A 10-Point Agenda to Support Technology-driven Innovation

With a new government at the helm, this is the time for wish-lists and advice as to how it can make a major impact. Here’s my two pennies worth on what should be the government’s priorities if it wants to promote technology-driven innovation and entrepreneurship.

Ease of Doing Business

India routinely does badly on the World Bank’s survey on ease of doing business. But, from talking to entrepreneurs, I get the sense that setting up a new services business is fairly straightforward, that’s why we see so many new service businesses springing up all the time. While there is always scope for improving the time taken to set up a service business, the real issue is with manufacturing businesses.

Most of the barriers to set up a new factory are at the state level, but the central government could help by creating a blueprint for a genuine single window approval system (possibly by studying the relatively more efficient states) and diffusing it to other states. Perhaps the centre can even incentivize states to adopt such a system (through a special grant?).

Availability of stable power is another important framework condition to encourage entrepreneurship in manufacturing as few entrepreneurs can afford to invest in large gensets for a fledgling enterprise.

Finally, while ease of setting up a business is important, ease of closing a business is equally salient. That’s an area for immediate attention.

Strengthen support for technology development

India’s success in services has obscured the fact that we are slipping backwards in several technology areas. In both more mature areas like electronics as well as important new areas like nanotechnology and new energy technologies, India is far away from being a serious player.

Over time, the government’s support programmes for technology development by industry have stagnated, and in some cases withered away. The only exception has been in Biotechnology where a robust set of support programmes is in place thanks to the initiatives of Dr. MK Bhan when he was Secretary of the Department of Biotechnology (DBT). [See my earlier post on Dr. Bhan’s initiatives at DBT.]

Some features of the DBT’s initiatives are (1) close involvement of industry in the design of support programmes; (2) willingness to support small firms with outright grants for genuinely innovative technology development efforts; (3) a variety of schemes tailored to meet the size and needs of different biotech enterprises; (4) a strong delivery mechanism (a separate Section 25 company) to execute the programmes. These could either be replicated in other sectors, or the Department of Science and Technology charged with rolling out large horizontal programmes along these lines.

There is an urgent need to start at least ten national collaborative R&D platforms involving industry, academia and research institutions to support technology development and commercialization in areas of critical importance to the country. Previous experiences such as the NMITLI programme of CSIR and the CAR programme of the office of the Scientific Advisor to the Cabinet can be drawn upon to design effective collaborative programmes. [See my earlier post on collaborative R&D programmes.]

Public procurement plays an important role in government support for local technology development. Government should give short-term preferential procurement to products based on local technology, developed specifically for Indian needs, which have been granted Indian patents. And, it should play a proactive role in helping local firms meet pre-qualification norms rather than using such norms to prevent local firms from participating in government tenders.

Promote Application-oriented Research in Academia

There is frequent criticism that Indian academia is too theoretical and lacks an application focus. Not enough research is done, and whatever research there is tends to be esoteric and abstract. Genuine application often involves crossing disciplinary boundaries, but Indian academia works within tight disciplinary silos. Yet, we also know that innovation in frontier areas has its seeds in academic research.

A first important step would be to recognize the importance of application-oriented research in Indian academia. The most prestigious science awards in India are the Bhatnagar awards, but these are based on research alone. I hear that there is a committee to set up a similar set of awards for translational research (this is the term in vogue for application-oriented work), this needs to be expedited and efforts made to find really outstanding people to be the first recipients of the awards.

Application-oriented criteria like patents, technology transfer/commercialization need to be included in the faculty evaluation process at our top institutions with some fungibility between these criteria and publication-related criteria.

At least 2 -3 positions of Professors of Practice need to be created in each department in an IIT or NIT which can be used to attract researchers from industry on either a fulltime or adjunct basis. The criteria for appointment of these professors of practice need to be different from those applicable to regular faculty appointments with a greater focus on application and commercialization. These professors of practice will also hopefully act as a bridge between the institution and industry, and enhance communication between the two.

Faculty should be encouraged to get involved in start-ups, either directly or as mentors. All restrictions on such activity should be removed. Strengthening of faculty evaluation processes within institutions will help dispel any concerns of faculty members pursuing commercial interests at the expense of their academic commitments.

Joint appointments need to be encouraged to promote inter-disciplinary work. Inter-disciplinary academic programmes and research projects can also help. 

Inter-disciplinary work can also cross institutional boundaries. A couple of existing programmes catalyzed by Dr. Bhan show how this can happen – (1) the Stanford India Biodesign Programme brought Stanford Design School, All India Institute of Medical Sciences and IIT Delhi together to create a new generation of designers of biomedical equipment, and a whole slew of new products; (2) the IISc-St. John’s Glue project brought together India’s leading science institution and a leading centre for medical research. Though located in the same city, these two premier institutions hardly used to interact with each other. Such glue programmes/ projects are particularly relevant to our country since we have a large number of high quality specialized institutions but a small number of high quality multi-disciplinary universities.

Some institutions have already set up tinkering labs to enable students to experiment in a non-formal setting. The government should give a one-time grant to the top 50 technology institutions to set up such labs.

