Panel I
India and the United States: An Emerging Global Partnership

Moderator:

David McCormick

Department of Commerce


Dr. McCormick, describing the panel’s topic as ambitious and exciting, said he would be very brief in introducing its distinguished presenters. He then invited Montek Singh Ahluwalia, deputy chairman of the Planning Commission for India, to speak on the topic of “India’s Reforms: Current Challenges and Opportunities.” The deputy chairman, he said, has a long history of public service in a variety of leadership positions in India, and, more recently, at the International Monetary Fund. A prolific scholar, he is not only a student but also an architect of many of India’s key economic reforms of the past 25 years. Offering thanks for Mr. Ahluwalia’s participation, Dr. McCormick turned the microphone over to him.

INDIA’S REFORMS: CURRENT CHALLENGES AND OPPORTUNITIES

Montek Singh Ahluwalia

Planning Commission of India


Mr. Ahluwalia began by proclaiming his delight that an institution accorded such prestige in India as the National Academies had seen fit to cosponsor a forum for discussing the scope for economic cooperation between India and the United States—a matter whose importance is growing rapidly. As the summary of



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India's Changing Innovation System: Achievements, Challenges, and Opportunities for Cooperation: Report of a Symposium Panel I India and the United States: An Emerging Global Partnership Moderator: David McCormick Department of Commerce Dr. McCormick, describing the panel’s topic as ambitious and exciting, said he would be very brief in introducing its distinguished presenters. He then invited Montek Singh Ahluwalia, deputy chairman of the Planning Commission for India, to speak on the topic of “India’s Reforms: Current Challenges and Opportunities.” The deputy chairman, he said, has a long history of public service in a variety of leadership positions in India, and, more recently, at the International Monetary Fund. A prolific scholar, he is not only a student but also an architect of many of India’s key economic reforms of the past 25 years. Offering thanks for Mr. Ahluwalia’s participation, Dr. McCormick turned the microphone over to him. INDIA’S REFORMS: CURRENT CHALLENGES AND OPPORTUNITIES Montek Singh Ahluwalia Planning Commission of India Mr. Ahluwalia began by proclaiming his delight that an institution accorded such prestige in India as the National Academies had seen fit to cosponsor a forum for discussing the scope for economic cooperation between India and the United States—a matter whose importance is growing rapidly. As the summary of

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India's Changing Innovation System: Achievements, Challenges, and Opportunities for Cooperation: Report of a Symposium ongoing cooperative activities provided by Dr. Dobriansky had been comprehensive, he would limit himself to expressing his contentment that collaborations between Americans and Indians are deepening and to observe that this trend signals a welcome and exciting change in the relationship between the two nations. Basic Premises of Indian Economic Reforms Mr. Ahluwalia noted that his talk would focus on the economic reforms that have been critical to altering perceptions in the United States and elsewhere of the state of India’s economy and of its relevance to the world economy. In their content, the Indian reforms have not differed greatly from those implemented in many developing countries. These reforms reflect India’s acceptance of four basic premises about a strategy for growth: Private enterprise is a critical driver of growth. The recognition that India’s private sector, which Mr. Ahluwalia rated as very strong, deserves support and encouragement has been critical to the reform effort. In his judgment, the country is quite capable of taking on competitors, provided the playing field is level. Competition spurs efficiency. Although India does not need to create a private sector, its reforms are in great measure designed to increase competition within the private sector already in existence. An open, integrated economy is preferable to a closed, insulated economy. There have been a number of initiatives aimed at opening India up to both trade and foreign direct investment. India’s private sector should be encouraged to seek opportunities abroad. Indian companies have begun looking at both new investments and acquisitions of companies offshore, a major change in the country’s economic environment that is creating a far more symmetric kind of globalization.3 In all four areas, India’s reforms have taken a gradualist approach, influenced by a pair of factors. The first is the strategic perception that it is better to exercise caution in moving forward than simply to undertake shock therapy. The second is a deliberate decision to move forward at a pace that would build consensus for change, thereby avoiding excessive controversy over any one issue. Mr. Ahluwalia reminded the audience that India is not only the world’s largest democracy but also a “very pluralist” one, that for the previous decade it had been run by coalition governments, and that the governments of its states were in the hands of a variety of political parties. As proof that a consensus in favor of change had been achieved, he cited the contrast between the national debate, which might often strike students of Indian politics as being at least somewhat contentious, 3 See, for example, The Economist, “India’s Acquisition Spree,” Oct. 12, 2006.

