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Innovation in India

I have spent a good part of my professional life developing commercially and strategically useful applications based on Plasma Physics. Through these efforts, a centre for technology development and diffusion has come up in Gandhinagar and a large number of technologies have been developed and spun off. The Department of Atomic Energy, which is our administrative department see some of these as societally relevant technologies of considerable developmental value. In my professional involvement with technology development, one of my concerns has been how to stimulate innovation in technology.

The Global Competitiveness Report, published annually by the World Economic Forum, classifies national economies in three broad categories: factor-driven, efficiency-driven, and innovation-driven. India still is a factor-driven economy; it is production factors like the labour cost which makes India competitive.

There is now a thrust to make India an innovation-driven economy. India ranked 48 in 2020 within 131 economies in the Global Innovation Index (GII) according to the rankings released by Cornell University, INSEAD and the World Intellectual Property Organization (WIPO). As a strategy to make India an innovation-driven economy, NITI Aayog, Department of Industrial Policy & Promotion and Confederation of Indian Industry together launched the “India Innovation Index”, an initiative to rank states on Innovation. The country’s first innovation index portal will capture data from all Indian states and regularly update it.

To strategize a technological innovation, we need to understand what drives it. Technology is self-creating, developing and evolving recursively. Each technology is the product of earlier ones, and new technologies often emerge not always from discoveries but the combination of existing technologies. The three rules of combinatorial technological evolution framed by Brian Arthur in his book, the Nature of Technology, are: i) all technologies are combinations ii) each component of technology is itself a technology iii) all technologies harness and exploit some effect or phenomenon. Technologies started as being the enhancement of the natural: more power, more speed etc. Then technologies began to replace the natural: genetic engineering, medical implants etc. Now, technology evolves towards cognification: getting smarter, intelligent.

Technological development is problem-solving, such as in engineering, that parallels Thomas Kuhn’s model of scientific revolutions. When existing methods, tools, and components of a system are insufficient to solve a new problem, these may get reworked, repurposed, “redomained,” in such a way to get the problem solved. This may result in new technology.

A problem posed in the Indian context is the cost. For a product to succeed in India, full performance at 30 per cent of the global price is needed. Not surprisingly, India has become home to a series of disruptive innovations in the domain of frugal engineering. These are often motivated by resource constraints forcing firms to think out-of-the-box and create solutions that can circumvent such limitations. India’s price-sensitive market has prompted firms to use frugal engineering for creating functional and less expensive products without compromising on quality. It has made significant progress in high-tech fields and has been able to develop solutions that, though driven essentially by domestic resource constraints, have become internationally successful.

Information technology is another innovation driver. Tata Consultancy Services was set up in 1968 to initiate projects related to the computerization of commercial establishments in India. In the 1980s, IT and IT-enabled services emerged as a major business initiative. Founders of these companies were trained abroad and were sensitive to the reality of market asymmetries to realize the advantages of offshoring. In return to India, they founded Information Technology companies like Patni Systems to exploit this value. These first-generation companies became incubators for future entrepreneurs. Trailblazers like Infosys were founded by the employees of the first-generation establishments, which in their turn gave birth to latter generations of entrepreneurs.

The present innovation wave in India is inspired by technology and driven to the creation of intellectual property. The last two decades saw India evolving into a significant R&D centre for multinationals and Silicon Valley startups. Global Capability Centres have sprung up in Bangalore, with about 600 multinationals setting up R&D centres in India. We see unique and complete product lines being conceptualized, designed and engineered exclusively from India. Multinationals like Adobe, Cisco and GE have even moved their R&D business units to India.

Somshubhro Choudhury, Supriya Sharma, and Sanjay Jain, (Dataquest: https://www.dqindia.com/innovation-curve-latest-wave-deeptech-startups-india/) report that the startups in India are climbing up the IP ladder resonating with the global ecosystems. Another trend is the emergence of startups building unique products and solutions. The target customers are no longer confined to India. An increasing number of Indian startups have global aspirations. The entrepreneurs have global exposure with work experience in large multinationals in the U.S. or Europe. More importantly, these entrepreneurs are inspired by a product mindset, unlike their earlier, services focused counterparts. These entrepreneurs are building in India for the world.

Most startups in the current wave seem to be following the Israeli model of setting up a global link and customer base for scaling up. The risky elements of development, pilot-scale production and market tuning are done affordably in India, unlike their global competitors.

Relevant to innovation is the major initiative in the digitalisation of personal data by the Government of India. This started in 2009 for issuing Aadhar cards to citizens. This is part of a digital infrastructure called IndiaStack that is targeted to innovate and accelerate India’s digital push. It promises to enable the country to leapfrog into a leadership position in digital infrastructure. In the last eight years, almost all citizens have received their Aadhaar cards: a billion clients in the shortest time, surpassing the growth of Facebook, WhatsApp and mobile phones!

Riding on these innovation waves and the government’s digitization initiative, India’s startup ecosystem now stands firmly with over 26000 active startups (ADBI Working Paper 1145 by Dharish David, Sasidaran Gopalan, and Suma Ramachandran). India has the third-largest startup ecosystem in the world. Inflows of investments are over $36 billion in the past 3 years with 26 $ Billion plus unicorns. With strong government support, the policy and regulation framework is also getting stronger. The recent thrust on improving ease of business by building business support infrastructure is further fueling the growth of the ecosystem. While challenges remain, there is strong political will and the promise of bold reforms for the long run to get the economy to $5 trillion.

We can discern the emergence of another wave where startups apply advanced technologies like Artificial Intelligence and Machine Learning to create solutions across sectors. Inspired applications of IoT, blockchain are also emerging. We are seeing startups that are creating solutions for the world as well as those that are applying frontier technologies to address socio-economic challenges of inclusion and livelihoods in India. The future of Indian Innovation and Technology thus holds immense promise.

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