CII Policy Watch on Innovation
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CII Policy Watch on Innovation

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In recent times, Indian Industry has started practicing Innovation as a business strategy which is great step towards making India an Innovation-led economy. Innovation is a much discussed topic now ...

In recent times, Indian Industry has started practicing Innovation as a business strategy which is great step towards making India an Innovation-led economy. Innovation is a much discussed topic now in different Government and private forums across all sectors.

It has been widely realized by various stakeholders that the Indian model of innovation has to be Inclusive innovation, with even the National Innovation Council (NInC) set up by the Government also promoting this concept actively. More and more companies are also trying to inculcate inclusive innovation approaches in their business and are striving to achieve sustainable growth over a long term period.

Confederation of Indian Industry (CII) has always been the proponent for growth of Indian industry and has been supporting the industry to weather unstable economic environment with the application of innovation, to benefit all sections of the society.

This issue of Policy Watch focuses on an urgent need for the Indian industry to focus and practice inclusive innovation model in their business and also outlines some specific recommendations to achieve the same.

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CII Policy Watch on Innovation CII Policy Watch on Innovation Document Transcript

  • Policy November 2013, Volume 2, Issue 6 Focus: Innovation T    h e a c c e p t a n c e o f innovation as a national and business strategy with positive outcomes has increased manifold in the last decade or so. Recognizing its intrinsic value for India's future, the Government of India established the National Innovation Council (NInC) in 2010, taking its outreach and relevance a step forward. However, even as we are increasingly becoming aware of the potential of innovation and its impact, putting it into practice remains a big challenge. Worldwide, innovation has been the crucial trigger for technological and economic advancement in the developed world. Countries in the West have benefitted tremendously from innovation in the last century and continue to make breakthrough advances in technology to maintain the lead in this space. India, with its socio economic challenges, has been slow in adopting innovation and building awareness on its importance. With the impact of economic slowdown and rapidly changing market conditions, the urgent need for innovation is felt by all – society, industry and the Government. Within the Government, the Ministry of Science and Technology has taken the lead in encouraging innovation through various entrepreneurial schemes (STED, PRISM, BIRAC etc.) and funding mechanisms. The NInC is spearheading programmes like Inside this Issue Message From the Director General........... 1 Chandrajit Banerjee, Director General, CII State and Sectoral Innovation Councils, Industry Innovation Clusters, Inclusive Innovation Fund and many more. Large industry houses and MNCs have more or less been innovative to the extent of having in-house R&D centers. Their global exposure and large capital investments have given them an edge over smaller enterprises. In some sectors such as automotives, they have displayed a high degree of indigenous innovation capacity, and also leveraged innovation to devise products and business models to address ‘low-income’ markets. But what is lacking, barring a few exceptions, is the establishment of a structured innovation process within the industry. Working closely with industry, CII has developed an Innovation Framework which helps companies identify innovation loopholes and establish structured innovation processes within their operations. The SMEs in India, employing close to 40 per cent of India's workforce and contributing 17 per cent to its GDP, face serious issues in incorporating R&D and innovation within their operations. CII is constantly working with the SMEs to improve the situation. Jointly with NInC, CII is helping in establishing Cluster Innovation Centers (CICs) and CII’s Centers of Excellence on Competitiveness in SMEs and Sustainable Development are working to address innovation related issues. Entrepreneurship is another area which needs serious consideration by the Government. India is not creating enough start-ups and the voice of the entrepreneurial community is poorly represented in the Government and has limited capacity to influence policy. Understanding this challenge, CII, under the aegis of its entrepreneurship committee, is currently working on establishing a startup platform which will not only provide opportunity to start-ups for scaling up their operations but also enable them to put forth their demands to the policy makers. CII’s other joint initiatives with Government and industry - like India Innovation Initiative-i3, which aims to commercialize innovations of individuals above 18 years of age - is benefitting grass-root innovators and beyond. Against the backdrop of these initiatives, India is striving to transform into an innovation-driven economy. The model of innovation in the West is an inspiration, but keeping the ground realities in mind, we need to create a sustainable innovation model with the potential to cater to the rich and the poor with tangible outcomes. This issue of the Policy Watch focuses on innovation as one of the pillars of sustainable economic growth and also stresses on inclusivity for building India’s innovation model for the future. n Chandrajit Banerjee Director General Confederation of Indian Industry CEO Speak............................................................................................ 2 Policy Barometer.......... 9 S Gopalakrishnan, President, CII and Executive Vice Chairman, Infosys Limited Factfile....................... 11 Vikram Kirloskar, Chairman, CII Innovation Council & Global Innovation and Technology Alliance (GITA) Board and Vice Chairman, Toyota Kirloskar Motor Private Limited Industry Voices.......... 12 . Venkatesh Valluri, Chairman, CII National Committee on Technology and Chairman, Ingersoll Rand (India) Ltd. Ashok Soota, Past President, CII and Executive Chairman, Happiest Minds Technologies Private Limited policy watch 1