Summary: The Ten Point Agenda

[The views expressed here are the personal views of the author. Some of these ideas have been expressed before in different forms by others, and I thank everyone who has contributed.]

TVS Motor & Thermax: Just a Step Away from being Outstanding Innovative Companies

I give several talks each year at corporate and industry association meets. One year, I found that I had given close to fifty such talks. But, one of my enduring regrets is that a good majority of my invitations come from (non-Indian) multinational companies. I don’t see myself as more patriotic than anyone else, nor am I xenophobic, but I find that I am just that little bit more motivated and excited when I speak to an “Indian” company. I guess this is closely related to the fact that building Indian innovation capabilities has been the overarching theme of much of my work.

I was therefore happy to be invited to speak at two prominent Indian companies in the last month.

TVS Motor Company Ltd.

The first talk was at TVS Motor Company Ltd. This is a company with more than 35 years’ experience in product development. I can still recall the excitement in Chennai when the TVS 50 moped was launched (actually by Sundaram Clayton, the parent company of TVS Motor) around 1980.

When the motorcycle industry was opened up in the mid-1980s, the company formed a joint venture with Suzuki to launch Ind-Suzuki 100cc motorbikes. Unfortunately though, in spite of being the first mover, the company was quickly overtaken by another Indo-Japanese joint venture, Hero Honda. The success of Hero Honda was due to an almost unbeatable combination of Honda’s superior 4-stroke engine technology and Hero’s vendor management and supply chain capabilities.

TVS and Suzuki split around 2001, but TVS had reasonably good internal design and engineering capabilities. In fact, in an article I wrote in Economic & Political Weekly at that time (EPW, October 13 2001), I predicted that TVS would be able to hold its own thanks to this ability. Interestingly, prior to 2000, Bajaj’s innovation capabilities were seen as quite weak, and its dependence on Kawasaki (whose technology was unsuited to the fuel economy needs of Indian customers) was seen as an enduring disadvantage.

Of course, that assessment proved to be only partially correct. TVS was successful with its internally developed bike the Victor, but under the leadership of Rajiv Bajaj, Bajaj launched its own bike (without Kawasaki’s help) the Pulsar which turned out to be a blockbuster. Bajaj and TVS got embroiled in a patent dispute that prevented TVS from launching the Flame, its answer to the Pulsar.

Notwithstanding these issues, TVS has persevered. It’s a dominant player in the niche moped market, and has developed a very competitive and nicely-designed Autoricksha (The King), which is reported to be doing very well in the export market. It’s trying hard to recover ground in what is now a much more crowded and competitive motorcycle market with powerful competitors like Hero, Honda, Bajaj, Yamaha, Suzuki and Mahindra through a series of new product launches.

Attending the IP Day at TVS I was struck by the enthusiasm of their young engineering team, and the diversity they have been able to create over time (good representation of different regions and women in product development and IP). There is a firm determination to achieve breakthroughs in technology and product development that could put TVS on a different trajectory. I wish them luck!

Thermax

My second visit was to Thermax. Set up in 1966, the company is close to celebrating its golden jubilee. Starting with a focus on boilers, today it has broadened its footprint to span a whole range of energy technologies, including renewables. The current chairperson, Meher Pudumjee, is strongly committed to a mission of converting waste into wealth. Over time, Thermax has grown into a large engineering company with a topline of $1 billion.

My first exposure to Thermax was as a student at IIM Ahmedabad. We discussed a case study on Wanson (India) as Thermax was called before 1980. I can’t recall the details of the case except that it was all about boilers! I had a chance to meet Anu Aga, one of the prominent conscience keepers of corporate India, at an executive programme led by Professor Indira Parikh around 1995. I remember being impressed by her management philosophy and straight talk! I read a book called “Confessions of a Chief Executive” by Rohinton Aga (Anu’s husband and the person who shaped Thermax into what it is today) somewhere in the mid-1990s. It was an insightful account of the challenges involved in building a technology business in a regulated economy.

Today, Thermax is doing impressive work both in its conventional strength of boilers, and in new technologies like solar energy. Under the leadership of BARC veteran RR Sonde (see picture below), Thermax has worked closely with institutions like IIT Kanpur, ARCI and Fraunhofer institutions to develop high performance solar parabolic concentrators at very reasonable costs. I was impressed by their willingness to get down to the basics and find innovative ways of jointly optimizing cost and performance.

Thermax has a very positive organizational culture that is reflected in the long stays people spend at the company. Employees are comfortable calling even the Chairperson and President by their first names. Thermax has all the foundation conditions to promote an innovation culture, and I won’t be surprised if the company is the source of some major breakthroughs in the years ahead.

Some Concluding Comments

Both TVS Motor and Thermax are good engineering companies. They have talented people, all the basic processes for R&D and product/process engineering are in place, and the leadership is committed to making long-term investments in innovation. But they appear to have a couple of the typical handicaps of engineering companies too – both are somewhat internally-focused, and pursue a “do-it-yourself” philosophy. Prima facie, both of them would benefit from being more aggressive in telling the world about their distinctive products and services, and collaborating more actively with other companies (open innovation). A caveat - this impression is based on spending just half a day at each company and looking at what they say about themselves on the internet. I don’t mean this as criticism, but to reflect a desire that Indian companies that possess the capabilities for successful innovation should be able to realize their full potential.

