ecosystem is also determined by the state of the
enablers. In section 2, using available data and the
considered views of stake-holders, we described
4.1 The Gap-current and future states of the Indian
innovation ecosystem
4. INNOVATION STRATEGY, ROADMAP AND MONITORING
THE ECO-SYSTEM
Innovate India: National Innovation Mission 49
How do you enthuse people to
innovate? To begin with, a
mission can be set. Then, an
ecosystem developed that is
goal focused. One has to be
clear about the goal, the
objectives, the strategy that
will help achieve them, and a
roadmap for the strategy with
measurable milestones. Then,
the innovation ecosystem will
foster innovation that will help
in achieving the goal set, in
growing faster and bolstering
India's leadership.
the state of some of the enablers. In the pictorial
depiction of the innovation ecosystem below, the
bold lines depict where India is relative to the
boundary of the outermost circle where we want to
be. The weakest or the most inward placed enablers
are human capital, service infrastructure (IPR,
venture capital, infrastructure and land), and
government and regulatory structure. Hence, these
are the enablers to focus on first while continuing to
expand all enablers.
Innovate India: National Innovation Mission 50
To build an innovative society, India has to focus on
Strengthening human capital
o Strengthen base of human capital -
secondary education
o Promote expertise for innovation - higher
education, basic sciences
o Set specific research matrix e.g., set goals
for number of PHDs, patents and papers
o Promote multi-disciplinary research pilot
service science curriculum in select
universities
Engendering creativity and application
o Address/ameliorate fear of failure
o Mechanisms to recognize achievement in
ideas, invention, innovation
Providing appropriate incentives
o Rewards (patents) for intellectual capital
building and sharing
o Penalties in the form of loss - of reputation
capital, future collaborations and value
generation opportunities
Allow both entry and failure
o Promote early-stage venture capital
funding, that is, promote entry
o Allow failure provide market-based exit
options within a specified period of time (say,
initially, up to five years from start of
operations)
Building and fostering linkages and networks for
innovation promoting collaboration.
If we continue in the current state with the above
potential bottlenecks, we would experience an
increasing gap between our status and our own
desired state as well as other countries.
Alternatively, we could devise a strategy to reduce
the gap and achieve the optimum specified.
Given Given the goal of enabling India to become an
innovative society and the constraints of resources,
the innovation strategy for India must focus on those
aspects of the enablers that builds the critical mass
for a self-sustaining innovation process, produces
the maximum value at the least cost in the shortest
time possible, with the early gains being
demonstrated and publicized. It must set out a
sequence of actions to pursue to achieve this goal
while also indicating the actions to follow if this
sequence is broken at any point.
For an innovation ecosystem, the underlying
characteristic is evolving. Hence, the ecosystem
must be enabling and not directive. Yet, to enable
India to become an innovative society, objectives,
targets, and a plan would be required so, how does
one specify objectives and targets without
becoming directive and therefore restricting
innovation itself? The answer begins with a
4.2 The Strategy
Innovate India: National Innovation Mission 51
Some of the weak enablers in
t he I ndi an i nnov at i on
ecosystem are human capital,
service infrastructure (IPR,
venture capital, infrastructure
and land), and government and
regulatory structures. Until
these are strengthened, the gap
between the existing status and
desired state will widen even
further.
network. Instead of having a directive organization
such as a ministry or a national commission,
innovation could be enabled by having a network of
thinkers --- an Indian Innovation network
Who should be responsible for the innovation
initiative in India? In the normal (equilibrium path)
course, direct or indirect government management
is to be avoided. In the event of minor deviations
(off-equilibrium path), the system structure
(incentives) would bring the system back to
normalcy. However, in case of a break or a
disruption, flexibility would require allowing some
State intervention. Given a self-sustaining eco-
system, the key is to determine if to intervene, when
to intervene, how to intervene, how much and where
to intervene? The State should step in to either form
an institution or restore the functioning of the
institution as the case may be; and, then allow
independent functioning.
Several networks aiming at enabling some part of
the innovation eco-system are in the process of
formation. The National Innovation Foundation
under the aegis of the Science and Technology
Ministry operates to support grassroots innovators
(including the excluded sections of the population).
The CII is in the process of establishing a National
Innovation Grid to bring inventors together with
entrepreneur-mentors, venture capitalists, and
innovators. However, they will not succeed if they
are to become like existing institutions ---
hi erarchi cal , prescri pti ve and safety-fi rst
bureaucratic organizations.