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India's Changing Innovation System: Achievements, Challenges, and Opportunities for Cooperation: Report of a Symposium with the fact that the many state governments are moving in the same direction of reform. The conscious choice of gradualism has aroused a fair measure of irritation and impatience among many of India’s friends abroad—feelings that, he acknowledged, are “not unknown even to those of us in India who have to deal with this subject”—but this was to be regarded as one price of building a broader consensus, which has proved effective. What enables him to say that India’s economic reforms were essentially on solid footing? Above all, the results they are producing. The economy’s annual growth rate, consistently above 7 percent over the previous half-decade, reached 8.4 percent in 2005. The country, targeting continued acceleration, hopes to push its growth rate to 9.5 percent per annum by the end of the following five years while achieving an annual average of 8.5 percent over the entire period. That would put India on a growth trajectory comparable to those that South Korea and China enjoyed in the previous two to three decades. There was agreement both within India and among international observers that growth on this order is “feasible” as long as India followed what the deputy chairman called “the right policies.” The Planning Commission had, shortly before, sent to state governments a discussion document laying out very detailed prospects for the five years to come. “We are trying to emphasize here,” he stated, “that these transitions are not automatic.” Four Major Challenges Facing India He then listed challenges that India is facing in four critical sectors—agriculture, social services, infrastructure, and energy—and declared that each offered a very substantial scope for advancement through cooperation between India and the United States. Agriculture A very large percentage of India’s population continues to derive the majority of its income from agriculture, even though agriculture’s component of India’s GDP, at 20 percent, has fallen off significantly. Indian planners are aiming for a “second Green Revolution” to transform the nation’s economy further. While the goal of the initial Green Revolution was to produce enough food to meet the country’s needs, the Second Green Revolution is to be focused on achieving broad-based income growth in rural areas. Its foundation is to be a high degree of diversification in agriculture, which implies the growth of agro-based processing activity and greater efforts in modern marketing than have been made to date. Technology is expected to play a crucial role in this wide-ranging change. The minister then pointed to evidence that change has already begun. Remote-sensing satellites are playing a role in water management as India attempts to cope with moisture stress in the two-thirds of the country that lack assured

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India's Changing Innovation System: Achievements, Challenges, and Opportunities for Cooperation: Report of a Symposium irrigation. Information from the satellites is being used in methods of land development designed to preserve water; in the planning of local-level irrigation systems, for instance, it is guiding the placement of small dams that retain water. Stressing the importance of the knowledge initiative in agriculture referred to by Dr. Dobriansky, he said that India hoped to rebuild technical and scientific linkages between U.S. universities and its own, calling such connections crucial for his country’s future. Among areas for inclusion, he suggested, were moisture stress and technologies related to food processing. Social Services A major focus of India’s Eleventh Plan is to build an infrastructure for meeting basic education and health needs, and, beyond that, “hugely” strengthening the country’s capacity to provide the skills required for integrating with the global economy. The country’s system of higher education, which historically had been very well developed, is capable of producing a wide range of skills, as reflected in the comparative advantage India enjoys in such fields as information technology (IT) and IT-enabled services or research and pharmaceutical biotechnology. Nonetheless, skill constraints have become evident with the expansion of the country’s economy. While India’s declining dependency ratio puts it in an advantageous position relative to the industrialized nations and even to China, this “demographic dividend” would only be capitalized if India can convert it into very highly skilled manpower. Major changes in the educational system are needed both to expand education and, even more important, to ensure quality. Infrastructure It is the consensus view among policy makers in India that high-quality infrastructure is a critical requirement if India is to achieve its desired annual growth rate of 8.5 percent. A number of initiatives are under way in the areas of seaports, roads, railways, airports, and electric power. All are designed to spur a major increase in investment and to bring in new technology, with public–private partnership being one of the tools. Results have been favorable to date, he added. Energy The Planning Commission believes that, to sustain an economic growth rate of 8.5 percent, India would need growth in total energy supplies on the order of 6.5 percent per year, a figure that assumes great improvements in energy efficiency. Underlining the potential this might offer for collaboration between India and the United States, Mr. Ahluwalia noted that he and U.S. Secretary of Energy Samuel Bodman, who was seated with him on the dais, cochair the Indo–U.S. Energy Dialogue. This dialogue envisages significant cooperation in many areas