(The views expressed here are the personal views of the author.)

University Ranking Revisited

There has been considerable angst in India regarding the failure of our universities and technical institutions to break into the top world rankings. The President of India refers to this frequently in his speeches. Last year, the Ministry of HRD thought this was serious enough to invite some of the ranking agencies to visit the ministry to explain why we don’t make it. Like several others, I have written about this issue in some of my earlier articles and posts.

I got a chance to reflect on some of the related issues again on Monday when I attended “The Rankings and Excellence Dialogue” organized by the Indian Centre for Assessment & Accreditation (ICAA) at Delhi last Monday. ICAA is a non-profit with the dream of getting 5 Indian universities into the top 100. Former Infosys CFO and Manipal Global Education Chairperson Mohandas Pai is the aggressive and articulate Chair of the ICAA.

Why are rankings important?

Why bother about rankings? This is one of the first questions that surfaced in the dialogue. There was some light-hearted banter about how we all like lists and rankings, but the more serious answer is related to education itself. It’s difficult to measure the quality of education, and both accreditation and rankings help “customers” of education in making an informed choice.

Rankings are particularly important in a cross-border context where students have to make choices from thousands of miles away. Not surprisingly, internationalization figures as an important parameter in many of the ranking systems. This also tells us why international rankings were never very important for Indian institutions –with such high domestic demand, there has never been a focus on international students in India’s leading institutions.

Research, availability of data

But, with India’s ongoing quest for global respect and recognition on all fronts, the importance of rankings has risen. This has had atleast one good outcome – it has put the spotlight on the research output of Indian institutions as all the major global rankings give considerable weightage to research (measured in terms of publications per faculty member, citations per paper, etc.).

One point that was made repeatedly at the dialogue is that Indian institutions don’t collect or maintain data systematically, and this puts them at a disadvantage in any ranking process. Another related challenge is the use of acronyms and a lack of uniformity in the way institutions are referred to (or even refer to themselves!). For example, publications from faculty at IIT Madras carry the institutional affiliation as IITM, IIT Madras and sometimes even IIT Chennai and therefore any attempt to measure research output using a publications database could be challenging.

QS Asia Rankings

The QS Asia rankings were released on the occasion. I had often wondered in the past why there was a separate list of regional rankings and how come the relative positions of institutions on the regional list were different from the global list. I finally got an answer – the regional rankings use different parameters and different weightages to reflect regional priorities.

17 institutions from India figure in the QS Asia rankings, with all the older IITs in the top 100. New entrants to the list include IIIT Allahabad and Amity. IIT Delhi is the top-ranked institution from India at #38.

Useful Insights

Secretary (Higher Education) in the MHRD Ashok Thakur gave a useful overview of the current developments in higher education in India. He emphasized the importance of speedy accreditation of Indian universities and institutions by credible and arm’s length accreditation bodies in order to move away from the “minimum standards” approach of the UGC and AICTE. He identified three positive developments: (1) the positive role played by the President of India in underlining the importance of joining the global mainstream in higher education and being willing to compete on the same terms as others; (2) the trend towards more outcome-based parameters to measure institutional performance (e.g. the Tandon committee that reviewed deemed universities); and (3) the Rashtriya Uchatar Shiksha Abhiyan (RUSA) which will direct central money to state universities based on their performance and adoption of reforms.

Another interesting feature of the event was an energetic panel discussion compered by Natasha Jog of NDTV (it should be screened by NDTV Profit sometime soon). Some of the interesting perspectives that emerged from the discussion are:

Sudha Pai, Rector of Jawaharlal Nehru University (JNU), argued that JNU is doing a fine job when you take into account its success in social inclusion and the constraints under which it functions (such as the mindless application of UGC guidelines, bureaucratic processes for faculty recruitment, etc.). It was clear from her comments that unless we unshackle some of the top government-sponsored universities, they will decline further.

Mohandas Pai made an impassioned plea to remember that higher education exists for the youth of our country and that all courses and programmes should be designed and offered with the student in mind. He pointed out that many of the concerns in higher education are no different from the concerns indentified by the Radhakrishnan Commission in 1949!

Narayanan Ramaswamy of KPMG asked a question that many of us have wondered about before – India has so much internal diversity, do we really need internationalization as well? Another interesting observation from him: Are ranking agencies thinking ahead about the parameters that are more relevant today?

Focus on World Class Universities

A presentation by one of the QS experts present revealed that countries as diverse as China, Japan and Thailand have programs underway to improve the rankings of their top universities.

At the same time there was a recognition that universities will have different goals and that not all universities will strive for global rankings (there are 18,000 universities in the world – only 200 can be in the top 200!).

The Bottomline

The main advantage of participation in rankings and accreditation efforts is to create a trajectory for improvement. Benchmarking helps identify gaps, and devise plans to fill these gaps. When taken in this spirit, both benchmarking and accreditation can be useful exercises.

Up-to-date comparative data on key parameters like research output, impact factors, teaching quality, and industry perception of the institution would help do this benchmarking better. It would be useful if someone could take up a thorough and objective process of compiling this data and providing the resultant rankings.