The strategy is to build credible institutions that have
two essential elements. First, they must foster each
(or a group of) sub-enabler(s) under focus. The
institutions must function in consonance with the
following principles.
Allow simple and generic processes that are
adaptable to evolving situations since
innovation process is inherently uncertain
Provide incentives (patents) to ideate,
collaborate and innovate; disincentives
Innovate India: National Innovation Mission 52
(reputation loss, punitive damages) for cheating
and reneging
Provide opportunity for all to access the
resources of these institutions; enable special
access for weaker sections (whosoever they
might be at that time) and grass-roots
innovators
Allow redress for grievances and wrong-doing
(e.g., idea theft); allow transparency by
involving the media.
Require government intervention only when
there are disruptions to the institution
Second, the key enabling institutions must be inter-
connected and collaboration must be the guiding
principle for inter-connectivity. This is the Indian
Innovation network --- empowered by links to
directive authorities that can effectively intervene,
e.g., the Science and Technology Ministry. It may be
an executive group with a rolling membership, say a
two year term for each member. Members are to be
drawn from a broad section of thinkers/innovators,
all of whom are stakeholders in the innovation eco-
system. It must be empowered for decision-making.
To enable maximum play of ideas within the
network, the hierarchy must be a flat one. Powers of
decision-making can be entrusted to a smaller
collective of members. Once these decisions are
taken, they must be executed within a pre-
determined time frame by all who have signed up as
members, be they government or private bodies.
The activities of the innovation-enabling network will
be
1. regular monitoring and reporting
2. stock-taking and identifying actions
3. taking action or delegating action to an
executing (public/private) body
4. and again, monitoring and reporting
Innovate India: National Innovation Mission 53
To reduce the gap between
actual and desired states of the
innovation ecosystem, the
strategy has to be built around
prov i di ng i ns t i t ut i ons /
networks that are flexible
enough in terms of evolving
situations and access. This
cannot be j ust anot her
institution. It has to be
proactive and empowered.
4.3 The roadmap and milestones
India has to focus on the following elements of the
innovation eco-system that are lagging and acting
as barriers rather than as enablers. For each, we
specify process milestones and the actions required
to achieve them.
Strengthening human capital: Strengthen base of
human capital - secondary education; Promote
expertise for innovation - higher education, basic
sciences
Determine the quantitative gap for proportion of
children out of secondary school, fill a fraction
(say, 10 percent) every year; provide resources
for filling this gap
Determine gap for graduates in basic sciences
and fill a specified fraction every year (e.g., 20
percent); provide resources for filling this gap
Promote expertise by encouraging doctoral and
research studies; provide resources and
incentives (increase salary levels in research
institutions)
To achieve these objectives, India would have to
allow increase in education capacity --- both schools
and colleges --- and foster competition among
schools. Hence, private schools must be allowed ---
at primary and secondary school stage and beyond
to higher education. In higher education, foreign
investment would augment domestic resources and
raise the level of research more quickly.
Engendering creativity and application:
Address/ameliorate fear of failure; adopt
mechanisms to recognize achievement in ideas,
invention and innovation.
Institutionalize contests and awards for ideas,
inventions, and innovations with associated
increasing monetary rewards.
o Romanticize innovation achievement (as in
music/dance and quiz contests on TV) and
motivate parents by using demonstration
effects
o Highlight leadership in innovation e.g.,
Mr. Sreedharan of Delhi Metro
Innovate India: National Innovation Mission 54
Foster trial, failure, and re-trial through formal
schooling, organizational, and societal means
o Increase tolerance for experimentation and
allow failure of experiments; promote risk-
bearing capacity
o Promote out of the box thinking, nurture
exploration, engage with local knowledge
and local issues --- science fairs, innovation
contests
o Promote a strategic way of identifying
problems or anticipating problems
o Promote learning by doing (e.g., allocating
20 per cent time to employees to innovate),
foster here in India what non-resident
Indians (NRIs) achieve abroad
Re-design course curricula to foster learning,
application and experimentation --- change
grading system, include case studies, projects
and problem-solving exercises
Re-train teachers to orient them towards
innovation
Create a culture of research and innovation
Providing appropriate incentives while
reducing risk: Rewards (patents) for intellectual
capital building and sharing; penalties in the form of
loss of reputation capital, future collaborations and
value generation opportunities
Devise new forms of IPR or patents; examples
in the text are patent pledges, patent commons,
shorter duration patents in a two-track patenting
system
Monitor patent use; provide for compulsory
licensing where patent is lying un-used
Institute an intellectual property policy regime
which strikes the appropriate balance between
protecting the economic rights of inventors and
meeting the needs of society by advancing the
progress of science
Change rewards system for teachers, students,
Innovate India: National Innovation Mission 55
parents, employees; use motivational tools
Allow both entry and failure
o Promote venture capital funding, specially
early stage funding provision of seed
money, venture financing, bankability; that
is, promote entry
o Allow failure allow shutting down of an early
start-up (exit and stopping loss) with more
exit nodes for young ventures, so provide
market-based exit options within a specified
period of time (say, initially, five years)
o Amend bankruptcy laws so that companies,
especially the small ones, can exit at
minimal cost
Provide venture counselling: address lack of
exposure (no business model even though
domain knowledge exists); highlight role of
design as the glue in bringing together an idea to
commercial application
Government role: A key role of the government is
to remove obstacles in the performance of other
enablers, notably, in the education, building skills
and training sector.