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India's Changing Innovation System: Achievements, Challenges, and Opportunities for Cooperation: Report of a Symposium of energy efficiency and in such clean-coal technologies as in situ coal gasification and coal-bed methane exploitation. The Indo–U.S. nuclear agreement, recently signed by President Bush and Prime Minister Singh, holds out the possibility of a major transformation of bilateral cooperation in exploiting nuclear energy’s potential. Nuclear energy could greatly aid India in reducing its dependence on coal. India also expected to see increased cooperation with the United States in the extraction of ethanol from agricultural waste, as well as in many other energy areas that it was interested in pursuing. The “bottom line” of the nation’s economic reforms is the fact that competition has put Indian industry under tremendous pressure to embrace innovation and change. This was evident in the way individual Indian companies are defining their corporate strategies and in the increased investments they are making in technology acquisition and upgrades. It is visible as well in the government’s putting in place an intellectual property regime consistent with the new environment. Success Paves the Path of Reform India’s transition has been associated with a perception of success: The nation’s industry has benefited hugely from the reforms, and many companies have positioned themselves in a way that has increased confidence, bolstering the government’s conviction that it should move forward. The deputy chairman wished to reassure the audience that the Planning Commission judges the reforms to have worked well and that the government would continue down the path of reform. He hoped that debate within India on how to realize the desired rate of growth would greatly intensify in the months ahead as a result of the release to the state governments of the previously mentioned discussion document. Having thanked Mr. Ahluwalia, Dr. McCormick introduced Secretary Bodman as ideally suited to speak on U.S.–India Science and Technology Cooperation as a scientist, scholar, former CEO of a Fortune 500 company, and current senior government official. OPPORTUNITIES AND CHALLENGES IN U.S.–INDIAN SCIENCE AND TECHNOLOGY COOPERATION Samuel Bodman Department of Energy Underlining the importance of the day’s meeting, Secretary Bodman expressed gratitude for the remarks of Deputy Chairman Ahluwalia, whose leadership in India’s economic reform effort he called “a major reason that we now see India both as a potential partner and a competitor.” India is a friendly competitor, to be sure, but an effective competitor in the global marketplace nonetheless.

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India's Changing Innovation System: Achievements, Challenges, and Opportunities for Cooperation: Report of a Symposium Secretary Bodman observed that, with energy issues currently at the forefront in the United States, the press of business would require his return to the Energy Department immediately following his talk. Apologizing in advance for his early departure, he stressed that the importance of the U.S.–India relationship was such that he had wanted to be sure of a chance to hear Mr. Ahluwalia speak and to say a few words himself about the benefits of U.S.–Indian cooperation in science and technology, which he called “a subject near and dear to my heart.” A New Era of Cooperation and Trust Cooperation between the United States and India is crucial to the global marketplace, as it has been to the spread of the democratic model of governance throughout the world. Both he and President Bush were very pleased that a new chapter has been opened in the relationship between the two countries, one based not only on mutual needs but on an increasing level of trust. As the President said in March 2006: “Our two great democracies are now united by opportunities that can lift our people. The United States and India, separated by half the globe, are closer than ever before, and the partnership between our free nations has the power to transform the world.” Secretary Bodman agreed with those sentiments and believed that great power comes from mutual interest in science and in technology. The Secretary said that he began his adult life teaching at MIT, and many of the very best students there were from India, a situation he was sure still stood. In 2005, President Bush and Prime Minister Singh declared their resolve to transform the relationship between their countries in ways that would support and accelerate economic growth through greater trade, investment, and collaboration on science and technology issues. This cooperation will do much to enhance energy security for both countries because it can promote the development of stable and efficient energy markets and enhance the research and development of alternative energy sources, work that was already under way. Collaboration Under Way in Energy Their joint statement also referred to the International Thermonuclear Experimental Reactor (ITER), a partnership dedicated to developing a facility for demonstrating the technological feasibility of fusion energy. India has joined six other nations in initialing the ITER agreement in May 2006; together, the seven parties to the agreement represent more than half the world’s population. Through ITER, India will be playing a very important role in harnessing fusion as an inexhaustible source of pollution-free energy for the world. While allowing that success in this enterprise will not come during his own tenure at the Energy Department, Secretary Bodman expressed the hope that it would make life easier for his successors. The United States also welcomes India’s collaboration on

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India's Changing Innovation System: Achievements, Challenges, and Opportunities for Cooperation: Report of a Symposium the development of the proposed International Linear Collider (ILC), which is expected to make possible new discoveries in particle physics. The ILC is to be designed, funded, managed, and operated as a fully international scientific project. “I hope we can attract the interest of India to participate,” he said. The Science and Technology Cooperation Agreement that the United States and India signed in October 2005 has established a framework for the exchange of ideas, information skills, and technologies. Under its terms, the countries will be able to advance scientific progress in clean-energy research and development, in the sharing of training facilities, and in the exchange of materials and equipment. An example of the type of cooperation that the United States hopes to encourage is India’s decision to join the FutureGen international partnership, an effort to create a zero-emission, coal-fired power plant that would convert all the energy in the coal used to fuel it into a stream of clean hydrogen while sequestering the resulting carbon dioxide beneath the ground. Secretary Bodman noted that the United States appreciates India’s agreement to participate in both the government steering committee guiding the project and the industry alliance handling its actual construction, as well as its pledge of $10 million in financing. This major investment in future technology, he hoped, would benefit the entire world. The two countries are also working together to bring India into the Integrated Ocean Drilling Program, as well as cooperating on the study of methane hydrates, or clathrates. India’s work on the latter would involve U.S. technology, which the Department of Energy was very happy to provide. Many researchers from both nations are to take part in this and follow-on efforts, allowing acceleration of the commercial utilization of hydrates in the United States and around the world. The U.S.–India Energy Dialogue, mentioned earlier by Mr. Ahluwalia, has led to the creation of five working groups: The Civil-Nuclear Working Group has already held one technical workshop to advance the dialogue between the two countries; a second workshop is to take place in the United States later in 2006. The Power and Energy Efficiency Working Group has a varied portfolio. Under its auspices, the U.S. Agency for International Development and General Electric have formed a public–private partnership whose goal is to provide up to four rural communities in India with access to clean and affordable energy over the following two years. It endeavors to establish avenues for technology cooperation on for industrial- and building-energy efficiencies. Just the previous month, a conference in Delhi—aimed at spurring business partnerships that would result in the application of new, energy-efficient technologies—attracted significant participation from representatives of both countries’ governments and business communities. Still under consideration is a strategic partnership between India’s National Thermal Power Corporation and the U.S. Department of Energy’s National Energy Technology Laboratory that would advance the development of clean, efficient power generation.

