Jab zero diya mere bharat ne… You won’t find an Indian whose heart will not fill up with pride to hear the song. Ancient Indians did a stellar job in innovation and discovery; from algebra and decimals to surgery and Fibonacci numbers. Coming to modern times, we felt being on star when Venkatraman Ramakrishnan won Nobel in Chemistry in 2009. We take pains to claim Har Gobind Khorana and Subrahmanyan Chandrasekhar, the other Nobel laureates, as Indians.
All of it sounds great. What is ironical, however, is that no Indian citizen has won a Nobel in any tech discipline since independence. The only resident Indian to have won Nobel was CV Raman who won the prize in 1930, in British India. Now that’s not impressive. Actually, it is shameful, because we go great lengths to drill home the point how intellectually rich and scientifically advanced we Indians were, in ancient times.
The sad reality of research and innovation in India is that we are a laggard in all parameters of innovation. We invest little in research activities; we have among the least science graduates per thousand graduates; our faculties don’t publish enough papers; our score in patent filing and approvals are very poor; and we don’t have world class universities. We rank 81st in Global Innovation Index, 2015 and according to a report of Information Technology and Innovation Foundation, which came out in January this year, India came at 54th position out of 56, meaning it was among the worst performers as far as impact on global innovation is concerned. The status of knowledge creation in the country can be gauged from that fact that the World Bank Knowledge for Development (K4D -KAM2012) report put India at 120th position among 145 countries in Knowledge Index (KI) ranking.
Obviously, something is wrong, very wrong in our scientific and technical academic establishment which is not allowing Indians to do well in science. The question that we need to ask ourselves is how Indian students who finish secondary education in India do exceedingly well in Western Europe and North America whereas their counterparts in Indian scientific ecosystem languish in intellectual wilderness? Is it our tertiary science education, our scientific research and innovation institutional structure or our incentivization system towards innovation, which is stifling innovation? Are we improving and if yes, at what pace? Shall we ever emerge as an innovation leader? What are our inherent strengths on which we should focus? And most of all, what needs to be done so that scientific research and innovation becomes remunerative enough to attract best talents? Complex questions these are and need uncluttered and clear approach to wade through.
Innovation based sectors that depend on IP laws are strong drivers of GDP and employment growth. According to a 2012 report by the US commerce department, titled “Intellectual Property and the US Economy: Industries in Focus”, IP-intensive industries supported at least 40 million jobs in the country and contributed nearly 35 per cent to the US GDP. They also accounted for over 18 per cent of all employment in the economy. In the European Union (EU), IP-intensive industries accounted for almost 39 per cent of the GDP and 26 per cent of all jobs. Because of the centrality of such enterprises in the economy, the role of innovation in pushing up growth numbers as well as growth quality has assumed great significance, globally.
Growth can basically come from three fundamental sources; an increase in factors of production which essentially means scaling up, higher efficiency of resource allocation, and higher productivity. While the first two can be done at managerial level, third requires knowledge creation and innovation. While most developing countries focus exclusively on the first two, those who have invested in knowledge creation through innovation have sustained higher growth for a longer period.
Multiple studies have been carried out to understand the impact of innovation on growth and majority of these studies have shown a strong and enduring link between R&D capital expenditure and output. Typically, a one per cent increase in the R&D investment is found to increase output by 0.05 – 0.1 per cent. Most of these studies have also found that industry led R&D expenditure have greater impact on growth compared with the government funded research activity. Another aspect of impact of innovation on economic growth is the impact of innovation on economic competitiveness. As countries innovate, they climb higher on competitive ladder as they find better and cheaper ways of production.
According to Global Innovation Index report 2015, India ranked 81st out of 140 odd countries in global innovation rankings. Trinidad and Tobago, Bosnia and Herzegovina and Morocco were just ahead of India. The ranking which was topped by Switzerland and was dominated by developed world as expected, nevertheless was an eye opener for India. It slipped from 66th position in 2013 to 76th in 2014 and lost further ground in 2015. China, the country with which India intends to compete in the global manufacturing space, held on to its position at no. 29. Further, in lower and middle income group countries, India stood at 8th position. The report said India had consistently performed poorly in political stability, ease of starting a business, tertiary inbound mobility (foreign students studying in India), and environmental performance.
