We owe a lot to the Indians, who taught us how to count, without which no worthwhile scientific discovery could have been made.

– Albert Einstein

Institutional infrastructure

The foundation for India’s innovation was probably laid as early as five decades ago. In the early 1950s, India built its science and technology assets by setting up labs, research institutions and institutions of higher learning. It also embarked on a space programme and a nuclear research programme. The motivation was self-reliance as much as nationalism in the era after independence. The real dividends of those investments were realised when private industry – traditionally known for its ability to commercialise ideas far quicker than the public sector – was freed to create opportunities to harness this talent pool that were otherwise being lost to other nations.

Today institutions such as the Indian Institute of Science (IISc) in Bangalore and labs like the National Physical Laboratory in Ahmadabad are part of 800-plus R&D centres, and 350 universities and institutions that employ 7000-plus PhDs in research or academic positions. This knowledge infrastructure for higher learning now has the capacity to churn out 300,000 engineers, 3 million graduates, 700,000 postgraduates and 1500 PhDs in the scientific stream each year, making it the third largest scientific talent pool in the world.

India’s institutional assets alone were a considerable draw for multinationals to invest in and operate research centres in India. For example, General Electric’s (GE) R&D in India is on par with the world’s best. Products developed in India, such as those related to diagnostic imaging, ultrasound sensing and advanced plastics, help GE compete worldwide. By being on the ground in India, GE is able take advantage of India’s vibrant innovation infrastructure, namely national laboratories, research institutes, industrial R&D labs, universities and a strong pipeline of science graduates. To capture these benefits, GE has invested over $80 million in the John F. Welch Technology Center in Bangalore as of 2006. This facility, which houses state-of-the-art laboratories, employs over 2500 engineers and scientists. To date, the Welch Center has filed for over 370 patents, 44 of which have been awarded.

Industry-academia collaborations

Traditionally, industry-academia collaborations have been at the backbone of innovation. Such models are not only becoming pervasive they are also starting to produce rich results. A study from the Centre for Studies in Science Policy at Jawaharlal Nehru University shows that over 50 of India’s 350-odd universities are active in academia-industry liaisons. The interaction between academia and business can take many forms, for example start-up companies by academics, consultancies, joint ventures between commercial and academic organisations, and even greenfield projects that require research sponsorship but the outcome of which is not clear.

For example, IISc has about 400 collaborations, its partners ranging from Cadila (pharma) to HFCL (telecom). The Indian Institute of Technology (IIT)-Delhi campus hosts labs for, among others, IBM, Tata and Motorola. Samsung Electronics is working with IIT-Delhi to design new colour televisions, washing machines and air-conditioners to suit the Indian market. Samsung has also set up a consumer laboratory at IIT, where industrial design students will work on sponsored projects.

Of these collaborations with industries, the most popular and successful include Shantha Biotech, a collaboration at the IISc and IIT-Delhi. Shantha Biotech funds research in the All India Institute of Medical Sciences, New Delhi, and the Centre for Cellular and Molecular Biology, Hyderabad. Some of the other successful models include collaborations from scientists from the Amritsar-based Guru Nanak University who have been providing quality control consultancy to textile and agro-based units, including food giant Nestle. Dibrugarh University has set up a world-class research facility in petroleum technology along with the Oil and Natural Gas Corporation (ONGC) and Indian Oil Corporation (IOC), which also provides technically qualified local manpower to ONGC and IOC. Firms like DuPont have had profitable alliances with national research laboratories under the Council for Scientific and Industrial Research (CSIR) since 1994. DuPont Textiles and Interiors and the Pune-based National Chemical Laboratory have extended research alliances for further terms.²

The ongoing successes of industry-academic collaborations have led large academic institutes to create specific business development initiatives and departments to support these. IIT-Delhi’s Foundation for Innovation and Technology Transfer, set up in 1992, was the first. It is seen as a prototype and provides funding and infrastructure support to a start-up for up to a year. Support for institutionalised innovation is beginning to yield results. For example, in 2001, four scientists from the IISc proved they could successfully explore new frontiers beyond the realms of pure science. With an initial contract of US $340,000, they launched Strand Genomics (now Strand Life Sciences), India’s first biotech company spun off from an academic institute. Today Strand Life Sciences has global operations from San Francisco that started with an investment of US $5 million and 100 employees offering solutions in data mining, predictive modelling, computational chemistry, software engineering and research biology, and other tools for research biology, chemistry and drug discovery.

Some of these alliances have re-written Indian scientific history. In Hyderabad, a contract between Shantha Biotech and the Center for Cellular Molecular Biology (CCMB) led to India’s first recombinant DNA-based vaccine, Shanvac for Hepatitis B in 1997, transforming India’s medical biotechnology industry. The vaccine, developed within 7 years of initial research, puts India among one in five countries to do so. Midas Technologies, incubated by IIT Chennai’s Tenet Group, proved that cheap rural connectivity could be married to a sound business plan. Midas developed the wireless local loop (WLL) technology, now adopted by many telecoms companies.