Improve governance (e.g., Right to Information
Act by the central government), enable public-
private partnership --- chaos in government
programmes discourages private sector
contribution
Innovate in service delivery --- education,
heal thcare access (tel emedi ci ne), use
technology (e-sewa centres employing
seemingly non-productive workers to provide
public services)
Reduce remaining regulatory barriers, (e.g.,
gateway clearance of imports for technology
innovation)
Building linkages amongst researchers,
designers, venture capitalists, and industry:
India has pockets of innovation, some technology
sub-sectors are world-class. However, these
remain oriented more toward global needs than
Indian. While a bigger market is preferable, Indian
needs must be addressed.
Innovate India: National Innovation Mission 56
Roadmaps for each of the
enablers that India lags behind
in have to be laid out. Unless
we build our human capital
( qual i t y and quant i t y) ,
encourage people to be
creative and feel free to apply
their creativity, reward people
for their creativity, allow both
entry and failure, where
government takes on an
enabler's role, and most
i mport ant l y, est abl i shes
linkages between industry,
academi a, and vent ure
capitalists, we will not be
successful in building a robust
ecosystem that lays the path for
innovations.
Build hubs of innovation universities,
institutions, small innovators and corporate
firms
o National networks e.g., CII Innovation grid
o International networks e.g., CSIR with other
national research councils
The Indian Innovation network must take on the
responsibility of being the nodal network with its
members being both other networks, organizations
and individuals. The nodal network must achieve its
goal of fostering an innovative society by enabling
collaborations and nurturing these so as to solve
India's problems.
Recall that the purpose here is to provide an
enabling innovation eco-system that does not get
trapped in a directive mode (that may appear
relevant in the current innovation situation) and
hence become a barrier to future innovation. A
caveat is that this report is not a complete mapping
of all enablers that define and determine the
innovation eco-system. The mapping, monitoring,
and reporting on the state of enablers and providing
recommendations to act upon are an on-going
process that will become increasingly complete with
repeated use.
Innovate India: National Innovation Mission 57
It is contradictory to ask for innovative ideas and then lay
down procedures f or get t i ng t o t hem! These
recommendations are, therefore, ways of encouraging
organizations and individuals to innovate and, once they do
so, to ensure that they are rewarded for it. In other words,
the focus is on enabling innovation --- allowing
experimentation with incentives to do them.
Who will be responsible for implementing these
recommendations? Obviously, everyone has to be
involved. It has to become a national movement --- a natural
way of doing things for all Indians. One way to kick off the
process is to announce a grand challenge --- a rallying call
--- to solve a major national problem. The most, or a set of
the most, innovative solutions can be rewarded with a
special prize. This should attract participation. To create the
culture of innovation and encourage participation by all, the
grand challenge should not be something like putting an
Indian on the moon; instead, it should concentrate on more
mundane things like clean water or, public transportation.
The prize distribution should be given the greatest possible
exposure on television and media.
A network of people will have to be developed who will
participate in an exchange of innovative ideas, with proper
protection of intellectual property. Each year, this network
could adopt a particular enabler for a detailed study, take
stock of where it is and draw up a blueprint of how to change
it, if necessary. In the process, one must also mention the
milestones which will then become the job of everyone to
monitor. The purpose of this network is not to drive
innovation. Instead, it will help generate an attitudinal
change in people's mind-sets like greater tolerance to
failure, going off the beaten track, looking for solutions
encountered in daily life, etc. It will also encourage the
public, government and other organizations to create an
innovative eco-system in whatever they control. Most
importantly, it will foster experimentation. All this has to be
done in a way that facilitates innovation and stops well short
of saying what has to be done!