More revealing and relevant to understanding the innovation status is the ranking on innovation input and innovation input sub indices. The Innovation Input Sub-Index took into account five enablers namely, Institutions, Human capital and research, Infrastructure, Market sophistication, and Business sophistication. These enablers define how conducive is the economic environment for innovation. On the other hand, Innovation outputs are the results of innovative activities within the economy and were captured by two elements; Knowledge and technology outputs and Creative outputs. On innovation input index, India stood at 100th position and did not feature in the top ten in lower middle income group. On innovation output index, it ranked 69th and was at no 8 in the lower middle income group of countries.
However, there was some good news too for India; it featured in the outperformer category, which meant it had outperformed in innovation inputs and outputs relative to its level of development. Another important takeaway from the report was that in terms of innovation quality which is captured by university performance, the reach of scholarly articles, and the international dimension of patent applications, India has started to make progress. However, China is increasing its lead over other developing countries.
On hard stats, the picture appears gloomier though. India’s R&D expenditure despite all efforts has not topped one per cent of the GDP. India also scores very poorly on the number of researchers per capita. According to Information Technology and Innovation Foundation report, India had only 0.15 researchers per thousand population, against 1.03 in China and around 7.5 in Finland. Similarly, per capita public funding of R&D activities was $464 in India compared with $509 of Lithuania. Korea and Israel each invested close to $2,000 per capita on research. Another key indicator of the quantum and quality of research is captured by the citations of Indian documents. At 0.08 citable documents per thousand citizens, India was nearly at one fourth level compared to China. Brazil and Russia were close to China on this parameter.
This gives a kind of mixed picture of the innovation scenario in the country. On one hand, the country is showing signs of improvement but on crucial parameters, India lags many low and middle income countries. So what is on play here? According to a former NASA researcher of Indian origin, this shows a narrow focus on research in select fields rather than an all around program to further innovation agenda at all levels. This opinion is shared by the Global Innovation Index 2015 report which mentioned that some developing countries have focused on research and innovation efforts in pre defined areas in which they felt they had comparative advantage. For example, India focused heavily on IT and software services arena and developed an ecosystem which catalyzed innovation in this field whereas China and Malaysia focused on telecom and electronics, and IT assembly respectively.
GII report also singled out India as a unique case in that despite being a low income country, “during 2011–14, India performed above the lower-middle-income group average in Infrastructure, Market sophistication, Knowledge and technology outputs, and Creative outputs.” India is also a major emerging economy and for its level of development, has a strong specialization in software and IT enabled services (ITES) arena. But it also paints the picture of a divided system, in which a small part, supported by a good ecosystem excels whereas the larger part, devoid of focus, lack of policy support and poor academic infrastructure, drudges aimlessly. As GII report says, “India is still facing a number of challenges. Among others, its huge and young population puts the education system under stress and its regulatory environment discourages entrepreneurs from starting new businesses.”
To understand why India has not realized its potential in innovation space, we need to go back at the time of India’s independence and the challenges the lawmakers faced at that time. Faced with precarious poverty, India’s challenge was to feed the millions and industrialize soon enough to achieve self sufficiency. The low capital and resource base needed optimal utilization and maximum immediate return on investment. As a result, policies were formulated that restricted competition through License Raj and adversely affected the country’s innovation capability. Academic institutions were created to quickly churn out technicians to be employable in newly set up industries. As time progressed, however, the country needed to infuse intellectual wealth in academia to create knowledge whose spillover effects could improve quantity and quality of growth. The current state of innovation in India suffers from the inability of successive governments to do so. From systemic perspective, therefore, Indian endeavor in pursuing high end research and innovation suffers from two fundamental weaknesses.
Academia ill designed for research
Former Infosys Chairman Narayan Murthy created a flutter in the intellectual circle last July when he said in a speech at IISc Bangalore, “Let us pause and ask what the contributions of Indian institutions of higher learning particularly IISc (Indian Institute of Science) and IITs, have been over the last 60-plus years to make our society and the world a better place…. Is there one invention from India that has become a household name in the globe? Is there one technology that has transformed the productivity of global corporations? he asked. “Folks, the reality is that there is no such contribution from India in the last 60 years.” While many derided the statement, facts back the statement.
According to a faculty at one of the topmost engineering institutes of the country who spoke to this magazine on condition of anonymity, entire tertiary technical education structure of the country is built on mediocrity. The focus is only on churning out larger number of graduates instead on creating thoughtful and inquisitive minds. The faculties are overburdened which leaves them with little or no time to pursue any research. Secondly, barring a few that can be counted on fingers, technical institutes don’t have infrastructure to conduct high end research because of which many researchers have to tie up with universities abroad for experiments. Third, there is no incentive to carry out research as fruits are not shared with researchers. On the contrary, there is significant disincentive for pursuing research as failure severely impacts career progression. The career progression for an academic in India is based on number of years in service rather than on the number of peer reviewed publications or book chapters written or patents filed.