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India's Changing Innovation System: Achievements, Challenges, and Opportunities for Cooperation: Report of a Symposium The Coal Working Group has created a high-level work plan identifying priority projects for the next couple of years, which includes the pursuit of investment opportunities and information exchanges in the areas of coal mining and processing, coal mining safety, and in situ coal gasification. The Oil and Gas Working Group held a one-day, government-to-government workshop in New Delhi the preceding month to pursue development of a regulatory framework for natural gas; ways of involving the U.S. and Indian business communities were being explored as well. Several bilateral Memoranda of Understanding have been arranged through the Working Group; they cover information exchange, operational safety, inspection issues, and investigation of accidents related to both drilling and production activities of offshore oil and gas operations. The New Technology and Renewable Energy Working Group is sponsoring meetings between the two governments to discuss potential areas of collaboration, including solar power generation, low-wind-speed technology, and other renewable energy resources. Secretary Bodman reiterated his belief that the partnership in science and science-related matters that is emerging between the United States and India would be of great benefit to both countries. President Bush, in his 2006 State of the Union Address, had laid out what the Secretary described as an ambitious but achievable program to expand research and development in alternative resources of energy. Known collectively as the President’s Advanced Energy Initiative, these efforts are geared to bring to the market energy produced using cellulosic ethanol, hydrogen, solar, and wind-based technologies. All require collaborations among the very best scientists and engineers in the world. While many of these individuals are to be found in the United States, the Secretary stated that they are surely to be found in India as well. He expressed his own hope that the two countries would achieve the same level of cooperation on these projects as on ITER and on FutureGen, which would make it possible to bring them to reality that much sooner. In closing, the secretary expressed gratitude for the invitation to speak at what he called an “important meeting.” He expressed his appreciation for the spirit of cooperation and noted further that the meeting was taking place, at the National Academies—“the heart of the American science community.” The conference was thus symbolic of a new and, he hoped, very prolific chapter in the history of U.S.–Indian relations. Dr. McCormick, thanking the secretary, opined that the web of collaborations and initiatives that had already emerged in the comments of the day’s first few speakers was truly remarkable. The avenues of the two countries’ cooperation were both many and exciting. He then introduced Ram Shriram, who has been associated as both an operating executive and an investor with some of Silicon Valley’s greatest success

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India's Changing Innovation System: Achievements, Challenges, and Opportunities for Cooperation: Report of a Symposium stories of the previous two decades. From his experience as a founding board member of Google and with other leading innovators—Netscape and Amazon among them—he was uniquely qualified to describe new models for U.S.–India innovation and for collaboration. NEW SYNERGIES IN U.S.–INDIAN COOPERATION Ram Shriram Google Noting that he was an outsider to Washington but a Silicon Valley insider over the previous 25 years, Mr. Shriram proposed to share some personal experiences, most specifically those with Google—in particular, how Google uses innovation as a competitive advantage to build its business. He said that he would then evoke one or two specific examples of innovation-based new products that have come out of the company’s laboratories in India. Far from involving magic or mystique, Google’s success is based on a “rather simple” formula that begins with hiring “really, really smart people.” From the earliest days of the company, its two founders, Larry Page and Sergey Brin, decided not to compromise on hiring high-quality employees. The first engineers Google hired were Ph.D.s, some from Stanford, the rest from other U.S. institutions. (Although neither Page nor Brin, Ph.D. candidates when they met at Stanford, had completed the degree, Mr. Shriram assured the audience that their former professors rated them among the brightest in their cohort.) Google’s Blueprint for Innovation Google’s features and practices aimed at maximizing innovation include: A flat management structure, making for easy communication up and down, thus reducing confusion within in the organization. Encouraging constructive chaos while keeping teams small and nimble so that their projects were “very measurable and very doable,” Avoiding silos in keeping with the company’s open, communicative environment. An “Ideas Mailing List” on an intranet running inside the company’s firewall that allowed employees to mail their ideas in. Offering engineers 20 percent of their time to work on anything they wanted as long as this did not compromise project timetables. Mr. Shriram called the practice “extremely effective,” asserting that most creative people appreciate the flexibility of not being “chained” to a single project, whether they are employed by an established corporation or a start-up.