Actions in Specific areas
For the network to be effective, it must nurture debate and
discussion among a broad spectrum of people. However, its
role will be limited to enabling, encouraging and
5. SPECIFIC RECOMMENDATIONS
Innovate India: National Innovation Mission 59
experimenting with innovative ideas rather than doing
them or saying how they are to be achieved. To achieve this,
the network will take initiatives that bring about
improvements to the enablers. In particular, the network can
work towards some goals laid out below. These are not a set
of policies that need to be enacted, but issues that the
network needs to seriously debate and develop as parts of
an innovative ecosystem.
Schooling up to class 10 should be made
compulsory for all children.
This will require an improvement in both quantity
(more schools) and quality (better teachers and a
better curriculum).
Private schools should be allowed with education
vouchers if necessary (especially where a public
school option is not available in some pre-defined
vicinity, e.g., within 5 kilometres).
Teachers in public schools must be made more
accountable to the local community of parents.
Institute competition among public schools by
ranking these and making the ranking public.
Foster competition between public schools and
private schools through regular competitions that
have prizes and wide recognition
School curricula should concentrate more on local
issues, be geared towards solving local problems
with the use of local resources, along with more
basic training in mathematics and languages.
Learning should not be by rote; tests and
examinations should be geared towards checking
on functional knowledge and understanding.
School education should include a strong content of
vocational training so that students can decide on
moving to vocational institutes after class 10 or, go
on to class 12 with a view to moving up to a college
education.
More vocational institutes are required with a strong
partnership between government and the private
sector. This will keep the curricula in vocational
School Education:
Vocational Training and Skilling:
Innovate India: National Innovation Mission 60
institutes geared towards the skills required by
businesses.
To keep up with changing demand for skills, modular
training is required to quickly train new workers and
upgrade workers to learn and perform in a
competitive and global marketplace.
The major objective of college education should be
two-fold: specialized training for higher productivity
and a managerial, or supervisory, role in the job
market or, for moving into a university education to
further a career in research and/or academics.
Generous educational loans should be provided to
the very best students and those who require
funding.
Augment capacity including allowing private
investment in higher education.
New universities should be integrated ones offering
both undergraduate and post-graduate degrees
leading up to PhDs.
Foster competition among universities, both public
and private, for example, by rankings based on
performance indicators and by competitions that
have prizes and wide recognition.
To attract the best researchers into academics,
teacher salaries need to be increased. One way of
doing this will be to top up government salaries with
private sector provided bonuses based on research
outputs.
The concept of posts in universities should be
discouraged; a performing young researcher should
not be held back from promotions because positions
above him, or her, are choked by those who have
been promoted before.
Universities should be the prime research
institutions (given that teaching and research create
dynamic complementarities). This means that
government grants and funds going to specialized
institutes with little or no teaching commitments
should, instead, be used to strengthen university
infrastructure. The existing specialized institutes
need to have linkages with students so that they can
continuously re-invent themselves.
College Education:
Innovate India: National Innovation Mission 61
New Curricula:
India is slow to react in developing new disciplines
and courses within its university setup. This is
largely because they are hamstrung by a regulatory
agency (the University Grants Commission, or the
UGC) that believes in prescribing a standard
system for all. This slows down the process of
developing new courses according to the need of
the hour. While UGC should be looking into
observable measures like class size and
infrastructure, it should desist from laying down
what can be taught and when. Universities should
be allowed to innovate on syllabi and courses.
India has taken enormous strides in developing a
vibrant services sector. Unfortunately, there is no
course in India that looks at service science as a
discipline. The service sector requires a training
process that is quite different from the existing
course structures that concentrate on the industrial
and agricultural economy. For instance, investment
in fixed assets is relatively unimportant in a service
company. Its major asset is the human capital,
made up of footloose and highly skilled individuals.
The productivity of such individuals depend on how
well they have learnt various aspects of the modern
technology, how they network with other people
and, how capable they are of borrowing insights
from a number of related disciplines. This is
independent of, and in addition to, the more
classical disciplines they learn in universities.
However, there are no training processes in India
that can churn out more and more of such people.
