As the new year approaches, its customary to review the year
that has passed. Here is my take on where we stand on innovation at the end of
2013.
Positive Highlights of the Indian Innovation scenario in
2013
Innovation in the public/strategic sectors took two
important strides. The first was the successful launch of the mission to Mars
(Mangalyaan) which demonstrated India’s ability to undertake complex scientific
and technological projects at low cost. The second was the initial operational
clearance for the Tejas Light Combat Aircraft by the Indian Air Force.
The emergence of a new generation of Indian technology
companies like Vigyanlabs, winner of the Nasscom Innovation Award in the
Technological Innovation category for 2013 was another positive development.
Vigyanlabs solves an important problem (high consumption of power by data
centres) with a system solution that is backed by a US patent.
Some of the most important innovations took place in the
political sphere. Two new entities demonstrated the potential for such
innovation. The success of a young political party, the Aam Aadmi party, in the
Delhi elections demonstrated the value of a grassroots approach to politics
backed by creative use of the social media. In Bangalore, the Bangalore
Political Action Committee B.PAC seeks to be a catalyst for “good politics” by
supporting candidates with a clean record. B.PAC also trains aspiring
politicians.
Another timely organizational innovation was the launch of
the Indian Software Product Industry Round Table (iSPIRT), a think tank devoted
to the promotion of India as a power in the software product industry. Two
initiatives of iSPIRT – one to connect Indian product companies with the
requirements of India’s large small and medium enterprise (SME) sector, and the
other to create a vibrant market for acquisition of software product companies
(“M& A Connect”) have shown the potential of efforts to close the gaps that
hinder the emergence of a vibrant product ecosystem [Disclosure: I am
associated with iSPIRT as a member of its Founders’ Circle.]
Market-driven innovation efforts by large multinational
companies such as Renault (with the Duster) and Gillette (with the Guard)
showed that some MNCs are coming to grips with what it takes to innovate for
the Indian market. Yet, the overall MNC innovation scenario in India was mixed
with some companies scaling down their efforts to use India as a base for
emerging market innovation.
The Indian Industrial Innovation Scenario
2013 was a decidedly mixed year for industrial innovation in
India. One of the mainstays of Indian industrial innovation, the transportation
sector, had a poor year. Despite several efforts, Tata Motors was unable to
revive the fortunes of the Nano, and sales remained muted. Mahindra’s earlier
success in the SUV market with products like the Scorpio and XUV 500 was
eclipsed by determined efforts by MNC automotive companies (Renault with the Duster, and Ford with Ecosport). By all reports, the initial results of
Mahindra’s acquisition of Reva (India’s pioneering electric vehicle company)
have not been great either with their first post-acquisition product, the E20
seeing only moderate success. Neither Tata nor Mahindra had successful launches
during the year. In contrast, MNCs had several successful launches including
Honda’s Amaze and the SUVs mentioned above.
Zydus Cadila successfully completed trials for what may
become India’s first new chemical entity to reach the market. But the Indian
pharmaceutical industry faced several setbacks as prominent companies came
under the scanner of American and European regulators, and big names including
Ranbaxy and Wockhardt faced regulatory action. Since, their ongoing operations
in the bulk drugs (APIs) and generics space provide the cash to fund their
innovation efforts, any setback to these businesses could have a long-term
negative impact on the Indian pharmaceutical industry.
Traditional Indian business groups have begun to realize the
importance of a more structured approach to innovation, but are struggling to
evolve appropriate processes to do so. My co-author, Vinay Dabholkar and I
received enquiries from such companies in different sectors, but few of them
translated into specific assignments.
The Innovation Ecosystem
Reflecting India’s overall struggles with enhancing innovation
output, India slipped two positions on the Insead/WIPO Global Innovation Index
in 2013. India’s biggest weaknesses are in the institutional environment, and in
higher education and R&D.
The latest available R&D statistics (pertaining to
2009-10, released on September 2013) show that India’s R&D expenditure as a
proportion of GDP is static at around 0.88% since 2005-06. But, there are two
important changes to note. The sectors accounting for the largest proportion of
industrial R&D spending – pharma and transportation – continue to be the
largest, but their share has come down to 27.7% and 14% respectively from 45%
and 17% respectively earlier. This is a positive development as it shows other
sectors increasing their R&D spend faster. The other interesting
development is that private sector industry now accounts for 28.9% of all
R&D expenditure and the entire industrial sector (private + public sector)
for more than 34%.
One piece of good news is that the proposed Inclusive
Innovation Fund has taken a step forward with an in-principle approval of the
first tranche of funding. But the operational details still seem some distance
away. It looks unlikely that the Fund will be put in place before the next
general elections, and it remains to be seen whether the next government will
see it through to fruition.
During the year, the Department of Scientific &
Industrial Research re-jigged its schemes for supporting R&D by industry.
New schemes include “Patent Acquisition and Collaborative Research and Technology
Development” (PACE) and “Promoting Innovation in Individuals, Start-ups and
MSMEs” (PRISM). As far as I can make out, the PRISM scheme is not too different
from the TePP programme that was quite popular earlier. The PACE programme
provides loans for companies to acquire patented technologies and then work on
them further. In the past, the common problems of government support schemes
included processing time, centralization in Delhi and inadequate scale. Let’s
hope the government is able to address such issues this time.
Another useful development is the incorporation of
innovation into the Results Framework with which the Performance Management
Division of the Government of India measures the performance of government
ministries and departments. This will hopefully result in a greater focus on
innovation in the government.
Conclusion
2013 wasn’t a great year for innovation in India. Industrial
innovation, in particular, seems to be at the crossroads. I hope that a focus
on innovation will return once we have a new government in place later this
year.
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