India's Changing Innovation System Achievements, Challenges, and Opportunities for Cooperation: Report of a Symposium (2007) / Chapter Skim
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I Introduction
I Introduction
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India is changing from a locus of lowcost 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.
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dress by David H McCormick, Under Secretary of Commerce for Industry and Security at the World Economic Forum 2005 Summit on "India and the United States: An Emerging Global Partnership." He notes that changing geopolitics following the Cold War, the expansion of global markets, the information and communications technological revolution, and India's recent economic growth and economic openness are the foundations of a growing U.S.–Indian strategic partnership.
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Public policies to enhance pro-growth innovation include improving higher education and creating new public–private partnerships as well as pursuing broad economic reforms that create the appropriate environment for investment in and commercialization of research. Bolstering inclusive innovation includes efforts to harness creative ef forts for the poor; to promote, diffuse, and commercialize grassroots innovations; and to help the informal sector better absorb existing knowledge.c aSee Richard R. Nelson and Nathan Rosenberg, "Technical Innovation and National Systems," in National Innovation Systems: A Comparative Analysis, Richard R. Nelson, ed., Oxford: Oxford University Press, 1993, p.
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is an example of the type of cooperation that the United States hopes to encourage under this S&T framework. He also cited, as a potential turning point in bilateral relationship, the U.S.–India nuclear agreement, which foresees research cooperation in exploiting the potential of nuclear energy more safely.5 INDIA'S CHANGING ECONOMIC POLICIES India's new dynamism, and hence these new opportunities for bilateral collaboration, are widely seen to have begun with the policies of economic 4 For a broad overview of the evolution of the U.S.–India strategic partnership, see Teresita C
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liberalization started in the early 1990s and supported by successive national governments. Montek Singh Ahluwalia, the deputy chairman of the Indian Planning Commission, and a key architect of India's economic reforms, noted that India's economic liberalization reflects the premise that the private sector is the critical driver of growth.6 By promoting a competitive environment within India, the dynamic effects of the private sector have emerged, where foreign firms are increasingly allowed to participate in the Indian economy, and where private Indian firms are encouraged to compete internationally through new investments and acquisitions of offshore companies.
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Although the country has made great strides as an emerging knowledge 7 For a sector-by-sector analysis of economic reforms in India, see Montek Singh Ahluwalia, "Economic Reforms in India Since 1991: Has Gradualism Worked? " Journal of Economic Perspecties, 16(2)
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28, 2006. 15 For an examination of factors underpinning the variations in growth within India, see Montek Singh Ahluwalia, "State Level Reforms Under Economic Reforms in India," Working Paper No.
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See also Carl Dahlman and Anuja Utz, India and the Knowledge Economy: Leeraging Strengths and Opportunities, Washington, D.C.: World Bank Institute, 2005. 20 For a discussion of polices for India to capitalize on its overseas diaspora, see Devesh Kapur, "Indian Diaspora as a Strategic Asset," Economic and Political Weekly, 38(5)
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Such entrepreneurship can already be seen in India's information technology, pharmaceutical, and automotive component industries, which are taking significant steps to improve manufacturing quality, increase the level of internal R&D, and develop global strategies for competition. INDIA'S CHANGING INDUSTRy Indian industry has made rapid progress since the economy was liberalized in 1991.
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focus on increasing the contribution of manufacturing to India's GDP from 18 percent to 30 percent over the next 10 years. To this end, the NMCC has called for policy measures that improve the climate for innovation, including a technology development fund for industry, improvement of the science education system, as well as programs to promote the commercialization of advanced technology products.24 A Turnaround in Manufacturing Quality This agenda for international competitiveness through enhancement of manufacturing innovation and quality is also being promulgated by the leaders of Indian industry.
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In the pharmaceutical sector, Dr. Swati Piramal noted that her company, Nicholas Piramal India Limited, is pursuing an ambitious strategy of growth through strategic acquisitions, alliances, and joint ventures that have brought it in partnership with many international firms including Allergan, Aventis, and Roche.
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noted that Tata's vision of making a $2,000 car for the Indian mass market calls for the company to develop not only an innovative automobile but also an innovative business model to bring this vision to reality. This business model would "not only use the engineering talent in India, but leverage the engineering talent in India for a global business market." When TACO was formed in 1996, the cutting-edge technologies required to produce advanced automotive components were not found in India.
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Chugh noted that his company is committed to building a deep engineering and R&D base that would enable it to develop new technologies and innovative solutions for customers around the world. Together, these three presentations by representatives of Indian industry underscore the global reach, current accomplishments, and aspirations of India's leading private corporations.29 U.S.
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Finally, Eli Lilly's Robert Armstrong noted that India's embrace of intellectual property rights protections have not only created value for domestic industries such as Nicholas Piramal but also have enabled multinationals such as Lilly to consider undertaking high-end research and development activity in India. He noted that while the decision to outsource routine research functions to India was initially motivated by expectations of cost savings, Western pharmaceutical companies such as Lilly soon discovered that "embedded in that cost reduction is a lot of innovation in processes and focus on delivering products," which effectively reduces not only cost but the time to bring new products to market.
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As gauged by the Science Citation Index, the number of basic science papers published by CSIR researchers between 2001 and 2005 rose from 1,700 to 3,018 with one in six Indian papers published in internationally peer-reviewed journals coming from authors employed by CSIR's laboratories and institutes. Also, the number of U.S.
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As Dr. Mashelkar and others noted, expanding India's infrastructure for higher level technical education and preparing more students for the demands of the global workplace is a national priority.
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that, in the absence of meaningful competition, shunned innovation, though he affirmed that this attitude is now changing. Liberalizing Education Exploring IIT's future and the scope for India to expand the size of its globally competitive workforce, Professor Indiresan identified several constraints.
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Expanding Opportunities for Quality Education Finally, Professor Indiresan noted that India's elite technical institutions lack adequate competition at their level, which leads to a dulling effect on these institutes and universities in innovating their own structures and programs to meet the changing demands of globalization. India's higher education system is two-tiered.
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An important theme of the conference reported in this volume is that the United States and India can both gain from a stronger innovation partnership and that there is significant scope for cooperation across many areas. Strengthening Global Research Collaboration The United States sees cooperation to improve India's knowledge infrastructure as enhancing its own innovation potential.
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and Indian scientists together. The International Center for Materials Research at the University of California at Santa Barbara is, for example, strongly linked with leading Indian institutions including the Nehru Center, the Indian Institute of Science, and the Indian Institute of Technology in Mumbai.
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"We are going to public–private partnerships in a big way," he declared, "giving money to small- and medium-scale enterprises to make sure that they do new kinds of research for new products." CHANGING INDIA'S INNOVATION SySTEM Economic liberalization has awakened Indians to their nation's potential, and particularly its capacity to innovate. This innovation potential is in no small part a result of major national investments made by India's postindependence leadership in setting up the Indian Institutes of Technology and the national laboratory system, among other core institutions.
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Finally, as Minister Kapil Sibal observed, changing India's innovation system to meet India's development needs calls for enhanced cooperation with the United States, particularly given the growing interdependencies among the two large knowledge economies. The United States can play a constructive role in facilitating the development of Indian capabilities by continuing to expand cooperative scientific exchange, demonstrating the value of a policy framework that facilitates the development and expansion of globally competitive R&D infrastructure, and, not least, by sharing best practices on innovation policies needed to unleash India's enormous pool of talent.
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