The universities should be treated as Factory of
Ideas and should play the true role of acting as an
innovation hot bed for creation of wealth.
Innovation is about imagining and creating new
things. While the role of science and technology is
readily understood, management has only recently
been receiving some mention. However, the role of
design is yet to be understood. Design is about
application of creativity throughout the process of
innovation to convert ideas into products and
services. For creating an innovation eco-system,
science, technology, management and design must
come together. The best way to achieve this is
Innovate India: National Innovation Mission 62
through the intermingling of these disciplines and
that happens when strong and functioning networks
are developed among the universities, institutes
and businesses.
The network should strive to include participants
from the private sector, academia and other citizens
to foster joint work with proper recognition of
intellectual property through mechanisms
suggested in this report. For India to be an
innovative society, it is imperative that collaborative
activities become institutionalized.
Competitions among private sector organizations
should be instituted to choose the most innovative
organizations.
Companies should be encouraged to set up
collaborative networks, both within and outside of
them.
Government supports various research proposals
under two broad heads. The first set consists of
research grants given to individuals, or institutes,
based on proposals submitted by them. The other
set consists of specific topical issues given to one
institute or organization to help formulate policy. The
second type of grant is not conducive to innovative
ideas. The same issue should be studied by at least
two (or even more) independent groups. This will
force the groups to compete with each other to
develop the best solution, bring the debate out in the
open (rather than being within the realm of
government designated experts) and bring about a
sense of participation among all.
Generate a mechanism of identifying ministries that
implement innovative solutions.
Work with various ministries to identify problem
areas and create a national movement to
encourage everyone to find solutions. The network
must take the solutions back to the ministries.
Our strength lies in our numbers. Innovation is a product
of the mind and people must not be treated as inputs into
Private sector:
Government:
Innovate India: National Innovation Mission 63
Both the private sector and the
government play a crucial role
in supporting the innovation
ecosystem. For this, the private
sector has to be encouraged
and rewarded.
Innovation is the need of the
hour. We need to encourage
creativity and bring it to the
market. Unless we realise the
urgency of the situation, the
loss of gaining a place in the
worl d market mi ght be
irreversible. We need to build
on the vast talent pool that we
already have and gear it
towards taking up challenges
that the country faces and come
up with innovative solutions to
our problems. Let's join hands
in making India an innovation
hub of the world, a focal point
around which other networks
would congregate.
a production process. Instead, they must be seen as
problem-solvers and must be encouraged to do so.
Unless this is done, our biggest strength can become
our worst nightmare, as we try to find productive jobs in
straight-jacketed enterprises and activities. Simply put,
if we do not innovate, we perish.
Innovate India: National Innovation Mission 64
TABLES
Innovate India: National Innovation Mission 65
Notes:
Sources:
For India, number of students passing Senior Secondary
Examination is not available. The reported figures are the total
number of boys and girls who got enrolled in Class XII.
For India, there are no statistics on the number of S&T graduates.
The data reported in the above table have been compiled using
enrolments in B.Sc., M.Sc., and AICTE approved intakes in
Polytechnics and Degree Engineering programmes.
Age-group wise population for India as on March 1, 2002, March
1, 2003 and March 1, 2004 have been obtained using data
reported in Census of India, 2001 and projected population for
2006 on the assumption that population grew at the same rate
every year.
For China, population in the age-group 20-24 has been obtained
using data for 2000 & 2005 on the assumption that population
grew at the same rate every year.
For USA, high school graduates refers to only high school
graduates, that is, does not include education attainment levels
higher than high school (e.g., bachelor's); this is selected to make
it comparable to the high school graduates (enrolments) data for
India and China.
Selected Educational Statistics 2000-01, 2001-02, 2002-03 &
2003-04
(An annual publication of the Dept. of Secondary & Higher
Education, Ministry of Human Resource Development, Govt.
of India)
Rajya Sabha Unstarred Question No. 42, dated 25.7.2005
Rajya Sabha Unstarred Question No. 3846, dated
22.05.2006
India:
Innovation Situation in India Quantifying Enablers using Indicators
EDUCATION
TABLE I
Innovate India: National Innovation Mission 67
Census of India, 2001
Projected population by age and sex for 2006 (on the basis of
Census of India, 2001) from Report of the Technical Group on
Population Projections (constituted by the National
Commission on Population), May 2006.