  • CEOSpeak Indian Ingenuity Can Help Address Low Growth and Economic Instability What needs to be done to improve the innovation ecosystem in India? The Indian Government has declared the years 2010-20 as India’s Innovation Decade. It has also set up a high profile National Innovation Council (NInC) to evangelize the cause of innovation and spread a culture of innovation across the country. This is a great step forward for India towards being an innovation-driven economy. Building on this move by the Government, India needs to capitalize on the momentum in order to transform into an innovation driven economy. With the global economic uncertainty compounded by the Indian economic crisis, there is no other way than making innovation a mantra for sustainable growth by Government, industry and society at large. There are many examples of Indian ingenuity which have delivered world class innovations within and outside India. What we need to do is to multiply these examples multifold to address some of our pressing problems of low growth and economic instability. India, with a billion plus population, cannot afford to ignore its citizens at the lower economic curve. This is a sizeable population with tremendous potential to deliver innovative solutions, and also to act as the for innovations to reach every household in this country. On the other hand, many innovations from the grass-roots level are also making their way into the mainstream and providing encouraging results to solve existing challenges. We need to encourage this trend in the future. S Gopalakrishnan President, CII and Executive Vice Chairman, Infosys Limited end user of low cost innovative products and services. Hence the future of Indian innovation is dependent on its capacity to include the marginalized in the process of development, making a true model of inclusive growth. Today multinationals and Indian corporates are looking beyond the metros to tier 2 and tier 3 Indian cities and villages in search of new markets for their products and services which are of low cost and good quality. Frugality has been imparted in the conceptualization of such innovations and has defined a whole new array of products and services. This is a very positive and important step in terms of solving an increasing number of people-centric issues with less resources and at an affordable price; a great trend Government mechanisms in India need to be transparent and corruption free to boost the innovation ecosystem in the country. IT intervention in Government functioning (like RTI, Income Tax filing etc) has already shown results and more e-governance measures would yield greater innovation potential for delivering timely and quality services to the people. The Government should also focus on improving the poor regulatory environment for creating new start-ups and commercial ventures. This will not only encourage entrepreneurs in this country to be competitive globally but also help in addressing unemployment prevalent among Indian youth. The work started by the NInC on Innovation Cluster Development is a much needed and essential step forward to encourage the local innovation ecosystem and develop local Small and Medium Enterprises (SMEs). The State Innovation Councils set up by the NInC can be a revolution if the States take up this opportunity and focus on developing and implementing good innovation strategies within the States. CII’s involvement in these State Innovation Councils will surely provide the impetus to develop industrial activity in each State. How can we leverage entrepreneurship to boost the economy? How does a start-up culture help in this direction? Entrepreneurship is an integral part of building an economy and its future growth engines. In India people are very entrepreneurial, but the country has failed to capitalize on this strength to create the optimum number of new enterprises that it should have created 2 policy watch
  • CEOSpeak after Independence. This is an issue and has a direct connection with the lack of development of an entrepreneurial support system in the country. There are no proper guidelines on how an entrepreneur can benefit by the system in terms of funding, mentoring and institutional support to make the venture successful. Although there are multiple schemes and programmes of the Government for entrepreneurial activities, they are all scattered and difficult to locate and access. With the economic crisis fresh in our minds, we are gradually coming to terms with the fact that the old enterprises are not enough to sustain economic stability in the rapidly changing global market. New ideas and solutions need to be encouraged and supported to solve new challenges. Entrepreneurship is the only way out to achieve this goal. Start-ups are the smallest segment of the industry, which thrive on innovation and entrepreneurship. Every big enterprise needs to initially go through the process of incubation as a start-up venture. Hence, building a start-up culture is essential for shaping the economic future of this country. Although the short term dividends are less with a majority of these start-ups, but it has tremendous long term potential. In the present scenario, the start-up culture in India is poor and we need to address this issue collectively. Government, industry and academia should work jointly to encourage building new start-ups across sectors. A focus on building high technology start-ups will usher a positive change in the existing product and process building capacity of India. Can India emulate a model from any other nation to become a leader in creating more start-ups? How can start-ups in sectors other than IT and Biotech-Pharma be encouraged? Although there is always scope to learn from the best practices of other nations, the learning needs to be customized based on the ground realities and challenges in India. Countries like USA, Europe, Japan and others have been leading the path of technological development for many decades. The start-up culture in these nations has given big dividends in the form of a Google, an Apple, a Microsoft, a Virgin or a Toyota and many more. The Government guidelines and entrepreneurial ecosystem have always been encouraging and supportive towards the growth of technological start-ups. For example, in Israel it is