More Chronicles from Central India: The Holkar Connection

Every city or region has its pre-eminent heroes. In Bangalore where I used to live, it was clearly Kempe Gowda. The main bus stand, an important thoroughfare in the heart of the city, a hospital and now the airport are all named after him. In Chennai where I grew up, Annadurai was the clear favourite and his name adorned state-owned transport companies, an important relatively new locality of the city, the city’s most important road, and, yes, the international terminal of the airport (the domestic terminal is named after Kamaraj!). Here, in the Malwa region, and more specifically in Indore, Devi Ahilyabai Holkar has a dominant presence with her name on the university, a large market and, of course, the airport!

Manik Bagh Palace

The footprint of the Holkars is clearly visible in this region. And, everyone likes to have a Holkar connection. When I visited the office of the Commissioner of Excise and Service Tax, he showed me around with pride the Manik Bagh Palace, a heritage building where his office is located. This Palace was built in the 1930s by a German architect, Eckart Muthesius for the young Maharaja Yeshwant Rao Holkar who took office in May 1930. It was built in the European style of the time, and reportedly fitted with furniture, equipment and art works from Germany. Fortunately, the Excise department has made an effort to maintain the building well, and it still has a quiet elegance going back to those times. (The palace apparently came into the possession of the government following the abolition of privy purses in the 1970s).

Sukhniwas

Just down the road from IIM Indore, on the way to the airport, lies a sprawling complex of the Department of Atomic Energy call the Raja Ramanna Centre for Advanced Technology (RRCAT). The main entrance to the complex on the main road has tight security and doesn’t really let on that there is a large scientific complex inside. RRCAT was set up in the 1980s to house some of the laser physics and accelerator development work that was earlier being done in BARC, Mumbai.

I attended the RRCAT annual day soon after my arrival in Indore, and was quite amazed to see the scale of activity inside the complex. Those were early days in Indore and I wasn’t clued into the importance of the Holkar connection. But, yes, RRCAT has one as well. In the middle of the campus (and invisible from the road) is the picturesque Sukhniwas lake with a small “palace” on one edge. Frankly, “palace” appeared to be an exaggeration, the building looks like a large outhouse. But it was apparently a summer getaway for the Holkars, and the RRCAT officer who showed me around was proud of the Holkar connection! The senior BARC scientist who presided over the Foundation Day spoke about how they had their own lake unlike other institutions which tried to create artificial ones!

Rajwada

Young Indians (YI), the “junior” wing of CII, gave me a chance to visit another Holkar monument, Rajwada, in the heart of the city. Rajwada was originally built by the Holkars in Maratha style in the 18^th century. YI organized an event inside Rajwada with special permission from the Archaeology department in February. It was certainly a stunning backdrop for a morning concert given by Gautam Kale, a versatile musician from Indore.

DAVV

But the institution that has the most visible connection to the Holkar name is DAVV, or Devi Ahilya Vishwa Vidyalaya. The university (which started with the simple name of University of Indore) and I have something in common: we both turned 50 this year! In my short stay in Indore, thanks to the generosity of DAVV Vice Chancellor Dr. DP Singh, I have already participated in two events of the university. I gave a talk on 8 Steps to Innovation as a part of the University’s Golden Jubilee Lecture series in March, and I was a guest of honour at the Golden Jubilee Foundation Day last week.

DAVV is one of those typical Indian universities which not only has its own departments (focusing on postgraduate studies), but a whole lot of affiliated colleges (280 in the case of DAVV). The university is proud to be rated as an “A” grade university by NAAC, apparently the only university in Madhya Pradesh to enjoy this distinction.

The Governor of MP, Shri Ram Naresh Yadav, presided over the Golden Jubilee Foundation Day. Babuji, as he is popularly called, belongs to a more gentle and refined political world of yore. His heroes are still Gandhiji and Madan Mohan Malaviya and other leaders of our freedom struggle. I was impressed by his concern for the university and its people. He reads a lot, and he recounted with passion some of his ongoing efforts to have mistakes removed from history textbooks.

The university took the positive step of inviting former vice chancellors and rectors to the event, and this was particularly appreciated by the Governor. Incidentally, the Governor was quite emphatic that he didn’t want to be referred to with honorifics such as “Your Excellency.”

The evening of the Foundation Day featured an energetic ghazal concert by Ahmed Husain and Mohammed Husain. Both of them can’t be young, but the energy and enthusiasm they put into their singing would put several young people to shame. The audience (particularly the students) reciprocated in full measure with spontaneous applause and support.

Maheshwar

Indore has a number of sightseeing hotspots in its vicinity. I haven’t had much of a chance to check them out, but the first one I visited turned out to have a strong Holkar connection as well. Maheshwar is on the banks of the Narmada and was at one time the capital of the Holkar kingdom. It’s a pretty small town which still manages to retain some of its charm. 

I particularly liked the temple on the banks of the Narmada and looking across the wide expanse of water. So many of our rivers have become pale shadows of their past, that it’s really nice to see so much water and life along the river.

The Holkars still retain several connections with the town. The descendants of the royal family run a hotel and, more importantly, a weaving centre to keep alive the textile traditions of the region. We couldn’t visit the centre itself as it was closed, but we did manage to pick up a few things from their sales outlet!

