India is a rising economic power and an increasingly important locus of innovation. Spurred by competition unleashed by a liberalization of once stifling regulations, India’s private-sector firms are fast improving the quality of their products and services and are rapidly expanding their global presence. At the same time, U.S. and other multinational companies are increasingly locating their advanced research and development (R&D) operations in India to draw on the nation’s highly trained scientists, engineers, and managers. In the process (and despite the endemic challenges of poverty) India is changing from a locus of low-cost contract research and reverse engineering to a global center of high-value, indigenously generated innovation. To sustain this transformation, Indian policy makers increasingly recognize the need for continuing economic reforms, new public investments in the nation’s infrastructure, and new policy initiatives and institutions to encourage innovation, expand the skills and knowledge base of its population, and facilitate entrepreneurship.
As India grows as a center of global innovation, a new U.S.–India relationship is emerging—one where India is seen as both a partner and an effective competitor to the United States in the global marketplace. At the National Academies’ June 2006 conference on India’s Changing Innovation System, Ralph Cicerone, the president of the National Academy of Sciences, noted that advances in information and communications technology are creating new opportunities for the United States and India to benefit from the complementarities in their innovation systems.1