a common habit to build start-ups as a strategy towards economic development. All these start-ups are resourceful and serving global markets. In India, things are different given its demographic diversity and economic disparity. India should learn from the achievements of other successful nations and then formulate a plan to bring inclusivity in the process. India needs to develop innovative techniques to minimize resources and cost, and improve quality and utility of products and processes. IT and Biotech have already taken a big lead in terms of innovation in India. In these sectors, India is now competing with the world leaders; infact India is now recognized as the IT destination of the world due to our collective effort to build this industry. Biotech-Pharma is also creating a niche area in terms of generic drugs and other low cost medicines. What is still lacking is the shift from a service providing industry to a product regime. IT in India now needs to gear up for building new and world class products which can compete with the best. Similarly Biotech-Pharma needs to come up with new drugs and vaccines rather than remain confined to being the manufacturer of generic versions of foreign drugs. With the human resource available in the country I am confident of India achieving this feat. What steps has CII taken to create a policy on entrepreneurship ? CII has been proactive and contributed to the development of the new Science, Technology and Innovation Policy 2013 announced by the Department of Science and Technology. This document emphasizes the need for entrepreneurship and provides a direction which we need to follow in order to improve our entrepreneurial ecosystem. Moreover, considering entrepreneurship as a main pillar of economic development, CII has constituted a National Committee on Entrepreneurship this year. This Committee has a mandate to encourage, promote and nurture entrepreneurial activity in this country. Also key industry members are involved in formulating an entrepreneurial policy roadmap under the aegis of this Committee. Although no step is big enough to solve all the problems of this vast country, CII thinks that small steps forward, in terms of its entrepreneurial programmes like India Innovation Initiative – i3, a joint initiative by CII-DST to encourage commercialization of innovation or an initiative like the startup platform, would help in providing the necessary voice to entrepreneurs in order to influence their policy needs. We all are optimistic and confident that in the near future, the entrepreneurial ecosystem in India will scale up and contribute to faster sustained growth of all sectors of the industry. n policy watch 3
  • CEOSpeak Industry Should Adopt Structured Innovation Processes How important is the PPP model to boost innovation in India? How can GITA play a big role in improving the R&D climate in India? India has been recognized as a rising economic power and increasingly important focus of advanced Research and Development (R&D). Many Indian R&D institutions in the public sector and companies in the private sector have made a mark in the global arena in their respective technology domains. However, we still have to consider that there are several nations ahead of us which have made their mark in the world by their innovations. These countries have well developed innovation models and R&D ecosystems, suitable for their business and economic environment. Against this backdrop, during the 12th Five Year Plan, the Government has set a goal to double India's GDP in R&D to 2 per cent, from its current level of 1 per cent. Therefore, by the end of financial year 2016-17, the Government will raise its investment to 1 per cent of GDP and encourage private sector's investment to 1 per cent of GDP from 0.33 per cent currently. The Science, Technology and Innovation Policy 2013 of India seeks to move the country towards a new paradigm with a focus on inclusive growth and innovation as well as increased private sector investment in R&D. It aims at strengthening India's innovation ecosystem through supporting and enabling technology and innovation driven enterprises. The policy also aims at Vikram Kirloskar Chairman, CII Innovation Council & Global Innovation and Technology Alliance (GITA) Board and Vice Chairman, Toyota Kirloskar Motor Private Limited promoting the establishment of large R&D facilities in PPP mode with provision for sharing benefits. Increasingly, the capability to innovate and commercialize new high-tech products is being acquired through collaborative efforts in a distributed global network. In this context, it is important to strengthen Public Private Partnerships (PPPs) to strengthen the national innovation system which can leverage the emerging opportunities in a global setting. Global Innovation & Technology Alliance (GITA) was incorporated as a PPP, not-forprofit (Section 25) Company jointly by the Technology Development Board (TDB) of the Department of Science & Technology (DST), Government of India and the Confederation of Indian Industry (CII) on November 29, 2011. GITA is well positioned to attract Indian industry’s investment in technology and improve the R&D climate in India by mapping technology gaps; evaluating technology offers across the globe; connecting technology developers, providers, commercializers; funding the last phase of technology development that connects the market and deployment of technology solutions. GITA can also be instrumental in forging industry-R&Dacademia partnerships, establishing centres of excellence, large scale R&D facilities and technology-business incubators under the PPP mode. Currently, GITA is implementing the joint industrial R&D funding programmes, assigned by the Department of Science and Technology, Government of India, with Canada, Israel and the ASEAN bloc. Similar programmes with UK, Finland, Spain and South Korea are also in the pipeline. Funding support can be availed under these programmes through GITA. GITA has also been assigned the Technology Acquisition and Development Fund (TADF) of the Department of Industrial Policy & Promotion (DIPP), under the National Manufacturing Policy, for promotion of green manufacturing among MSMEs. The funding support under this scheme would be available for: 1. Direct funding support for technology acquisitions 2. Indirect funding support through patent pools 3. Subsidy for manufacturing energy efficiency / water conservation / pollution control equipment 4. Incentives for energy, environment and water audits 5. Incentives for construction of Green Buildings 6. Subsidy for implementing waste water treatment facilities All these initiatives implemented by GITA have the potential to change the innovation 4 policy watch