Does IIM Indore have a Holkar Connection?

Does IIM Indore have a Holkar connection too? I thought we were not blessed till the people who run the Shiv Mandir on campus claimed to me the other day that the Mandir goes back to the Holkar era. For the record though, the sign next to the temple says it was built in 1972!

[The views expressed here are the personal views of the author.]

Creating Collaborative Platforms for More Effective Innovation

One of my friends, Dr. Ardhendu Pathak, posed me an interesting question recently: how do we create structures and platforms that can make collaborative innovation easier, and more successful? Having interacted with individuals and institutions across the globe he was puzzled that as individuals we are not inferior to any other country, yet our innovation outcomes are often not on par!

This question resonated with me because it’s closely related to the question I posed in From Jugaad to Systematic Innovation: Why is it that though we have talented individuals, our country does not do well on innovation?

The Structure of Indian Industrial Innovation

Some historic context is helpful here. Post-independence, we imitated the Russian system of creating stand-alone R&D laboratories in different disciplines and application areas. Government directed funding towards these institutions which became part of large R&D systems such as the CSIR, DRDO, ICAR, ICMR, etc. 

These laboratories became rather disconnected islands of effort to build process and product technologies for use by industry. Technology transfer and commercialization remained a perennial problem – industry found the technologies developed incomplete and difficult to scale; and the laboratories felt industry was not supportive of their efforts. Universities remained outside the arena of innovation for industry.

Until the early 1990s, government funding for innovation was directed towards these national laboratories. In contrast, R&D by firms received little attention - the only government support for firm R&D was tax breaks, and some relaxations on import restrictions for firms whose R&D facilities were certified by the government.

After 1991, the government slowly changed its policies and tried to find ways of supporting industrial innovation in firms. But the first two programmes in this direction – HGT and PATSER – were both primarily directed towards helping firms absorb and scale-up technologies that had been created by the government R&D system.

The first recognition of the independent potential of firm R&D came with the creation of the Technology Development Board (TDB) around 1996. The TDB provided low-cost loans to firms to help them commercialise technologies without any insistence on the involvement of a government laboratory.

None of these programmes – HGT, PATSER and TDB – had a strategic focus. Instead they were all reactive, responding to applications received from firms or laboratories.

Vertically integrated programmes like the Space and Atomic Energy programmes had a different approach where they sought to do everything within their internal networks. They went outside only when they didn’t have the internal capabilities and even that was largely for execution – e.g. the atomic energy programme working with a large contractor like L&T.

Perhaps the first attempt at a large scale collaborative innovation programme was the Light Combat Aircraft (LCA) programme launched in the mid-1980s. While a separate agency (ADA) was set up to spearhead the development of the LCA, it was quickly realized that expertise in areas like avionics and composites simply didn’t exist within the government system and hence there was no option but to involve academic institutions like the IITs. But involvement with private industry was very limited.

Why Platforms are Needed

Today, it is widely accepted that no organization has all the knowledge it needs to innovate and compete successfully. Partnerships and open innovation initiatives are the order of the day. Companies create their own platforms – e.g. Procter & Gamble’s Connect & Develop – to reduce the friction involved and systematically reach out to a wide variety of potential partners.

At the national level, countries have realized that bringing together key players across academia and industry can help build competitiveness. Of course, such initiatives usually stop at the level of pre-competitive or generic technology development. Even the United States, historically a big votary of open competition in technology development, experimented with initiatives like the Sematech consortium.

The First National Collaborative Platform - NMITLI

The first large scale effort to bring all the relevant players – private industry, academic institutions and research laboratories together – and with a view to creating some distinctive strategic position for the country was the New Millennum India Technology Leadership Initiative (NMITLI) launched by Dr. Mashelkar under the umbrella of CSIR in 2000.

NMITLI was distinctive because it explicitly recognized that such collaboration may help India build a sustainable edge in some new technology areas. However, even NMITLI retained some of the traditional government funding structures – e.g. in a project, while the government/CSIR is willing to make an outright grant to a university or research institution, any funding to a company is again through a low interest loan. NMITLI has another distinctive feature – a project can be initiated either from a corporate proposal or through identification based on expert inputs or national consultation.

What has been the outcome of NMITLI? According to the NMITLI website, in the first 8 years (I was unable to find more recent data –will try to update) NMITLI supported 57 projects involving 80 industry partners, and 270 R&D groups. Outcomes included 100 international patents, and 150 papers in high impact journals. Prominent products include Biosuite (with TCS) and Drishtee, a 3D computational biology platform (with Strand Life Sciences). Some drugs and medical products are undergoing trials. Its not clear whether any project has been able to help India realize the dream of leadership in a particular industry or domain. But its clear that NMITLI has succeeded in bringing myriad academic and research institutions, and companies to the same table.

CAR: A Focused Innovation Platform

Perhaps the most focused innovation platform created was the Collaborative Automotive Research Programme (CAR) created by the office of the Principal Scientific Adviser to the Cabinet in 2003.

