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Innovation Key To Success:URGENT NEED TO FOCUS ON R&D, by Dhurjati Mukherjee,1 November 2007 Print E-mail

Economic Highlights

New Delhi, 1 November 2007

Innovation Key To Success

URGENT NEED TO FOCUS ON R&D

By Dhurjati Mukherjee

Innovation is the key to success according to the recently released World Bank report. This is borne out by investments in Research and Development (R&D) in the country, which grew seven-fold in 2004 as compared to 1991.

The report titled Unleashing India’s Innovation has pointed out that “liberal economic policies, transparency and relaxed import laws will provide better opportunities for small industries to grow bigger which will further enhance the investments in R & D”.

The report stressed that private firms, apart from enhancing skill development of employees, also need to spend more on innovation. In fact, after more than a decade of liberalization, 75-80 per cent of the expenditure on R & D was incurred by the public sector in 2005.

Unfortunately, the aggregate domestic spending on research and development has never exceeded one per cent of the GDP. This clearly revealed that the country is lacking on the innovation front and more efforts are needed. Specially, against the backdrop, that the GDP is surging ahead at a very fast rate for which R & D support is imperative.

Records reveal that multi-national companies (MNCs) have filed more patents in India over the past decade (1995-2005) than all of public and private institutions put together. Of the 50 applications for patents in India, 44 were from private firms.

The Council for Scientific & Industrial Research (CSIR) and the Defence Ministry were the two Indian public sector departments with the highest number of patents in the country followed by the Steel Authority of India. The two private companies that filed patents were Ranbaxy and Dr. Reddy’s Laboratories.

While India is emerging as a top global innovator in information technology and bio-technology, less than 3 per cent of the Indian workforce is in the modern private sector while 90 per cent remains in the informal sector where the productivity is quite low.

Besides, the report has found that the average enterprise productivity in finance, insurance and real estate companies is nearly 23 times than that in agriculture. But these industries account for only 1.3 per cent of national employment!

Pertinently, the World Bank report has aptly pointed out that “only economic policy will not be enough as there is a major divide and disparity in the population”. Whether it is education, health or even accessing mobile phones, there is a wide gap between urban and rural areas in the country.

It is in this context that Mark Dutz, the senior economist of the Bank and editor of the report, observed that “inclusive innovation can play a critical role in lowering the costs of goods and services and in creating income opportunities for poor people”.

For this to happen there is need for better coordination between the industry and the academic world. In India, as mentioned in the report, the private sector is not quite interested to fund R & D as a result of which the industry-academia relationship has not flourished. The lab-to-land approach also has become a myth and has yet to become a reality for which agricultural productivity has not increased to the desired levels.

A positive step to promote innovation would be the creation of district R & D centres or “innovation clusters” which would bring together user industries, technology solution providers, research institutions and the academia. Such clusters could provide the right ambience for innovation and result in considerable synergy between the different sectors.

Moreover, the Government would have to ensure that such clusters are set up at least in one out of every 4 or 5 districts and a plan of action evolved with the participation of universities. 

The former President, A.P.J. Kalam, a well-known space scientist, had repeatedly emphasized the need for better coordination between the universities, on the one hand, and the industry and agriculture, on the other so as to develop skills, innovation and productivity. President Kalam’s influence had a bearing on the Government’s decision to set up a few research institutions while increasing the number of Central universities in the country.

There is also a necessity that more agricultural universities should be opened which should have a direct contact with the farming community. Meanwhile, it is heartening to note that NASSCOM, the apex body of the IT industry, has proposed knowledge townships that would seek to bring institutional convergence.

There are signs of research picking up in some of the major economies. This is confirmed in a study which has projected that R & D is shifting from the US to Asia, specially India and China. In the next ten years, the global R & D activity will shake loose the near domination that the US has held for the past 50 years and be split into thirds between the US, European Union and China and India in terms of efforts, funds and activity.

The study conducted by the US-based Battelle, the world’s largest independent R & D organization, has pointed out that the long history of R & D inter-actions among US, western Europe and Japan has been growing to include the rest of Asia, specially India and China.    

One of the key factors driving the change is that outsourcing and off-shoring of R& D is becoming increasingly prevalent among all the players in the R & D enterprise with the US leading the trend. Close on the heels though are EU and Asia, increasingly off-shoring R & D to the US in order to be in a better position to enhance their market shares.

It is quite natural that competition for R & D funds will get more intense as globalization grows. Thus, companies aiming to understand the emerging trends in order to make the best investments and to capitalize on the global economy would have to reserve funds for innovation and research. India would be no exception and the latest trends reveal that there is a significant change from what one witnessed in the 90s.

As India has emerged a very strong economy, during the last few years, it is imperative that R & D should be give due attention to enhance its position further. There are scientists and engineers of very high calibre in the country, most of whom migrate abroad for lack of research facilities.

Things are destined to change and the thrust on research would definitely increase in the coming years with active support and encouragement from the Government and aided by the private sector.

Clearly, funds would not be constraint for a country of India’s stature as the benefits of increased R & D would be widespread. Importantly, as underscored by the World Bank report, the country needs to generate more income opportunities, increase exports, make goods more competitive and ensure a better livelihood for the poorer sections of society. ---- INFA

(Copyright India News and Feature Alliance)

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