From students’ side, because of the poorly designed curriculum and excessive focus on examination, the interest in experiments is lost. So much so, faculties are blamed for not being able to engage students. In a survey conducted at IIT Bombay in 2013, 88 per cent students said they did not study as their professors do not manage to generate interest in their courses. The survey, conducted by students themselves, found that at least 72 per cent students believed the course content was theoretical, lacked in application and therefore, not interesting. As many as 75 per cent felt they can get a decent grade even by studying a night before the exam. Result of uninterested student body and overburdened faculty body is that the research productivity of Indian tertiary education is poor at best.
The situation is similar in management stream. Between 2009 and 2012, Indian School of Business produced 22 research papers compared with 6 of IIM Bangalore and 4 by IIM Calcutta. IIM Ahmedabad, which is the toughest MBA school in the world to get into, and IIM Lucknow produced one research paper each. Against these, Wharton and Harvard business schools generated 276 and 182 research papers during this period, respectively. Between 2009 and 2012, India’s 4,000-plus B-schools together published just 36 papers in journals tracked by University of Texas, Dallas. According to Nirmalya Kumar of London Business School, this is because Indian B-schools are predominantly teaching institutions that are not research oriented. Poor quality of faculties and unavailability of funding are other crucial factors that run across Indian tertiary education system and across knowledge streams.
IITs admit that they are unable to find good faculties. Some have also been targeting PhDs from abroad, but it has not delivered much result for couple of reasons. First, those who are interested in pursuing high end research develop cold feet because of poor infra in India and secondly, they invariably find bureaucratic environment at Indian universities unhealthy. Finally, the difference in compensation is also too high to be ignored.
It is because of such weaknesses Indian tech institutions rank so low in global rankings. No Indian institution is in global top 200 and the highest ranked Indian engineering institution, IIT Delhi ranked 103rd in the U.S. News and World Report ranking published in Oct 2015. China’s Tsinghua University topped the chart, ahead of Massachusetts Institute of Technology and Stanford University. Indian Institute of Science Bangalore ranked 169th and old IITs (Kharagpur, Bombay, Madras and Kanpur) featured between 171 and 222 places).
Poor incentive to research (IP)
Second biggest hindrance in pursuing research in India is that intellectual property regime does not allow innovators and inventors to reap benefits that they are entitled to. The country has faced a persistent dichotomy between protecting intellectual rights for commercialization and catering to the social needs of the poor. Traditionally a poor country with socialist thinking, the policies were crafted with the idea that research and innovations are social goods and researchers need not be given any monetary benefits for their efforts. This philosophy has done a lot of damage to the psyche of researchers. In current environment where research is a resource and time intensive activity and shelf life of any invention is very short, guaranteed profit for certain period is a necessary condition to encourage high end research.
The result of this approach reflects in the number of patents filed by Indians. While absolute number of patents filed has increased substantially, a disturbing trend which emerges is that the percentage of patents granted by the Indian patent office has declined over the years. Also, the share of international patents filed by Indians is minuscule compared with patents filed in India. This is not propitious for a country that wants to emerge as a knowledge economy with high end IT and computing prowess.
If we look at the score of India on various indices that capture strength of IP laws in protecting the monetary rights of inventors, we find that India scores quite low on these. For example, on the Ginarte-Park Patent Rights Index, which provides a measure of the strength of patent protections, India scores 3.76/5.00 and came at 100th position of out of 110 countries tracked in last edition. United States topped the table with a score 4.88 with China scoring 4.08. Further, on Global International IP Index, India scored 7.2 (out of 30) compared with 12.4 of China and 28.5 of the US.
But there is another side to the IP debate which is especially applicable in case of pharmaceuticals. Because India has a huge population which is poor, it is the responsibility of the state to ensure that the prices of lifesaving drugs do not move out of the reach of common man. This is what forces it to eschew policies like data exclusivity which developed world and pharma MNCs have been asking for. As such, it is a delicate balance that the government has to maintain in critical areas of public safety and welfare. This aspect of IP laws has become important in light of recent rejection of a few pharma patents by Indian patent office.