In January 2011, when I met Sajid Mubashir, the officer who coordinated the CAR programme, he explained that it came about in fortuitous circumstances. Dr R Chidambaram, Principal Scientific Adviser to GoI, played tennis with Capt Mohan Ram (TVS Motors) regularly. At a SIAM meeting, Mohan Ram and other automotive heads (curiously, most of them ex- GM R&D) – V Sumantran (then Tata Motors), Arvind Bharadwaj (Ashok Leyland) and Pawan Goenka (Mahindra) were musing about what was needed to take the automotive industry to the next level.

Dr. Chidambaram believed that funding the automotive sector would have good results because being a growing industry, there was a greater likelihood of technology getting commercialized. As a result, Dr. Chidambaram got interested in this (by virtue of being PSA) and tasked Sajid from TIFAC with finding out what they needed.

Six panels were formed, resulting in a 2005 Road Map covering 30 areas. These six panels had about 12 people each (that became the nucleus for a future network). During one year they met three times, culminating in a meeting at IIT Madras where the topics were narrowed down. The consensus was that the government should support the industry and bring in academia and research institutions to undertake pre-competitive research through a consortium approach.

As in other cases, TIFAC decided to make all government contributions through the institutions, and as grants. Finally four areas were narrowed down. The common demand driver for technology underlying these themes was fuel-saving. Various dimensions of fuel-saving were identified – size (smaller cars); light-weighting (could give upto 20% reduction in fuel consumption) with a focus on new materials and processes in steel and aluminium, not magnesium; engine improvement; electronics; fleet management; alternate fuels (including electric drive vehicles and hybrids but not hydrogen or fuel cells that were seen as too far out).

Under CAR, about Rs. 35 crores was spent on 10 consortium projects. About one fourth to one third of the project budget went to the lead institution; the lead institution was the conduit for the funding of other dimensions of the project. The lead institution could commission work (e.g. prototypes, machinery, etc. at the companies) and pay for this.

Three out of the ten projects have seen commercial outcomes. But there is a widespread consensus that the CAR platform helped industry and academia understand each other better, and this will provide a basis for future collaborative work.

So, we have at least two examples of collaborative platforms, both of which have achieved some positive results.

The Future of Collaborative Innovation Platforms in India

In recent years, there have been new efforts to create innovation platforms. Perhaps the most ambitious is the Department of Biotechnology’s BIRAP. The Unique ID project, Aadhaar, has provided opportunities for a host of new applications to ride on top of it, thus creating a platform of a different type.

In the US, one finds a number of industry-sponsored consortia, often centered around a few key academic institutions. However, industry associations and trade bodies in India have not taken any such initiatives as far as I know.

India needs such platforms to help exchange information more easily, and to smoothen out transfer of technology and commercialization. One area crying out for such a platform is assistive devices and technologies for the disabled. There are hundreds of projects across the country trying to build such low-cost devices, yet few of them are commercialized or diffused. Building a national platform to bring together and support these disjointed efforts could help India take much better care of people with disabilities and even aspire to be the world leader in this area.

There are several new colleges and technology institutions across the country, keen to collaborate with industry and contribute to technology development. The creation of some new platforms could guide and direct these efforts to more productive outcomes, and help address the problem that Ardhendu identified.

(The views expressed here are the personal views of the author.)

McKinsey Global Institute Report on What India Should do...

The McKinsey Global Institute (MGI) is a think-tank set up by the consulting firm to look at broader issues, usually outside the firm and at the level of the economy. MGI rose to prominence in India in 2001 when they presented to then Prime Minister Vajpayee a report on how India could achieve 10% growth. I found that report interesting enough to organize a small internal workshop at IIM Bangalore in early 2002 where we debated the report. At that time, MGI’s prescription was that India needed to focus on raising productivity in the modern sectors of the economy where differentials between India and the best in the world were very high. I wrote a critique of that report in EPW.

So, I was excited when I recently received a new MGI report titled “From Poverty to Empowerment: India’s imperative for jobs, growth and effective services.” Interestingly, the report itself has created hardly a ripple and has not received much attention in the Indian media, having been completely submerged under the deluge of election-related news. That’s a pity, because the report has some interesting insights. What I also found fascinating is how MGI’s views have evolved over time, and become much more sensitive to the Indian context and debates within the country.

The Report

Measurement of poverty is a tricky matter and we have seen several debates triggered by the politics of measurement. While traditional measures have tended to be simple ones based on either income or calorific consumption, there is general recognition that a more multi-dimensional measure would be helpful.

MGI has tried to create its own measure to fill this need, by replacing the poverty line with an empowerment line. According to MGI, to be “economically empowered” is to be able to meet basic needs of food, energy, drinking water, sanitation, healthcare, education and social security at an acceptable level (p. 36).

MGI’s adoption of such a measure is somewhat surprising because it is people like Amartya Sen, usually not the darling of “capitalist” consulting firms, who have been the pioneers of such thinking! Sen has been a major proponent of every individual being entitled to a certain minimum quality of life and dignity!