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India's Changing Innovation System: Achievements, Challenges, and Opportunities for Cooperation: Report of a Symposium An iterative design process, anchored in the belief that the best ideas don’t make their appearance all at once, but emerge over time. He described most company decisions as “highly data driven,” based on feedback from the more than 150 million people per day who visit Google’s Web site, thus providing it with a “huge laboratory” in which it can “refine and define” its products. Server based deployment in huge data centers, six in the United States and many more overseas. “We have one instantiation of the code that we run, which is what you access as Google products at home on your PCs or on your handheld mobile phones or other devices,” he explained. “Test, Don’t Guess,” the philosophy behind Google’s constant iteration and improvement, as well as the reason Google products may carry the label “beta” for a year or more. “We’re proud that we are in beta,” Mr. Shriram said, “because we really don’t want to release products as full-fledged till we feel they’re ready for prime time.” Summarizing what he called Google’s “excellent hiring process,” Mr. Shriram said that, because of the pace of technological change in its field, the company does not believe in recruiting experts. Rather than looking for a specialist in, say, storage or user-interface design, Google prefers to develop someone it had hired on the basis of raw intelligence and willingness to learn. The company is adding about 15 employees a day, most of them highly skilled: Of a total workforce of around 7,000, 2,500 were engineers, and 500 of those hold Ph.Ds. “It’s important for us to be able to scale the level at which we’re hiring without making any serious mistakes,” he said, adding that this was accomplished through an Applicant Tracking System. Getting a job at Google began with solving a mathematical puzzle. Posted along U.S. Highway 101 in Silicon Valley is an algebraic equation whose solution took prospective applicants to a Web page where their application would be accepted. With resumes coming in at a rate exceeding 20,000 per day, the company felt it could not handle the volume otherwise. “We are doing our best to filter applications out so that we can hire the people we want while not wasting the time of those who may not be the best fit for our corporation,” Mr. Shriram said. Company Organization Accents Transparency In its internal processes, Google does everything that many major corporations do—delegating document review, for example—but in what he described as “a very lightweight sort of online, intranet way.” All projects were posted on the company intranet for everyone to see, so that even small projects were called to colleagues’ attention. “We share everything, we talk about everything, and we use our own products internally as a way to communicate as well,” he added.

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India's Changing Innovation System: Achievements, Challenges, and Opportunities for Cooperation: Report of a Symposium Google’s engineering leadership has a narrow structure: three or four people at the top, with a large number of project leads across the company. Employees are often moved from project to project, which allows them to become well versed in such areas as mobile design, user-interface design, or internationalization, all of which the company considers important. “When you cross-pollinate,” Mr. Shriram stated, “you develop really well-rounded people with a lot of skill sets and a lot of talent.” Thinking Globally from the Start Seeing its footprint as global, the company takes a global view of each of its projects from day one. Google Maps, for example, was not limited to maps of the United States; the company viewed it as imperative to include maps of Europe, Asia, and elsewhere as quickly as possible. Indeed, of Google’s current traffic, only 30 percent originates in the United States, and the company expects the 70 percent coming from overseas to grow, with India and China expected to become the largest points of origin within 10 to 15 years. Mr. Shriram said he has been a major proponent of Google’s expansion in India, and that the company’s two founders had been thrilled with their experience of seeing the country up close during a 2005 visit. Google’s efforts in India began with an R&D center in Bangalore whose staff has since grown to about 60 from 5 or 6 at its founding three and a half years before. The company currently has two Indian locations, the other being an operations center in Hyderabad employing around 350. Finding people for the Bangalore center who could “be easily assimilated into the Google development environment” initially proved a challenge, because the company had not gone about it the right way. Realizing that it needs to recruit at the universities, however, Google has since succeeded in hiring top graduates from Indian Institutes of Technology and others among “the best available researchers” in the country. The company had sponsored a pair of programming contests, the Google India Code Jams, which had drawn 25,000 participants. “As much as people think that there’s a lot of talent available in India,” he cautioned, “it is a very competitive environment, so you have to be out there seeking that talent directly at the source.” There is a very strong belief inside Google that all its R&D centers should be equal. Far from considering India a labor-arbitrage, cost-saving destination, Google views its Indian operations to be on a par with those of its Mountain View headquarters or the R&D centers it had opened in New York City, Zurich, Tokyo, or, most recently, at Beijing’s Tsinghua University. Google recognizes that not all talent resides in Silicon Valley, nor does everyone want to move there. “We need to have a global view, not a narrow, Silicon Valley-centric view,” said Mr. Shriram, adding that Google wished to avoid “the hubris that often develops in a successful company.”

