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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