  • CEOSpeak and R&D landscape of India in a holistic manner. Considering India’s current economic downturn, how can innovation play a key role in reviving the economy? Innovation is very important in the current Indian context. With the economy slowing down, Indian GDP plummeting below the 5 per cent mark and industrial production comparable to the 1990-91 growth rate, it is high time India incorporates innovative measures in governance and industry related matters to boost economic growth. The ambitious plan of achieving a 25 per cent contribution to GDP by 2022 from its current level of 16 per cent for the manufacturing sector can only happen by providing incentives to industry to set up new plants, new production techniques and an overall environment which spawns an innovative mindset. Currently with the policy paralysis that plagues the Government's decision making, it would be an uphill task to achieve the projected growth for India in the coming decade. Innovation in governance is essential to make a turnaround from the current state of affairs, and to create a transparent legislative structure free of corruption. All measures of e-governance are very important to make that innovation happen in the Government. It is high time that industry embraces structured innovation processes in its operations, production and decision making structure. In the absence of an innovation policy at the firm level and a dedicated team to monitor such process, it would be difficult for firms (especially SMEs) to make a transition from low to high production units. Unless industry boosts their production capacity in the coming years, the situation will hardly improve. Lastly the entrepreneurial ecosystem in India needs a push with adequate funding and enhanced incubation support, in order to create future enterprises and new jobs. The current system prevailing in India does not support entrepreneurs, and entrepreneurs have to face many regulatory obstacles, over and above the difficult task of building a venture. This is evident from the statistics of the conversion rate of Indian innovation into profit making enterprises -a very low percentage. Commercialization of new products and innovations is the key to new markets and jobs and thus it acts as a force to break cycles of economic stagnation. Overall, to come out of the current economic downturn we need to embrace innovation at all levels starting from Government to industry and boost the entrepreneurial mindset. We need to think of new ways of doing things. What are CII’s initiatives in supporting innovation in industry and society? CII, for the last one decade, has been very active in the innovation space. To boost structured innovation in industry, CII has spearheaded an industrial innovation framework, which is a tool to measure innovation in an industrial firm and identify the gaps. This is unique in the sense that a lot of emphasis was laid on making it a simple and cross sectional tool, so that it can be applied to a vast majority of sectors. CII is also working with the National Innovation Council (NInC) and supporting their activities in Industrial Innovation Clusters, State Innovation Councils and Sectoral Innovation Councils. These are areas which will not only boost the States in terms of improving their GDP but also make the industrial climate of States, specially the industrial cluster comprising SMEs, sustainable and robust. CII is associating its industry members and facilitating industrial dialogue in all the State Innovation Councils which have been formed till date. Through these councils CII plans to mobilize State level innovation mapping which will add a new dimension to the innovation measurement mechanism at the State level. Work on establishing Indian Intellectual Property Facilitation Centers (IIFCs) at each of these States to boost the IP ecosystem is also an ongoing activity. CII has, for the past 5 years, been steering the nationwide innovation competition called India Innovation Initiative –i3, which aims to support innovators of 18 years and above to recognize and commercialize their innovations. This is a unique initiative to provide a platform and voice to individual innovators from all walks of life. From 2013 CII is planning to create a platform for Indian start-ups. This platform would encourage start-ups to connect to industry and benefit by mutual exchanges. This is essential, considering no such existing platforms in India connect start-ups directly with industry. The innovation council of CII is also working on creating a policy framework for innovation. Such a framework would help the Government to identify the key innovation challenges faced by industry today, and help in addressing these challenges through policy intervention and implementation of some of these recommendations. CII is also associated with the Global Innovation Index (GII) published by INSEAD, WIPO and Cornell University, which is essentially a tool to measure innovation at the country level. n policy watch 5
  • CEOSpeak ‘Innovation Convergence’ Required In your view, how much will the new Science, Technology and Innovation Policy 2013 by the Department of Science & Technology, Government of India, affect the innovation ecosystem in India? and a sustainable environment for the future generations. These practices can be made financially viable without the loss of intellectual property of the participating bodies and yet have a positive impact on the large, unserved society. Innovation is critical for emerging economies as products developed in these economies are expected to better address the needs of a large population, which is defining the growth of the global economy. The new science policy in this regard is truly aspirational and aims at producing and nurturing talent in the field of science in order to stimulate research in universities, develop young leaders and reward performance. It also seeks to create a policy environment for greater private sector participation in research and innovation