When ideas are in hiding

Academics invariably attribute national competitiveness and economic growth to innovation-enabling policies. Empirical evidence supports their contention: Countries that foster an environment that assiduously encourages innovation enjoy sustained growth. The reasoning is that in such countries, science and technology take centre-stage in economic activity, leading to a steady flow of patentable inventions that provide the impetus for long-term growth.

Arguably, patent count and application trends would indicate how effective a country’s innovation policies are. India’s patent output raises doubts about its innovation support system. Data from the World Intellectual Property Organisation (WIPO) show that in 2015, just about 46,000 patent applications were filed, and 6000 patents were awarded. Compare that to China’s 1.1 million patent applications and 360,000 awards!

China leads other nations in inventive activity: generation of new ideas, patent applications, and patent approvals. At present, 1.4 million patents are in force in China. For India, that number is 47,112 — ironically, 80 per cent is owned by foreign firms. Equally discomfiting is the mediocrity of India’s patent applicants. No Indian entity has ever made it to the ‘world’s top 100 applicants list’ — in the last five years, 20 Chinese have made it to that list.

The Global Innovation Index, 2017, ranks India 60th out of 127 economies (China at 22). Clearly, India’s innovation performance is abysmal. Proposals for strengthening India’s inventiveness have been made by public policy experts, notably, The World Bank and WIPO. Suggestions fall into three broad categories: (a) create and support world-class universities, (b) cut bureaucratic red-tape, and (c) foster an entrepreneurial culture.

India has a handful of quality universities. Regrettably, few have distinguished themselves globally in basic/applied science, or in the creation and transfer of fundamental knowledge. Most are rated at or near the 500th place globally in teaching effectiveness and intellectual contributions. But consider China — two universities among the top 30. And, 12 have a large number of technological patents pending, relative to other applicants, worldwide.

Recently, Prime Minister Narendra Modi announced plans to support 20 universities with a ₹10,000-crore fund. Universities are short of funds, and the proposed help should get the talent and technologies they need to transform themselves. But funds are one influential factor in university performance — equally, perhaps more, important is leadership. The curiosity, critical thinking, and collaborative culture that are fundamental for knowledge-creation can only be engendered by enlightened leadership. It is imperative that Indian universities explore recruiting proven leadership through a global search of leading educational institutions.

India’s bureaucracy is notorious for its red-tape. World Bank ranks India 100th out of 190 economies on the Ease of Doing Business — Nepal is at 105 and Bhutan at 75. Government data indicate that it typically takes 5-7 years for a patent application to be examined and approved. Tardiness aside, the process is also expensive. To speed up the process, India amended patent rules a year ago, allowing startups and entities filing a patent application first in India to receive rapid approval. An added incentive to the scheme is a dramatic reduction in fees. While the move is laudable, the key is in its effective implementation which is a challenge, given India’s proclivity for rigmarole in decision-making. Appropriate control mechanisms may have to be designed and employed.

Three decades ago, India adopted market-oriented policies to guide economic growth. The belief was it would usher in an enterprising business climate with a robust capitalistic ethos. As expected, the move positively impacted new business formation: in 2015, India emerged third, globally, in business startups. Regrettably however, 90 per cent of these seem to fail invariably in the first five years. Reason? Most Indian startups are run-of-the-mill, mom and pop, ventures — not rooted in path-breaking technologies with potential to become large-scale enterprises.

Propensity to take risk is essential for pioneering new ventures, especially technology-driven ones. But culturally, Indians are risk-averse. Students pursuing higher education in science or technology have employment prospects in mind, not invention or its commercialisation. Risk-aversion extends to mainstream technology firms as well that must invest in R&D to stay competitive.

There are relatively simple solutions to this problem. Liberal venture capital funding, achieved through tax laws, may spread the risk thereby encouraging pioneering activities. More intricate and long-term solutions will require strengthening entrepreneurship education as a field of graduate study. A practicum in this study may include exercises oriented toward personality change.

India has the potential to be highly innovative. Enabling policies and infrastructure have to be fine-tuned to exploit this potential.

The writer is a professor of business policy and strategy, Baruch College, City University of New York

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