What is alarming is that by this criterion, as many as 56% of our people (680 million people) lack empowerment. MGI’s calculation is that the average consumption expenditure for a minimum standard of living in India meeting these eight basic needs is Rs. 1544 per person in 2011-12 prices. For a typical 5-member family, that works out to a family expenditure of Rs. 7720. MGI’s estimate is that Government (central and state) spent Rs. 390 per capita on these 8 needs but only Rs. 208 reached each individual (p. 39). The resultant empowerment line of 1336 per capita is 1.5 times the official poverty line (p. 39)

The report estimates that a big reduction in empowerment gap came about between 2005 and 2012, a period of rapid economic growth. 74% of this came from income increases, and 26% from government programs.

The overall empowerment gap is estimated at about $69B. I was relieved when I saw this figure – it doesn’t seem all that high when you think that India’s software exports are about twice this figure and that this is the rough topline of the Aditya Birla group, one of our top industrial groups. I know we can’t just redistribute wealth, but the gap can be bridged with just the wealth of some of our rich industrialists!

Some Interesting Observations

Embedded in this report are some interesting observations:

• India has a missing female work force:  “40% of India’s women in the age group 25-54 were economically active compared to 88% in China” (p. 48).
• The unorganized sector is where the jobs are being created but its productivity is one-fifth that of the organized sector. [I wonder what are the implications of this for the Wal-mart vs. Kirana store debate!]
• MNREGA has increased rural incomes but reduced construction sector productivity! (p. 50). Interestingly, the MGI report refrains from any criticism of MNREGA and in fact when it talks of the lack of safety nets, it looks like being mildly supportive!
• Lack of skills is a critical issue – at the extreme, only 1% of workers in Bihar have received skills training (p. 51).
• India has poor agricultural yield – only half that of China (p. 52).India’s problems in agriculture arise from focusing spending on input subsidies rather than on technology and knowledge diffusion.

The report suggests a more nuanced look at poverty by breaking up the poor into those who have just escaped (but who are still “vulnerable.”), those who are excluded, and those who are impoverished. 

Vulnerable are above the poverty line but below the empowerment line. Using this classification, 30% of the population of urban India is vulnerable.

Such segmentation should be useful as it helps identify the needs and priorities of different groups. While health (40%) and food (19%) together account for almost 60% of the empowerment gap overall, housing is the second largest gap in urban India.

Other Perspectives of the Report

Another measure that the MGI report looks at is access to basic essential services. It estimates nationwide access deprivation at 46% (p. 54)

Access deprivation score (ADS) is used to characterize availability of services in each district. ADS is based on access to 6 services. National ADS is 46%. Most deprived districts are in Bihar and UP.

India’s 9 megacities are “community services deprived” (p. 94) and fall short of being the least deprived agglomerations.

The MGI report suggests that states have districts fitting different archetypes and therefore need different policies for different different districts. I don’t think we see much of this thinking in most states except for declaration of “most backward” districts. Is it time for states to take a more nuanced approach to development within themselves?

The Recommendations

The MGI report recommendations are a mixed bag. They sometimes re-trace existing dogma. They occasionally embrace new ideas. To drive the creation of millions of jobs, the report advocates reforms along predictable lines – cut red tape, improve infrastructure, remove tax distortions, etc.

But I was relieved to see the report refrains from motherhood statements like “enhance competition” that were commonplace in the earlier MGI report.

The four main recommendations are:

• Creation of 110-115m non-farm jobs [nothing new, I guess]
• Increase agricultural yield [easy to say, seems difficult to do]
• Double public spending to expand access to services [I was surprised by this one]
• Increase effectiveness of public spending – best states achieve about 75%

While correctly observing that growth is required to fund public provision of services [for an interesting exposition of this dynamic, see Sanjaya Baru’s The Accidental Prime Minister], the report observes that public spending is the key for the bottom-most layer.

At the same time, there is need for better governance to ensure that the resources invested reach the people they are intended for.

While the report calls for increasing level of investment, there is no specific reference to FDI. Are they just being cautious? Not wanting to take a position? Or just assuming that FDI is inevitable? That’s not clear!

A few things I found interesting about their recommendations:

• They call for the creation of 70-100 job creation engines – “industrial clusters, tourism circuits, food processing parks” (p. 123). There’s nothing new about industrial clusters and food processing parks, so it’s not clear what is distinctive about their recommendations and how they will suddenly do magic.
• I like the recommendation to create a vibrant set of “emerging cities” (p. 127) – the report shows how, compared to China, India lacks intermediate sized dynamic cities. Economic history shows the importance of cities in economic development. While former President Kalam’s dream of PURA is attractive, I have always had my doubts regarding the economic viability of it!
• The report is quite neutral about the new land acquisition laws (p. 136) of which industry associations were quite critical, preferring to wait and watch!
• While agreeing that labour reforms are necessary (the report quotes an OECD study that India has the  second most protective set of laws for workmen), the report calls for labour reforms to be accompanied by greater job security and even suggests unemployment insurance.
• Another interesting suggestion from the report is why not use MNREGA funds for skill development?

The report refrains from being doctrinaire and instead advocates learning from best practices. You might recall my posts on the Amartya Sen – Jagdish Bhagawati debate some months ago. The report takes a middle path saying that both in-kind transfers and cash transfers can work. It proposes a contingency model – where choice depends on context – the report even suggests that the Public Distribution System (PDS) can be reformed using technology.