to facilitate international alliances and collaborations to meet the national agenda. Further, in emerging economies such as ours, there is an imperative need for organizations to drive innovation to create value based products for the current needs of the market. Companies need to find ways to turn constraints into competitive advantage by designing new processes, creating new markets and services, collaborating and partnering. In my opinion, the future opportunity is all about converging technologies and collaborative approaches to create solutions that will be applicable not only to the BoP markets but can be applied across the spectrum. The industry today needs to work with an objective to create markets ‘In India; For India; By India’. At Ingersoll Rand, almost 40 per cent of our engineers that work at our two Global Engineering and Technology Centres now work specifically to create products and solutions for India using the Technology and Innovation convergence approach. Thus companies today need to deploy strategic innovation to achieve market expansion through a new definition of collective affordability and acceptability. I firmly believe that ‘Innovation Convergence’ across organizations and technologies is the way forward in the current market scenario. We must pool resources in this difficult market. With the unique skill sets India has in the area of Information Technology, it is time that as a nation we bring forth technologies on a common platform Venkatesh Valluri Chairman, CII National Committee on Technology and Chairman, Ingersoll Rand (India) Ltd. and converge them to drive profitable sustainability practices. These could be in the area of Energy Management, Material Science, Solar Energy, Water, Healthcare, Homeland Security, Food Security and many others where a lot of societal good can happen and at the same time economic value can be created for the participating enterprises. Targets that are laid out by the Government currently do not stipulate the methods in which they have to be met. It becomes the joint responsibility of the Government, industry and academia as partners to leverage capabilities together and drive comprehensive execution plans, which in turn, will drive creating a cleaner What is necessary to improve innovation in the manufacturing sector which is underperforming in terms of its contribution towards the nation’s GDP? A couple of years ago it was being touted that India will be the next destination for manufacturing after China because of labour cost arbitrage. This has not happened. The labour cost arbitrage no longer works. Many nations have become extremely productive and we have not improved our efficiencies. There are capacities available everywhere in the world and shifting manufacturing to countries where there is labour arbitrage is no longer a viable option. 6 policy watch
  • CEOSpeak Innovation is the key for the Indian manufacturing sector to survive and lead. We continue to depend on other countries for many technologies and have been unable to keep pace with the changes. I believe that restoring growth and achieving sustainability require a strategic shift in the core mindset as well as operational strategies envisioned by manufacturing companies. Manufacturing needs to address the challenge of technology and productivity, while consuming fewer resources, using less energy and creating less waste. These are, in fact, the basic pillars of innovation to enable improvement in efficiencies altogether. In my opinion, innovation has clearly become a key determinant of success. The other area of focus is Research and Development (R&D) with innovation in order to create a robust pipeline of newer, better and more efficient products hitting the markets. Thus organizations ought to shift their focus and make efforts towards developing enhanced products by augmenting their R&D investments and allow innovation to make a smooth transition. Moreover, companies also need to look at not just product innovations but operational innovations in order to achieve competence and edge in their daily production processes and thereby create value for their customers. Optimization of resources demonstrates the core objective for enhancing efficiency. The present and future for India is about collaborative approaches to create solutions as markets are beginning to demand ’converged solutions’ to address a larger interconnected problem. The Indian manufacturing industry has the latency to bounce back and this can only be driven by reformation, innovation and convergence and minimizing the use of expensive capital by collaboration between industries, Government and academia. We must aim to become a self-sufficient nation. How can technology (indigenous and acquired) play a big role in bringing about the next revolution in innovation in India and how can it benefit the Indian economy? The future will be dependent on many technologies that are emerging at a very rapid pace. The change in internet speeds, the intelligence that will be derived out of analytics and the ability of the new aspirational generation to adopt such technologies will become the key. In such a scenario, we will need to build innovations that are unique and applicable not just to emerging markets, but also to global markets. Moreover, our ability to improve the speed of innovation will determine the dependency on other countries. If we can drive technology convergence across multiple technologies and deliver solutions that provide more convenience and value we will be able to lead the market not only for the geography in which we operate but also globally. A firm need not be good at developing all technologies but needs to focus on new paradigms in this competitive world, wherein we are able to collaborate and create solutions. Today the dependence on imported technologies has become an inhibitor for our growth. We have a technology deficit and the application development approach is lacking. Creating a new research approach that focuses on application and solution creation, funding the researchers at market rates and industry support for them to create solutions will drive India’s future in the area of pure and applied sciences. We have a huge challenge which we must address. The danger is in becoming a nation dependent on other countries for technology. This trend must be contained and reversed. Our talent pool is one of the best in the world. We have not made our ecosystem attractive enough for this talent to deliver. We must address the ecosystem immediately to create the right infrastructure, reward the talent appropriately and allow the industry and the Government to be major stakeholders in this process. n policy watch 7