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India's Changing Innovation System: Achievements, Challenges, and Opportunities for Cooperation: Report of a Symposium From Bangalore, a Promising New Product A sign of its success in hiring “Google-caliber” engineers in India is the development of an interesting new product, Google Finance, by two researchers at its Bangalore labs. During their “20 percent time,” they came up with the core innovative concept of flagging the occurrence of news events along moving charts that track stock prices. From an engineer in Google’s New York office, a young Romanian “who was well versed in macromedia flash but didn’t know the difference between the NASDAQ market and a grocery market,” came the Ajax code that allowed the company to launch this sort of moving chart. At present, Google has 10 engineers at three labs across five different time zones working on the product, an example of cooperation at the global level within the company. Google Finance itself, which was still in beta, or testing, phase, is in fact quite complex, in that all its graphics have to be sent down to a given computer fairly quickly—whether the device is on a broadband or a narrowband connection—so that the user can see the movement of the chart when pulling a news item into or out of it. Mr. Shriram classified it as a “mainstream product,” saying it has been very well received by U.S. users, who are particularly interested in its application to stocks traded on the NASDAQ or New York Stock Exchange. Urging those members of the audience who had not played with Google Finance to try it at home, he called it “as good as having a Bloomberg terminal on every desk.” Deepening U.S.–India Ties: A Private-Sector View Mr. Shriram then said that he wished to share his own perspective—that of one who is active in the private sector—on ways in which the U.S.–India partnership might be deepened. A major priority is to attract a larger number of U.S.-trained Ph.D.s of Indian origin back to teach at the Indian Institutes of Technology (IITs) and Indian Institute of Science. Building a culture that rewards innovation across the spectrum of Indian educational institutions, not only by improving levels of pay and recognition for professors but also by providing them a platform for growth, is needed to create this dynamic. Access and affordability for prospective students are also priorities. Increasing the number of admissions at the IITs is important because, in comparison to the 10 percent or so of applicants to the U.S. Ivy League universities who successfully graduate with degrees, only around 1 percent of the IIT applicants actually make it all the way through. While Mr. Shriram was willing to wager that some percentage of those rejected by the IITs have been subsequently accepted by Ivy League schools, he posited that there were many applicants who were nearly selected and who could handle the coursework and benefit from alternatives in high-quality education. Offering additional direct incentives for investment in education and research in India would therefore be a very proactive, helpful step.

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India's Changing Innovation System: Achievements, Challenges, and Opportunities for Cooperation: Report of a Symposium Innovation drives the growth and success of companies as it does of nations, and if there is going to be innovation in the product sector of software companies, more computer science graduates will need to come out of these IITs than is the case currently. In view of the prevailing shortage of skilled people and of the number of both U.S. and Indian companies hiring science talent, the supply side demands immediate, collective attention. “We know the talent exists,” he said; “they just don’t have the ability to go to school.” Furthering Exchange of Skilled Personnel Highly desirable as well is additional “joint level ‘measurable’ research” with support from U.S. corporations, especially focused around the educational institutions. Mr. Shriram said that he is urging Google to partner with more institutions of higher learning in India. Whether this strategy will ultimately reward Google by swelling its ranks with skilled employees is open to debate, but it is certain that this initiative will nurture talent in India by providing promising researchers the opportunity to take their work further. At the same time, more U.S. students should be invited to spend a year in the Indian environment, either with U.S. corporations that are based in India or with Indian firms. Although this is already becoming a trend, it merits encouragement because it is an excellent way to augment communication between the two countries at the grassroots level. To conclude, Mr. Shriram emphasized that innovation without execution represents wasted effort, evoking the example of Xerox PARC in the 1970s and 1980s. Some of the brightest Ph.D.s in the United States worked at PARC, and a great deal of innovative thinking took place there. Yet, while the innovation from PARC benefited the country as a whole through the products of other firms such as Apple Computer and Microsoft, Xerox itself never benefited sufficiently from its investments in PARC. It is therefore important to try to ensure the existence of a virtuous cycle from innovation to successful product to profit, with the profit then plowed back into innovation and, perhaps, education and research. It is this successful cycle that fosters more innovation. Dr. McCormick thanked Mr. Shriram for providing a fine overview of Google’s activities, in particular those related to India. The company’s global reach had become apparent to him several weeks earlier during a visit to China. A senior executive of a Chinese company began asking, in the course of a lunch, some very detailed questions about the U.S. Constitution, how it had been developed, the history of the Bill of Rights and other amendments, among various other details. Taken aback by these questions, Dr. McCormick asked: “How did you become so conversant in this topic?” The answer: “I’ve studied this in great detail on Google.” The extent of Google’s reach was significant, therefore, and its implications much broader than often imagined.