Tailpiece

A cynical way of looking at this report is that MGI has hedged its bets, and its report allows it to go along with whoever wins the next election. But, to be fair, I think this report has some new insights, and could facilitate some useful debates on what the country should do next.

[All data quoted here is from the report. The comments and views expressed here are personal.]

Allowing Indian Science to Flower and Bloom

In a recent article in the prestigious journal Nature, Mathai Joseph and Andrew Robinson make a passionate call to “Free Indian Science” in order to allow it to flower and bloom. (Regular readers of this blog might remember Mathai Joseph from a review I wrote of his book.) Their core argument is that Indian science has not lived up to its potential (e.g. after independence, no Nobel prize has ever awarded to an Indian scientist working in India) and that the reason for this is the excessive bureaucratization of science – scientists are promoted on the basis of years in service rather than scientific accomplishments; funding is subject to unreasonable bureaucratic restrictions; and mobility is limited. They call for creating an independent funding agency with government money but outside government control, rotation of administrative roles, cross-institutional research groups, and rejuvenating science in Indian universities.

Too Broad a Brush?

Joseph and Robinson have used a broad brush to paint their picture of Indian science and, in the process, missed some nuances. My guess is that individual scientists working in theoretical domains have done well, even if they haven’t won a Nobel. I could point to at least two – Ashoke Sen (see picture above), a string theorist, who is regarded among the best in the world (he won the new Fundamental Physics prize instituted by a Russian billionaire in 2012), and Manindra Agrawal (see picture below), a computer scientist who, working with two of his students, created the first deterministic algorithm to determine whether a number is a prime in polynomial time, leading to his being awarded the Godel prize and the Fulkerson prize among others. The long arms of scientific bureaucracy couldn’t prevent either Ashoke or Manindra from doing their best!

Is Funding an Issue?

Joseph (see picture above) and Robinson (see picture below) acknowledge that funding is not the issue though they can’t resist criticizing the government for failing to raise the spending on R&D above the magic mark of 1% of GDP. The fact is that thanks to the influence of the scientific establishment and people like CNR Rao in particular, Indian science has no shortage of funds. I have heard stories of officials from government agencies camping at the IITs and the Indian Institute of Science (IISc) in the last quarter of the year literally begging professors to submit proposals.

India has science and technology cooperation agreements with several countries from the OECD. Historically, these were funded primarily by the foreign partner. Today, with the partners facing a funding crunch, the Indian government has taken over many of these finding obligations. This is another sign that India is not short of research funds.

If not, where is the problem?

The problems lie elsewhere. Globally, science operates through peer review, whether it is funding or acceptance of papers for publication. In India, though the government tries to use similar mechanisms to give out money, these peer review systems don't work well. Most of the funding tends to be "captured" by scientists from a limited set of influential, government-funded institutions. Historically, this was inevitable as India had a limited number of experts in each area and these were largely based in these marquee institutions. But while higher education in India is rapidly shifting to the large number of private universities set up in the last two decades, these are largely un-represented in the funding agencies’ review mechanisms and in the funds they give out. One reason is that they have not established their own credibility, the other is that the government tends to be suspicious of them in much the same way that the government is suspicious of private industry. It is not clear how this will change even if funding happens from an independent agency.

While Joseph and Robinson may be right about the evils of bureaucratization, the more potent evils are in a different arena. Even good institutions like the IITs and IISc lack an efficient and competent internal administrative system. I recently met a young faculty member who had a handsome start-up grant and access to government funding but finally threw up his hands and emigrated because of the huge number of obstacles to procuring the equipment he needed. Those who stay and wait lose out on productivity unless they are theorists and don't need equipment or laboratories. The system is particularly slow if you need a complex collection of equipment. This is one of the reasons that professors don't take on large projects that involve product or system development.

The situation is different and worse in the (public) university system. Rather than seeing a project as a matter of pride, the administrative system sees it as a source of rents. Several university professors have told me that they don't take on externally-funded projects because they have to constantly hang around university officials to be able to spend the money that has been granted to them. Given these problems within institutions, I wouldn’t expect to see a sudden boom in scientific output even if the government were to create a separate funding agency outside its immediate control.

Instead, the Indian science system, whether it be in government-funded research laboratories or universities, needs a new cadre of administrators who have some understanding of science and can promote it in a meaningful way. Professionalization of science management and administrative roles has not been given the attention it deserves.

Are charismatic leaders the solution?

Though Joseph and Robinson lament the absence of towering personalities like Bhabha at the helm, I have a different view. A certain democratization has happened in Indian science that is good for the country in the long run. Today, Indian science has a large number of competent scientists who have gone through the hoops of the Indian system (for example, competed with thousands of others to enter the portals of an IIT or IISc), done their PhDs at the best universities in the world or India, and then committed to working in India. Many in this category are today becoming leaders of scientific and academic institutions. They command respect because they have reached where they have due to their own talent and hard work, and they have demonstrated the ability to succeed in the tough environment that is India. 

I am thinking of people like VijayRaghavan of NCBS (now Secretary of the DBT, see picture above) or Sathyamurthy of IISER Mohali (see picture below). These quiet leaders are creating the right environment for research in their institutions, outside the spotlight. May their tribe increase.