  • CEOSpeak Innovation Can Be One of the Primary Levers to Transform India How can inclusive innovation play an important role in transforming India to an innovation-driven economy? ends of the economic spectrum: from the world’s extremely wealthy to the world’s extremely poor. Innovation is the engine of creative output, and inclusive innovation is about focussing on creative output that addresses the problems of all strata of society, rather than a select few. Inclusive innovation is also about harnessing the innovative ideas and energies of the entire spectrum of society.  Since innovation is also a primary lever for wealth creation, inclusive innovation has the potential to influence equitable wealth distribution.  Since there is a huge potential for improvement in economic conditions of large sections of society, especially the under privileged, innovation can be considered one of the primary levers to transform India to an innovation-driven economy. The cost of knowledge generation in India is amongst the lowest in the world and few countries have the ability to scale efforts and output as India. Constraints on resources have brought out innovations as demonstrated by ’Jugaad’ successes.  Indian inclusive innovation has the potential to become a significant driver of world growth. Till date, the West has spearheaded innovation in terms of its R&D and cutting-edge technology. How could the Indian model of growth through inclusive innovation be relevant to Ashok Soota Past President, CII and Executive Chairman, Happiest Minds Technologies Private Limited the world? India is uniquely poised with the potential of emerging as one of the hubs for inclusive innovation, because of the abundance of production sources, and the diversity of consumption sources. The production sources are primarily the billion+ connected Indians of the future – each with the inherent human ability to create and innovate. The consumption sources are diverse since they include, on a large scale, the extreme How are the IT and ITeS industries in India embracing inclusive innovation? Please share your views on their growth path. In today’s world, a proven way to address problems across all strata of society is through technology innovations. The IT and ITeS industries in India are poised to make significant contributions to these efforts. The simple mobile phone (or affordable tablet computer) can be used today by farmers for yield analysis, by villagers for banking and payments, by children and teachers for education, by hospitals and patients for healthcare applications, and so on. Big data analytics can be used by the Government to ensure tracking of various schemes and ensuring that the target sections of society are actually receiving the intended benefits. Online learning has the potential to address the key challenge faced by the education sector today: the lack of a sufficient number of qualified teachers. There are innumerable similar examples.  Three key dimensions appear to emerge in terms of the direction we need to go ahead as a people. These are innovation, inclusivity, and a strong technology focus. India has established itself as a leader in both IT and ITeS. I see India maintaining its lead and our contribution increasing through innovative applications. n 8 policy watch
  • Policy Barometer CII’s Key Suggestions on Policy Issues National Strategies for Science, Technology & Innovation • High-Quality Science and Technology (S&T) Governance and Reform; Advisory Councils; co-ordination and implementation; new institutions and institutional structures, evaluation, establishing S&T competencies and enhancing incentives for innovation and science and technology in National Action Plan for Climate Change will boost innovation in the country. • Under the aegis of the National Educational Programme of the Ministry of Human Resources Development (HRD) of the Government of India, each major player in an industry sector (steel, power, petro-chemical etc.) should be encouraged to set up an engineering academy to improve the technical competence of their staff members and also enhance their ability to innovate. Infrastructure • Innovation clusters which will house business incubators to facilitate the transfer of patents/know-how from academia/ national labs to the market should be established. This will encourage meaningful participation from the Research & Development (R&D) fraternity across the country, thereby strengthening existing clusters. To further strengthen these clusters, make it mandatory for all SMEs, start-ups to become a member of a particular cluster (with no cost implication thereof). It should be mandatory for the owner / CEO to participate in weekly meetings of the clusters to initiate improvement and development activities. Partnership Development Platforms to foster Open Innovation and Interdisciplinary Research should also be established. • The IP infrastructure should be strengthened, and patent offices and branches should be opened at technology transfer offices around the country and at higher educational institutions. Patenting fee must be made affordable for innovators. A framework for IP as revenue generating tool for SMEs should be built, to motivate them to file IP. A separate IP for commercializable innovations having immediate impact on society should be there. Human Resources Development • Pomote innovation and entrepreneurship among young people. • Develope easy learning modules and experience-based teaching programmes on innovation. • Place emphasis on ‘projects’ and hands-on deliverables along with pure text books and course type education. • There should be adequate training for students on the importance of IPR and innovation as part of the school/college course-work. Training in entrepreneurship may also be considered. • India has 670 districts. If every top corporate adopts one district and works towards building a science, technology and innovation culture, it would be a great initiative towards strengthening the ecosystem. This can come under Corporate Social Responsibility (CSR) activities. • Create career opportunities in the field of innovation and connect the process/outcome of innovations into a research degree (M.Phil or Ph.D). These degree holders can then become guides for future innovators. • Industry focussed courses in engineering and science disciplines and tie-ups between colleges and industry for practical project-related experience should be started. Funding, Direct & Indirect Incentives and Processes • Direct funding, fiscal incentives and provision of infrastructure should be used to promote the involvement of national firms in international co-operation. • Total R&D spending must be 3.5-4 per cent of GDP of which 2 per cent should be public support and 2 per cent Business Expenditure on R&D (BERD); 10 per cent of public spending on basic research; 90 per cent of public R&D allocation should be in financial partnership with stakeholders; 70 per cent of the R&D funds should be for scale up, pilot scale evaluation and commercialization trials. • The Government should look at putting in a performance clause for availing tax sops for R&D spend so that this is not only a tax saving measure. • Public support may be graded: high priority sectors may offer near 100 per cent support to Government-funded institutions; academic and R&D institutions may be supported up to 70 per cent and industry may receive 50 per cent support for S&T/R&D programmes. • The Government should also provide tax incentives or any other tangible benefits to the industries for investment in S&T manpower development and innovation. • There should be greater encouragement by way of various types of tax incentives on the expenditure - both capital and revenue - for more business R&D and innovation, and speedy processes for approval for establishing new R&D centers. policy watch 9
  • Policy Barometer Intellectual Property Rights • Enhancing IP Education and Training: Educating local communities, businesses and the public on the potential benefits of the intellectual property system; providing assistance to innovators/producers/ creators on how to use intellectual property protection to their commercial advantage and supporting efforts of stakeholder organizations in this area. Further, there needs to be a structure, preferably along the lines of a PPP model and training programmes for enforcement bodies. favourable response for their innovations in India. To address this, the Government should come forward and create a market for IP products developed by domestic innovators. Policy measures should look at enabling Government agencies to procure more domestic IP innovations. Government to buy the technology/technology transfers at a decent royalty and use the innovations to encourage more collaborative and indigenous innovations. The Government should also look at promoting local standardization, allocating additional R&D budgets to domestic technology and development and aim at growing the quantity of IP–tax/financial incentives. Moreover, the Government should encourage local universities and research centers for R&D and have a policy to encourage local companies to take up commercialization of innovations. • IP Management and Research Centres: The Government should seriously look at adopting management-oriented education and IP research facilities. This facility’s curriculum should focus on issues related to patent protection, exploitation—licensing, negotiating and litigating—to convert patents into revenue streams. Once this model is well established, it will enable the industry to innovate and collaborate in IP Projects. Currently due to lack of understanding of various IP issues, industry and academic institutes don’t see value in IPRs. There is a need to bridge this gap and have initiatives in the IP regime to bring in awareness and sensitize the industry to make them see value in IPRs. • Encourage Patenting Innovations and Research Results: There is a strong need to create awareness regarding patents and IPR among innovators and researchers. • Government Policy on Procurement of Indigenous IP: Indian innovators don’t find a domestic market and do not get a • Establish measures to safeguard genuine innovations from frivolous challenges. • There is a need for a suitable framework for assuring Return on Investments (ROI) for innovation, flexibility in IPR issues as well as assurance of financial return at the IPR stage itself. Collaborations • A platform for R&D personnel to interact with industry and academia not only from India but also from other countries should be created, such as a portal, which is open to all, where industry, institutes, innovators can post problems and anyone can post a solution. This would benefit the cause of innovation. An internet based network portal should be developed for people to interact on R&D work. • Specially incentivize universities that are benefitting industry by providing high quality HR and knowledge services and earning more than 50 per cent of their research budgets, based on industry ratings. • Cluster level whitepaper on industry problems/issues would help institutes approach industry to solve their problems. • Foreign Direct Investment (FDI) /Joint Ventures in R&D • Partnerships with reputed overseas institutions and exchanging researchers • Policies should be aimed at linking domestic firms to foreign sources of knowledge, which in turn would attract knowledge intensive businesses, and foreign highly skilled workers, providing opportunities for inward and outward international mobility. Other Recommendations • Design should be part of STI Policy - encourage activities aimed at transforming the S&T findings for the social and economic benefit of people by adding new value through design. • Public procurement through SMEs which have commercialized public funded R&D. • Support and training on innovation marketing predominantly for design engineering right up to product sale. • Open up research to foreign investments and project Indian talent pool for cost effective global research. 10 policy watch • Work in industry-academia combined projects to enable students access dual type of research • Venture capital to support early stage innovations • IPR must be treated as an asset by financial institutions/ banks. • SME / start-up ideas would require Government funding for at least 5 years for them to generate IPR / succeed in product development.