According to experts, a prominent weak point for private sector in present IP regime is the lack of protection for trade secrets. According to the WIPO, trade-secret protection is particularly important for small and medium-sized enterprises, as protection is indefinite. Right now, there is no separate legislation that regulates the protection of trade secrets in India.
Govt. steps in
Traditionally, Indian government has been ambivalent towards promoting research and innovation as a matter of national priority. Till the end of last century, national growth through efficient resource allocation and higher input was given a priority and innovation was relegated to back seat. However, post liberalization, and after witnessing the stunning growth acceleration of countries like China and Korea, which was supported by domestic technological improvements, Indian government gradually came around to the idea that without a strong research and innovation base, it is not possible to increase either grow at a high rate for a long time, nor is it possible to climb up on global value chain. With this realization, governments over last fifteen years have tried to put in place research and innovation policies and integrating the dispersed system of innovation and research. Setting up of National Innovation Council and Science and technology policy, 2003 were steps in this direction. Science, technology and innovation (STI) policy, 2013 was an extension to the approach and intended to build synergy by integrating science, technology and innovation.
At a policy level, the STI policy of 2013 sets out a shift in approach of the government towards innovation. Against Science and Technology Policy of 2003 which addressed science and technology together and delved in the need for technological innovation and creation of a national innovation system, the STI policy 2013 brings together science, technology and innovation framework in the country. This is a progression in the light of the fact that innovation cannot be separated from basic science and technology and treating them separate means continuing with the compartmentalized approach towards innovation. Secondly, by calling for inclusive innovation, it brought to the fore the requirement of innovation to orient towards the needs of the people.
The policy announced an increase in the gross expenditure in research and development (GERD) from less than 1% to 2% of the gross domestic product over the next five years. The target can be reached if the ratio of public to private sector investments in R&D improves from the current 3:1 to 1:1 within this time span. It also set up a National Science, Technology and Innovation Foundation for investing critical levels of resources in innovative and ambitious projects and attracting private sector investments in R&D. It further announced the establishment of a fund for innovations for social inclusion, “small idea-small money,” and a “risky idea fund.” On the issue of intellectual property, it sought to “establish a new regulatory framework for data access and sharing [and for the] creation and sharing of intellectual property. This will enable strategic partnerships and alliances at international level in science, technology and innovation.
Over last few years, some important regulatory developments have taken place to facilitate basic research. For example, Science and Engineering Research Board Act (SERB), 2008, among other things, supports proposals in high priority areas where multidisciplinary/ multi institutional expertise is required and supports facilities required for such research. Similarly government has set up the National Research and Development Corporation (NRDC) whose job is to transfer technology from public funded institutions to the private sector. But the Protection and Utilisation of Public Funded Intellectual Property Bill, 2008, which could have boosted research and development in public funded research institutes by permitting the sharing of the right to intellectual property with the institutes and scientists who created them, has yet not seen the day. This bill was seen as India’s version of the Bayh-Dole Act (BDA) of the USA.
Apart from these regulatory steps, which can be termed tentative, the government has put in place specific bodies and initiated specific programs to support research and innovation. These include Technology Development and Demonstration Program, India Innovation Growth Program, Promoting Innovation in Individuals, Start-ups and MSMEs (PRISM), Technology Business Incubators operated by the Department of Science and Technology, and Small Business innovation Research Initiative. To add external competence to the innovation ecosystem, especially in high tech areas, “The Innovate for Digital India Challenge” initiative has been taken which would provide innovators with technological assistance by Intel and expert guidance by IIM Ahmedabad’s Centre for Innovation Incubation and Entrepreneurship. Additionally, a separate portal has been announced which will be established under Department of Electronics and IT (Deity) through which innovators can seek government support for their ideas and products. To encourage private sector to invest more in research and innovation, government is providing most generous tax benefits. For every 100 rupees that the private sector spends on R&D, a firm is allowed to receive a tax credit of 44 rupees, which is highest in the world.
A crucial yet less noticed development on academic front has been the setting up of the Indian Institutes of Science Education and Research (IISERs). Envisaged as a group of premier institutes akin to IITs of basic sciences, The IISERs are a unique initiative wherein teaching and education is integrated with state-of-the-art research. Each IISER is an autonomous institution awarding its own Masters and Doctoral degrees. Currently six of these are functional with two more in pipeline.