China Statistical Yearbook 2005 Chapter 21: Education,
Science & Technology
21-7: Number of Graduates by Level and Type of School
21-36: Basic Statistics on Scientific & Technological Activities
from National Bureau of Statistics of China
(http://www.stats.gov.cn/tjsj/ndsj/2005/indexeh.htm)
Population by five-year age group and sex 2000 & 2005,
World Population Prospects: The 2004 Revision Population
Database (http://esa.un.org/unpp/)
Educational attainment data from Current Population Survey
2001, 2002, 2003 & 2004, U. S. Census Bureau
(http://www.census.gov/population/www/socdemo/educ-
attn.html)
Educational attainment data from 2004 American Community
Survey, American FactFinder, U. S. Census Bureau
(http://factfinder.census.gov)
Survey of Graduate Students and Post Doctorates in Science
and Engineering, Division of Science Resources Statistics,
U. S. National Science Foundation
(http://www.nsf.gov/statistics/nsf06325/tables.htm#group1b)
Estimated age-group wise population from U. S. Census
Bureau (http://www.census.gov/popest/archives/2000s/)
Age & Sex data from 2004 American Community Survey,
American FactFinder, U. S. Census Bureau
(http://factfinder.census.gov)
China:
U.S.A.:
Innovate India: National Innovation Mission 68
Notes:
Sources:
*of which 31.7% were performing R&D activities, 30.4%
were performing auxiliary activities and rest 37.9% were
providing administrative and non-technical support.
By July 2006, R&D Scientists/Engineers in India had risen
to 157 per million.
This figure is 3 percent of that for U.S.A
(Dr. R. A. Mashelkar, Director General, Council of Scientific
and Industrial Research)
University Grants Commission
R&D Statistics, Department of Science & Technology,
Government of India (http://dst.gov.in/majorhighlights.pdf)
China Statistical Yearbook 2005 Chapter 21: Education,
Science & Technology
21-36: Basic Statistics on Scientific & Technological
Activities, National Bureau of Statistics of China
(http://www.stats.gov.cn/tjsj/ndsj/2005/indexeh.htm)
Survey of Graduate Students and Post-doctorates in
Science and Engineering, Division of Science Resources
Statistics, National Science Foundation
(http://www.nsf.gov/statistics/nsf06325/tables.htm)
2004 Survey of Science and Technology Statistics,
UNESCO Institute for Statistics(http://www.uis.unesco.org)
Estimated age-group wise population from U. S. Census
Bureau (http://www.census.gov/popest/archives/2000s/)
Innovation Situation in India Quantifying Enablers using Indicators
EXPERTISE
TABLE II
Innovate India: National Innovation Mission 69
Notes:
Sources:
According to World Development Indicators, 2005 total number of
patent applications filed in India in 2002 was 91,924 of which
residents filed 220 applications and non-residents filed 91,704
applications.
According to National Bureau of Statistics of China, total number
of patent applications filed in China in 2002 was 2,52,631.
Figures for India under Number of Patents granted are the
number of patent applications Notified for opposition in the
Gazette of India.
of which 1078 patents were granted to Indians
The reported figure for new designs in India in 2003 gives the
number during January-April, 2003.
*World Development Indicators, 2005

News article: India lagging in science and technology dated

August 29, 2006 authored by T. V. Padma (official at SciDev.Net)
(http://www.scidev.net/content/news/eng/india-lagging-in-
science-and-technology-says-official.cfm)
**Science Citation Index
@
Indian Patent Searchable Database EKASWA-A & EKASWA-B
provided by Patent Facilitating Centre, Department of Science &
Technology, Govt. of India
(http://www.indianpatents.org.in/db/db.htm)
R&D Statistics, Department of Science & Technology,
Government of India (http://dst.gov.in/majorhighlights.pdf)
#
China Statistical Yearbook 2005 Chapter 21: Education, Science
& Technology, 21-36: Basic Statistics on Scientific &
Technological Activities from National Bureau of Statistics of
Innovation Situation in India Quantifying Enablers using Indicators
INNOVATION RELATED OUTPUT
TABLE III
Innovate India: National Innovation Mission 71
China
(http://www.stats.gov.cn/tjsj/ndsj/2005/indexeh.htm)
^
Dept. of Industrial Policy & Promotion, Ministry of Commerce &
Industry Notification of Registration of Designs dated August 16,
2003
(http://ipindia.nic.in/ipr/design/notification/16.08.2003.pdf)
Innovate India: National Innovation Mission 72
ANNEXURES
Innovate India: National Innovation Mission 73
1. Pre-paid SIM cards in India
2. Sona Koyo systems steering systems
3. McDonald's food development centre
4. National Open School
5. CII Skills Initiative
6. IDF Health Smart Card
7. Reverse pharmacology process of drug discovery
8. Aravind Eye care system
9. Governance: Small area estimates of poverty and
poverty maps
10. BPO: business process innovation - Pick-up and drop
facility
11. IBM On-demand consulting model
12. E-choupals
13. Computer based functional literacy
14. Governance: RTI
15. E-governance: online filing of Haryana VAT returns
16. Bharti Outsourcing (business process) model
17. Magarpatta City: The farmers' cybercity
18. Cavincare Chic? shampoo small sachets
19. IBM e-commerce website architecture
I. EXAMPLES OF INNOVATION
Innovate India: National Innovation Mission 75
This note outlines the steps in quantifying the indicators
identified for each enabler of innovation.