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India's Changing Innovation System: Achievements, Challenges, and Opportunities for Cooperation: Report of a Symposium DISCUSSION Dr. McCormick, remarking that many interesting topics had been raised by the panel’s three speakers, then proposed to devote the 15 minutes that remained of the session to questions from the audience. Developing India’s Information Infrastructure Harvey Newman, a professor of physics at Caltech, said that he wished to pose a question to both Mr. Ahluwalia and Mr. Shriram, but he felt that it first needed to be put into context. Dr. Newman said that as chair of the Standing Committee on Regional Connectivity, which deals with global collaborations, he has worked on the issues of network development, grid development, and digital divide in many different regions of the world. Since the focus on India has been very strong of late, he said that he noted with specific interest Mr. Shriram’s statement that there soon would be a great deal of network traffic and communications involving India and China. This had also called to his mind a number of recent speeches by India’s president, A. P. J. Abdul Kalam, articulating a vision of a grid for a billion people in India. Despite these optimistic predictions, however, India remains about 10 years behind the more advanced regions of the world, and its transition to modern telecommunications has yet to begin. Dr. Newman wished to hear Mr. Shriram’s perspective on this issue, as well as Mr. Ahluwalia’s view on the next steps to be taken in developing this infrastructure, which would provide students and researchers throughout India with access to information. Responding first, Mr. Shriram said that many in India’s private sector are already working on broadband infrastructure. A major example is Reliance Corporation, which is putting in a backbone fiber network. However, he warned against looking at India through a U.S. prism, saying, “They don’t have the exact infrastructure that we have.” The last mile in both India and China is likely to largely go wireless, permitting the bypass of the entire generation of copper-wire technology, with mobile phones likely to provide the initial vehicle. In those two countries the phone is currently incorporated in the PC for many communications, both text and voice, and multimedia messaging services might later be added. From 4 million to 5 million new mobile connections were being made each month in India, and even if not all are on the high-speed network represented by the GPRS platform, in time they would be. Mr. Ahluwalia, endorsing Mr. Shriram’s viewpoint, stressed India’s awareness that it is “absolutely crucial” to develop its telecom infrastructure and make available ICT connectivity. Indications from the previous five years have all been very positive, and although there is indeed less connectivity than the country would like, current talk is of possible increases in multiples. Besides the private-

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India's Changing Innovation System: Achievements, Challenges, and Opportunities for Cooperation: Report of a Symposium sector players, active government-sector companies are involved, and they are in fact rolling out quite a substantial network. The deputy chairman shared Dr. Newman’s perception that the process needed to be accelerated if India is really to catch up and said he is unaware of “any major policy hassle” holding up connectivity, although “individual bits and details” might have to be overcome. Expanding Capacity in Higher Education Anant Narayanan, introducing himself as an alumnus of an IIT and a lawyer, said that in the former role he had been involved to some degree in discussions relating to the expansion of higher-education capacity as alluded to by Mr. Shriram. Speaking on behalf of his fellow IIT alumni and of those harboring good wishes for India and its future, he said all realized that a substantial expansion in capacity was desirable but at the same time were greatly concerned lest undue speed result in dilution of quality or unevenness of output. In view of Google’s obvious talent for rapid growth, he asked whether Mr. Shriram saw a way to accomplish the expansion quickly. He also requested Mr. Ahluwalia’s opinion on the issue of liberalization in the educational sector, which in his own view might offer an alternative solution. Mr. Ahluwalia answered that there was no doubt of the need for a massive expansion of India’s education sector, adding that this major issue has been raised explicitly in the discussion document recently sent by the Planning Commission to the states and is to be debated over the next year or so. In the Commission’s view, the expansion of existing publicly funded institutions, such as the ITTs, should be explored and the sector opened to private investment. There are no policy bars to privately funded, nonprofit institutions that, in addition to covering their costs, might generate a surplus that could then be reinvested. However, the deputy chairman had heard it said that regulations have kept the liberalization from being truly effective, an opinion he was inclined to accept. The next step is to look at the possibility of changing those policy elements that people wishing to set up new institutions had found restrictive. Not all the engineering schools or even the business schools in India are publicly funded, so the extent to which the restrictions were a problem and whether irritants might be removed by clarifying policy could be learned from these institutions. Applying Google’s Innovation Model to Agriculture Alok Sinha, a professor of mechanical engineering at Penn State University and an alumnus of IIT Delhi, asked whether Mr. Shriram’s innovation models would be applicable to the challenges facing India in agriculture, social infrastructure, and other fields, as outlined by Mr. Ahluwalia. He specifically asked for comments from Mr. Shriram on the potential impact of flat management structure on innovation in those areas.