  • Factfile Patent Applications globally by Applicants’ Patent Applications Globally byof Origin Countries of Origin (Top Countries Applicants’ (Top 15) 15) Source: World Intellectual Property Organization Source: World Intellectual Property Organization 25 Patents Filed / (Granted) in India Confidential © Confederation of Indian Industry Patents Filed / (Granted) in India Source: Indian Patent Office Source: Indian Patent 26 Office Key sectors filing patents in India Confidential © Confederation of Indian Industry Key Sectors Filing Patents in India Source: Indian Patent Office Source: Indian Patent Office 28 Confidential © Confederation of Indian Industry policy watch 11
  • Industry Voices In the post-globalised era, innovation has become the core mantra for the very existence of any business in the connected economies. Given the size and complexity of a country like India, meaningful and globally competitive innovation is the only way to uplift the condition of millions. We have to empower the poorest of the poor to the level that they realize their actual contribution to the value creation of the nation's success story. Only inclusive innovation can guarantee prosperity of the nation at a macro level. Here, SMEs and companies run by entrepreneurial dynamics play the crucial role of innovation hubs throughout the world. CII, along with Government, is trying to create an ecosphere in order to promote it. Deep Kapuria Chairman, CII MSME Council and Chairman, Hi-Tech Group In today's business environment, disposable income across various strata of the society is under stress. As a result, per capita consumption and company growth are under threat. The need of the hour is inclusive innovation which is the only solution that can strike a win-win between the expectations of consumers and marketers alike. Inclusive innovation could be a result of technological breakthroughs leading to cost or process improvements or simply meeting unmet consumer needs at attractive price points. Breakthrough innovation is possible only through deep consumer understanding enabled by a continuous connect with the consumer. Companies need to co-create products with the consumers by involving them in the new product development process. Further, to foster inclusive innovation, it is important to encourage budding entrepreneurs and build a favourable ecosystem, an ecosystem that is targeted at innovative solutions for the Bottom of the Pyramid, an ecosystem that nurtures grass-roots enterprises by providing the necessary knowledge and venture capital. C K Ranganathan Chairman, CII National Committee on Entrepreneurship and CMD, CavinKare Private Limited Let us raise the battle cry to make this the century of Indian innovation and lead the way on inclusive innovation -inclusive of the different sections of Indian society, inclusive of the different regions of the Indian economy, inclusive of ideas from everywhere and needs of everyone globally, inclusive of all that is beautiful about this universe. Dr. Gopichand Katragadda Member, CII Innovation Council and CMD, GE India Technology Centre Pvt. Ltd For real innovation, creativity, growth and prosperity to happen, it must be on an inclusive platform where all stakeholders are encouraged to participate, contribute and enjoy the benefits of creativity and success. Sriram Subramanya Member, CII Innovation Council and Founder, MD & CEO, Integra Software Services Private Limited For suggestions please contact Priya Shirali, Corporate Communications at priya.shirali@cii.in Copyright © 2013 by Confederation of Indian Industry (CII), All rights reserved. No part of this publication may be reproduced, stored in, or introduced into a retrieval system, or transmitted in any form or by any means (electronic, mechanical, photocopying, recording or otherwise), without the prior written permission of the copyright owner. CII has made every effort to ensure the accuracy of information presented in this document. However, neither CII nor any of its office bearers or analysts or employees can be held responsible for any financial consequences arising out of the use of information provided herein. However, in case of any discrepancy, error, etc., same may please be brought to the notice of CII for appropriate corrections. Published by Confederation of Indian Industry (CII), The Mantosh Sondhi Centre; 23, Institutional Area, Lodi Road, New Delhi-110003 (INDIA) Tel: +91-11-24629994-7, Fax: +91-11-24626149; Email: info@cii.in; Web: www.cii.in 12 policy watch