Given that Human Capital is the most vital resource for
promoting innovation, we started off with compiling data on
our manpower stock and the output that it has generated
over the last few years (2000-01 to 2003-04). First, it is very
important to take stock of how many High School Graduates
and how many S&T Graduates India has been producing
because that is the very first step towards building up a
(human) resource base in Science & Technology that will
engage in R&D activities to produce output that is
commercially applicable and socially useful. Then, we have
looked into our expertise, to be more specific, the number of
Doctorates, personnel in R&D establishments and their
output in terms of the number of scientific & technical journal
articles published, the number of citations, the number of
patent applications filed, the number of patents granted and
the number of new designs.
It is important to benchmark the results for India against
those for U.S.A. and China, the former a world leader in
innovation and the latter our neighbour and our immediate
competitor. Accordingly, for all of the above indicators,
statistics for U.S.A. and China have also been compiled.
The major problem that we have encountered during this
exercise is the absence of readily accessible data for India
from a single reliable database. In fact, there is no defined
source for our data requirements. However, there is some
data at the disaggregated level available from myriad
sources. Moreover, since we have also attempted a cross-
country comparison of the indicators, it was necessary that
the statistics be comparable. Nevertheless, within the
limitations of data availability, we have tried to develop a
reasonably consistent dataset.
For India, data on the number of students passing Senior
Secondary school examination is not available. While
annual enrolments in Class XII are available from the
Ministry of Human Resource Development, there is no data
on drop-outs. Thus, we were not able to estimate the
number of High School Graduates. In view of this, we had
no option but to report enrolments instead of High School
Graduates. The reported figures are therefore not strictly
comparable to the figures for U.S.A. and China.
II. DETAILS ON THE DATA COLLECTION AND
COMPILATION METHODOLOGY
Innovate India: National Innovation Mission 77
Again, there is no data on the number of persons graduating
in Science & Technology. Therefore, we had to compile
whatever data is available from various sources so as to
arrive at a reasonably good approximation. Ministry of
Human Resource Development provides data on annual
enrolments in B.Sc., M.Sc. and AICTE approved
Polytechnics. Sanctioned annual intakes in AICTE
approved Degree Engineering Institutions are available
from Lok Sabha and Rajya Sabha Starred & Unstarred
questions. The reported figure for each year is the total
enrolment in B.Sc., M.Sc., Polytechnics and the total
approved intake in Degree Engineering Institutions. Thus,
we have accounted for University recognized Degrees in
Science and AICTE approved Degree and Diploma
programmes in Engineering & Technology. However, once
again the reported figure is not strictly comparable to the
figures for U.S.A. and China.
We have also reported the numbers as percentages of the
relevant population age-group. Thus, it was necessary to
have annual data on age-group wise population. However,
for India, this data is available only for two years 2001 and
2006. Census of India provides the data for 2001 and the
data for 2006 is the projected data based on Census 2001.
The age data for the intervening years was obtained
assuming a linear annual growth rate of population.
Data on the number of Doctorates in Science & Technology
have been obtained from the University Grants
Commission. R&D output statistics have been obtained
from World Development Indicators (2005), Science
Citation Index, Patent Facilitating Centre, Department of
Science & Technology, R&D Statistics, Department of
Science & Technology and Dept. of Industrial Policy &
Promotion, Ministry of Commerce & Industry.
