Innovation is key to economic growth. The modern world was created by the process of ‘creative destruction’ represented by continuous cycles of innovation, where every new cycle was an improvement over the previous. Time and again, innovation has helped humanity overcome its gravest challenges, with Covid being the most recent example.

In the world of innovation, India has emerged as one of the best performers in the last decade or so. In the 2022 report of the World Intellectual Property Organization (WIPO), India ranked 40th in the Global Innovation Index (GII), an improvement of six spots from that in 2021 and a massive jump from 81st rank in 2015. WIPO highlights that China and India are emerging as global innovation powerhouses.

The latest report on GII also notes that 19 economies performed above expectations relative to their level of development, and India was one of them for the 12th year in a row since 2011. India is one of the largest positive outliers in the relationship between GII score and GDP per capita (PPP$), with a much higher innovation score compared to peers with same development levels.

Among BRICS nations, only China, ranked 11th, performed better than India; Russia ranks 47th, Brazil 54th, and South Africa 61st. India continues to lead the world in the ICT services export indicator (1st) with high ranks in other indicators like venture capital recipients’ value (6th), finance for start-ups and scale-ups (8th), graduates in science and engineering (11th), labour productivity growth (12th), and domestic industry diversification (12th).

India’s continuous improvement has not been a mere coincidence. It is the outcome of increased policy focus on ‘innovation and entrepreneurship’. Many programmes have recently been initiated to directly or indirectly boost innovation, including Atal Innovation Mission, National Initiative for Developing and Harnessing Innovations, PRAYAS, Digital India, Startup India, Technology Incubation and Development of Entrepreneurs 2.0, LEAP Fund, etc.

With the help of these initiatives, an ecosystem has been created not just for innovating but for putting new ideas to commercial use too.

Along with these, India has also taken steps towards reforming the biggest incentive for innovation — Intellectual Property Rights — by adopting the National Intellectual Property Right Policy 2016, which aims to adopt global best practices.

These reforms have resulted in the number of patent applications going up from 45,444 in 2016-17 to 66,440 in 2021-22, and this has been accompanied with an increase in the share of residents in the applications from around 30 per cent in 2016-17 to 44.5 per cent in 2021-22. Filing of trademark applications increased from about 2.8 lakh in 2016-17 to 4.5 lakh in 2021-22.

Still some way to go

Though India is climbing up the ladder fast, it still lags behind the US, China, Singapore and various European countries. A recent EAC-PM working paper noted that patent applications in India were merely 4 per cent of China’s 15 lakh and 9.5 per cent of the US’s 6 lakh applications in 2020. The paper notes that India needs a much larger patent office along with some process simplifications and technological improvements.

In terms of R&D expenditure too India lags, with gross expenditure on R&D at 0.7 per cent of GDP as compared with Brazil’s 1.16 per cent, Russia’s 0.98 per cent, South Africa’s 0.83 per cent, China’s 2.14 per cent, US and Germany’s 3 per cent. Bulk of the R&D expenditure is done by the public sector, unlike other countries where the private sector also plays an important role.

Addressing the gaps will further improve India’s position and make it an innovation powerhouse globally.

Arora is Deputy Director, Economic Advisory Council to PM, and Dwivedi is Assistant Professor (Economics), National Law University Delhi. Views are personal

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