The road ahead
Noted scientist and Chairman of National Innovation Foundation, Raghunath Anant Mashelkar opines that a good innovation ecosystem spots and encourages talent in the young people, helps them harness their technology and puts trust in them taking all the risks. According to him, the essential elements of a powerful innovation ecosystem comprise of physical, intellectual and cultural constructs. It includes idea incubators, technology parks, a conducive intellectual property rights (IPR) regime, smart and fast IPR capture systems, balanced regulatory systems, strategically designed standards, proactive government support systems (including aggressive public procurement policies for indigenous innovations), industry leaders, who believe in innovation led growth and invest heavily in R&D, scientists with an aspiration to become technopreneurs, potent inventor-investor engagement, venture capital, and passionate innovation leaders.
What transpires from above is that action is required on multiple sides. First, a comprehensive overhauling of academic system is required. Second, high end infrastructure needs to be put in place which is available to researchers without hindrances. Third, long term high risk bearing capital is needed to allow long gestation period research. Fourth, the industry needs to be roped in the overall research and innovation ecosystem. Finally, an institutional framework is required which encourages and rewards innovation adequately without surrendering social welfare.
In a chapter of GII 2015, Senapathy ‘Kris’ Gopalakrishnan and Jibak Dasgupta noted that India lacked an adequate number of higher education institutions to cater to its growing number of aspiring students. They further mentioned that there is dearth of high-quality teachers in the education system. But besides these, two additional changes are required. First, the focus of curricula from secondary education onwards needs to shift from memory based learning to thinking based learning. One of the biggest reasons for Indian students performing so low in Program for International Student Assessment (PISA) tests is their poor creative thinking and data interpretation ability. Second, the method of selection and promotion of faculties need to be based on knowledge output instead of year in service.
Because it is not possible to create world class academic institutions by spreading resources too thin, India would do well to learn from Chinese experiments like Project 211 and Project 985 which targeted to select a few institutions initially, pumped in massive resources to make them truly world class and then expanded the program to include more universities. This has done wonders for China both in terms of knowledge creation and global ranking of its universities.
Second aspect of creating a conducive environment for innovation is to put in place a strong IP regime. Indian IP regime is still evolving and has been a work-in-progress for some time. However, there is reason to believe that the government is seized of the matter and is working on an innovator friendly IP policy. According to Secretary in the Department of Industrial Policy and Promotion (DIPP) Amitabh Kant, recognizing the need to scale up the process of IP creation and increase commercialization of the technology, the government has embarked on the process of preparing a national IPR Policy. In one of his speeches, he said it was important to have an innovative ecosystem which supports translation of inventions into commercial use. This ecosystem can only be created and nurtured through initiatives of the government in collaboration with industry. We think that the IP policy should be improvised to deliver two basic requirements that have been missing so far; first, protection of trade secrets which is crucial for encouraging private sector participation; and second, sharing of benefits of innovation with researcher.
Globally, private sector plays big role in innovation and a seamless cooperation between academia and industry results in high end innovation whose spillover effect on economy is visible over time. India needs to fine tune its institutional infrastructure to allow and encourage academic and industrial research. A beginning is made in this regard in form of the Prime Minister’s Fellowship Scheme for Doctoral Research, which is uniquely designed in that the government provides half of the total cost of a fellowship to students for performing research in a real-time industry environment. Industry provides the rest, and the IPR created is owned jointly by the student and the industry concerned. Again taking a leaf out of Chinese experience, India needs to improve the R&D and innovation capacity of the industry and improve the commercial efficiency of academic research.
However, even with the best of innovation policies and incentives in place, the full fruits of knowledge creation may elude the country if the basic business environment is not improved. Over last decade, IT and communication infrastructure has improved substantially, but the physical infrastructure remains in bad shape and needs immediate, radical improvement. Secondly, we need to improve ease of doing business, without which the return on investment for any business goes down, which in turn, detracts investors.
Over last couple of years, India has emerged as a leader in startup arena which is a reflection of new, innovative entrepreneurial talent. This culture needs to be nurtured which is possible only if we reward this talent and create a business environment in which commercial exploitation of new ideas are realized with ease. Only then can tomorrows giant businesses emerge from today’s unicorns. Also, the innovation spurt that is visible right now in applied areas of IT and IT enabled services, needs to spread to basic science for which greater governmental nudge is needed.
Innovation is a global race in which participants don’t know how many are in race and with what facilities they are running for the final goal of winning a patent. It is imperative therefore that best minds are provided with best facilities and adequate funding to run the race. Indians in global scientific institutions have proved their mettle and have done great service to science. It is high time resident researchers are empowered to do the same.