A sharp recent speech by Infosys co-founder N R Narayana Murthy has once again raised the question: what ails Indian innovation?
Mr Murthy pointed out that, for all its renowned institutions and their brilliant graduates, world-beating innovation has been minimal. The numbers bear this out. India in 2013 made a bare 21,000 patent filings, compared to 734,000 by China and 501,000 by the US. This picture is supplemented by India's ranking in the Global Innovation Index (constructed by Cornell University, INSEAD and WIPO) which has fallen from 66 in 2013 to 76 in 2014. Meanwhile, the four other BRICS countries improved their ranks. Nor can this be blamed on insufficient funds for research alone. The index includes an "innovation efficiency ratio" which compares innovation input with output. If you have little by way of resources (input), you can make up a bit by getting more out of them (output). Here China achieves a highly impressive second rank, compared to India's 31.
Of course, India's spending on education is low and inefficient. But companies do as badly as does the government: in terms of expenditure on research and development (R&D) by business enterprises, India is ranked 43, compared to China's 13. It is best to stop tom-tomming Indian information technology, as well, as India scores very poorly in both access and use of communication and information technology. Where India does score is in computer software spending and high and medium high-technology manufacturing. In market sophistication - as reflected by its high rank in getting credit, investor protection and market capitalisation - India is a global leader; but innovation cannot benefit from this unless there is a robust pipeline from the financial markets to genuine, innovative start-ups. This is yet to emerge.
In one way, India's low score in global surveys of innovation should not be surprising, since such surveys draw heavily on the number of patent applications filed. But, given India's relatively idiosyncratic approach to intellectual property, the incentive to research and file patents is not great enough. Nor can there be any dispute about the need to improve the intellectual property administration. Infringements, as also applications for patents, have to be dealt with swiftly. Research collaboration between industry and academia has to improve and for that the foremost need is to improve the quality of higher education and research institutions in the country. India is a favoured destination for offshored R&D but the talent pool that results from this should enable Indian firms to invest handsomely in R&D. As the size of India's gross domestic product keeps growing, it cannot remain an outlier in protecting intellectual property rights or in maintaining high tariffs on imports. What must come next is corporate will.