Data for China and U.S.A. were available from respective
country and international sources. Data for China has been
sourced from the National Bureau of Statistics of China and
the data for U.S.A. has been taken from the U.S. National
Science Foundation and the U. S. Census Bureau. Age-
group wise population for China was not available for all the
four years. Population in the age group 20-24 in the two
years 2000 and 2005 was obtained from the 2004 Revision
Population Database provided by the UN. We have
estimated the population in this age group in the intervening
years by assuming a linear annual growth rate. However,
Innovate India: National Innovation Mission 78
data could not be obtained for the 18-24 age-group because
the available data is grouped by 5-year age cohorts.
A reasonably consistent dataset is thus being developed
that allows us to measure progress in innovation over time
and across countries.
Innovate India: National Innovation Mission 79
CII Advisory Committee on
National Innovation Mission
Mr. Shanker Annaswamy (Co-Chair)
Managing Director
IBM India (P) Ltd.
Lt. Gen. (Retd.) S. S. Mehta (Co-Chair)
Director General
Confederation of Indian Industry
Dr. Ashok Jhunjunwala
Professor - Department of Electrical Engineering
Indian Institute of Technology, Madras
Prof. Rishikesha T. Krishnan
Chairperson - Research & Publications
Indian Institute of Management Bangalore
Dr. Jai Menon
Chief Information Officer
Bharti Airtel Limited
Dr. Ganesh Natarajan
Deputy Chairman & Managing Director
Zensar Technologies Ltd.
Mr. Krishnakumar Natarajan
President & CEO - IT Services
MindTree Consulting Pvt. Ltd. and Indian Institute of
Management Bangalore
Prof. Anand Patwardhan
Executive Director, TIFAC
Department of Science & Technology
Dr. S. Ramakrishnan
Director General
Centre for Development of Advanced Computing
Mr. Anuj Sinha
Adviser & Head (NCSTC)
Department of Science & Technology,
Mrs. Aruna Sundararajan
Chief Executive Officer - CSC Project
Department of Information Technology, IL&FS PMU
III. CONSULTATIONS
Innovate India: National Innovation Mission 81
1. A S Rao
DSIR, Government of India
2. Ajay Madhok
AMSOFT Systems India Inc.
3. Anil Wali
Foundation for Innovation & Technology Transfer
4. Anjan Das
Confederation of Indian Industry
5. Anupam Saronwala
IBM Global Technology Services
6. Badri Raghavan
FairIssac India
7. Bharati Jacob
SeedFund
8. Daniel M. Dias
IBM India Research Lab
9. Darlie O Koshy
National Institute of Design
10. Dravida Seetharam
IBM India Limited
11. H R Bhojwani
Ministry of Science & Technology and Earth
Science, Government of India
12. Harish Krishnan
IBM India Ltd.
13. Harsh Soni
Fidelity India
14. M. P. Ranjan
National Institute of Design, Ahmedabad
15. M. V. Rajiv Gowda
Indian Institute of. Management, Bangalore
16. Maj. Gen (Retd) R. Swaminthan
Office of the President of India
17. Manish Sabharwal
Team Lease Services Pvt. Ltd.
LIST OF RESPONDENTS
Innovate India: National Innovation Mission 83
18. Meena Ganesh
TESCO Hindustan Service Center
19. N Srinivasan
Confederation of Indian Industry
20. N. K. Singh
TeleVital (I) Pvt. Ltd.
21. Naushad Forbes
Forbes Marshall Ltd.
22. Poonam Bir Kasturi
Srishti School of Art, Design & Technology,
Bangalore
23. Pradeep Dubey
Yale University
24. Puneet Gupta
Infosys Technologies Ltd.
25. R. Saha
TIFAC, Department of Science & Technology
26. Rajendra Prasad
Council of Scientific & Industrial Research
27. Romi Malhotra
DELL India
28. Sanjay Singh
TIFAC, Department of Science & Technology
29. Soubir Bose
Oracle India
30. Soumitra Dutta
Roland Berger Professor of Business and
Technology INSEAD
31. Subir Roy
Business Standard, Bangalore
32. SUNY
Stonybrook, USA
33. V. Ponraj
Office of the President of India
34. V. S. Ramamurthy
Board of Governors, IIT Delhi
Innovate India: National Innovation Mission 84
35. Vasu Roy
Netapp India
36. Venkat Panchapakesan
Yahoo India
37. Vinay L. Deshpande
Encore Software Ltd.
38. Vineet Kumar Goyal
Confederation of Indian Industry
Innovate India: National Innovation Mission 85
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