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India's Changing Innovation System: Achievements, Challenges, and Opportunities for Cooperation: Report of a Symposium Mr. Shriram demurred when it came to the application of Google’s practices in other contexts. He explained that he and his colleagues at the company “thrive in an environment of constructive chaos.” He cautioned, however, that the chaos must be kept “within reason,” which is accomplished by ensuring that project teams are small and that results are measurable and receive close attention. A weekly review of the company’s “Top 100 Projects” makes progress visible “on a dashboard” at the CEO and management levels. He speculated that it would be somewhat harder to achieve this on a much broader basis, as represented by agriculture or by India’s other main areas of challenge. Mr. Ahluwalia moved the audience to laughter with the observation that “agriculture, as an industry, actually has the flattest management structure: It’s a lot of private farms, and they’re all reporting to themselves.” Then, addressing what studies have revealed as a “huge knowledge deficit” in the sector, he stated that Indian farmers could in fact be provided much better access to information than has been done traditionally. Moreover, the importance of doing this was increasing as farming moves toward objectives beyond simply growing enough food. “The first Green Revolution was about wheat, then rice,” he recalled. “Today’s Green Revolution is going to be about farmers growing a multiplicity of products.” High-Tech Solutions for Farmers and Fishers Now providing farmers with electronic access to information were India’s Krishi Vigyan Kendras, or Farm Science Centers, one of which the minister had visited one month before. This center, which serves a district of roughly 1 million people, hosts a Web site offering information about the kinds of crops growing in the area; diseases to which particular crops are vulnerable, with pictures to help identify the diseases; and recommendations formulated according to local conditions.4 Those sending in questions by e-mail would receive answers based on consultation with the agricultural research university in the area. Weather information, the single most important kind of information that Indian farmers need, is also posted on the Web site; it comes not only from the Indian Meteorological Service but also from some U.S. forecasting centers. The extent to which farmers are making use of these services remains a question, but the deputy chairman pointed to the likelihood that connectivity improvements, both those in progress and those planned, would increase their opportunity to do so. Noting that Google had logged many hits of late from people in India looking for the truth behind the Da Vinci Code, he expressed his hope that Indian farmers would soon be retrieving information useful to them from such information storage and retrieval devices. 4 The Krishi Vigyan Kendra’s Web site can be accessed at <http://aimlab.aces.uiuc.edu//diglib/india/kvk_index.htm>.

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India's Changing Innovation System: Achievements, Challenges, and Opportunities for Cooperation: Report of a Symposium This use of technology to reduce the knowledge deficit constituted a sea change, according to Mr. Ahluwalia, who said he could offer any number of examples but would limit himself to one more. In Pondicherry, there had been strong resistance to modernizing fishing boats on the grounds that it would disrupt traditional livelihoods. Now, however, the Indian Remote Sensing Satellite provides information on temperature conditions in the Indian Ocean—and, from there, to map onto where the fish were likely to be. As a result, fishers there underwent a “sudden change in attitude.” They next realized that in order for them to capitalize on this information, they would have to invest in better boats. “Major changes are taking place in the lives of ordinary people, driven by what is otherwise very high technology,” he remarked. And while the problem of access was as yet unresolved, the importance of finding a solution had become obvious. Establishing U.S. Campuses in India Vasant Telang, an associate provost at Howard University, asked about the panelists’ reaction to the idea of establishing campuses of U.S. universities in India at which Indian students would follow the U.S. curriculum and receive a U.S. degree. Noting that his own academic background was in pharmacy, he observed that the United States is facing a tremendous shortage of pharmacists. Conversations with facilitating agencies, he said, had brought forth no objection. Mr. Ahluwalia replied that although regulatory approval would be required to establish a degree-granting institution in India that recruited Indian students, it was unclear that merely locating a university campus in India would require any permissions. If what Dr. Telang had in mind was that an Indian student, after being accepted by a university in the United States, could then opt to go to a campus of that university that was located in India, then his guess was that no regulation would apply because that would be equivalent to renting space or putting up a building. However, since no such proposals had yet come in, he cautioned, a definitive answer called for further checking. Opening Collaboration to Entrepreneurs Anand Das, a former Silicon Valley engineer who spent the previous five years in the employ of the U.S. government, asked how U.S.-based entrepreneurs could participate in programs associated with the bi-national cooperation being discussed. He noted that some agencies, in view of the specialized nature of federal procurement processes, maintained program offices that dealt specifically with entrepreneurs. Dr. McCormick stated that, of the numerous forums trying to increase collaboration between entrepreneurial communities in the two countries, he is most familiar personally with the U.S.–India High Technology Cooperation Group. Although it had involved mainly large companies at the outset, this group’s focus

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India's Changing Innovation System: Achievements, Challenges, and Opportunities for Cooperation: Report of a Symposium has been evolving over the previous year to include start-ups, primarily in the life sciences and biotechnology. Its agenda for the next year and subsequent years emphasizes bringing in entrepreneurs in other areas: venture capitalists, U.S. private equity firms seeking opportunities in India, and similar Indian firms seeking opportunities in the United States. That forum, in which hundreds of business people from both countries had been engaged, had proved a constructive one. Dr. McCormick concluded the session by saying that the number of questions and the line of questioners that remained at the microphones were indications of its success. Noting that the panelists would remain in the auditorium during the break to take further questions, he asked the audience to join him in expressing appreciation for what he termed a terrific discussion.