National research programmes

The National Programme on smart materials is a joint programme run by DRDO (Defense Research and Development Organization), through the Aeronautical Development Agency, Department of Space, Department of Science and Technology, Ministry of Information Technology and CSIR. Currently, there are about 30 research efforts funded across India under this programme, in places like IIT, national laboratories and even smaller universities. A related development is the development initiative for Smart Aircraft Structures (DISMAS) executed by the Aeronautical Development Agency. A five-year project that was sanctioned by DRDO in April 2001 at a cost of US $4.3 million, DISMAS covered smart health monitoring, vibration and noise control, active shape or morphing, and conformal antenna. India’s Light Combat Aircraft project was then identified as the platform of choice for developing and testing these concepts.

Corporations in India have begun investing in R&D. Indian pharmaceutical companies doubled their R&D spend to 8 per cent of revenues in 2005. In 2003/4, a total of 855 drug patents were filed by Indian companies, up from virtually zero 10 years ago, according to BusinessWeek.³ India today has over 50 drug research centres. Nicholas Piramal, for example, filed 14 patents for new chemical entities from India between January and June 2006. Underlining the new confidence of Indian industry in the same year, the company acquired from Pfizer a 450-employee facility in Morpeth, UK, providing Nicholas Piramal access to Pfizer’s global sourcing network. This acquisition is consistent with Nicholas Piramal’s intent to become a global leader in custom manufacturing across the pharmaceutical chain.

Grassroots innovation is a critical component of India’s innovation story. In 2005, the Indian government set up the National Innovation Foundation (NIF) under the leadership of the CSIR. The NIF serves as a facilitator for nurturing innovation at the grassroots level and has a national registry for capturing grassroots innovation and traditional knowledge; it has set up a micro-venture innovation fund for individuals who have no bank account and who cannot produce any balance sheet and yet have innovations that warrant investment of risk capital. Some of the ways that the NIF has encouraged innovation include a national innovation competition, for which the winners have included an eighth standard dropout, who developed a complex robot, a farmer who developed a unique variety of cardamom and an illiterate individual who developed a disease-resistant pigeon pea variety.

Government commitment

The current Indian Prime Minister, Dr Manmohan Singh, made a statement at the recent appointment of Sam Pitroda as his advisor on infrastructure innovation and information that the next decade will be a decade for innovation and infrastructure. In the last two years, investment in science and research has grown 200 per cent and it will double in the next few years. Investment in science and technology has doubled to 2 per cent of GDP. Investment in higher education has risen from 3.5 to 6 per cent. US Patent and Trademark Office (PTO) data show that the number of patents granted to India has grown eight-fold in the last 10 years. In 2008 India was granted 634 patents, and many more were filed. By 2009, Infosys alone filed for 200 patents.

In a well-endowed innovation system, talent is just one key part. What India lacked was investment in building an ecosystem where not just development of the generation of IP can take place but also its protection and effective commercialisation. In the 11th five-year plan, the government doubled R&D investment from 1 per cent of GDP, but still short of the 3 per cent of GDP that most developed countries spend. There are other areas of research and development being undertaken that are of national importance. In 2001, the CSIR in partnership with the government’s Department of Science and Technology invested US $60 million in the largest post-Independence knowledge network called the New Millennium Indian Technology Leadership Initiative (NMILTI). NMILTI is probably the first attempt at building the ecosystem that India lacked. It aimed to bring together industry and academia to focus on innovation in 14 niche areas, including nanotechnology, climate modelling and fuel cell power. The vision is to make India a world leader in these areas. NMITLI is already operational and is the largest private-public R&D partnership in India. Today, NMITLI includes 57 groundbreaking projects involving 80 industry partners, 175 R&D institutions and 1700 researchers. In 2009, the government expanded the scope of the programme by adding budgets of US $155 million in the 11th five-year plan. The programme will also benefit from newer public-private partnerships for innovation. These measures include funding R&D projects along with industry on an equal sharing (50:50 initiative), co-financing of projects with venture capital funds, setting up of NMITLI innovation centres in selected areas for long-term effort, support to post-NMITLI projects and acquisition of early-stage relevant knowledge/IP to develop portfolios.

Impressive results

An analysis of the US PTO data released in December 2008 showed that the number of utility patents awarded to India began taking an upward swing from 1996 onwards, with inflexion points in 2001, 2005 and 2007 (Figure 6.1). The impact of globalisation began to show within 5 years. Subsequent inflexion points are closer together. India has had a compound annual growth rate (CAGR) of 22 per cent in terms of patents awarded – second only to Malaysia (25 per cent) on a global basis.

Although the US holds about 50 per cent of the 100,000–160,000 patents granted by the US PTO annually worldwide, that percentage has been steadily declining. For instance, in 1995, 55 per cent of all patents granted were to firms and institutions on American soil. That figure declined to 52 per cent in 2005 and stood at 48 per cent in 2008 (Table 6.1).

Although the rate at which the number of patents granted from the US and the most competitive nations – Switzerland, Sweden and Denmark – remained at between 2 and 5 per cent CAGR for the last 14 years, China and India have been granted patents at much faster rates: 18 and 22 per cent, respectively. But the number of patents being awarded to Switzerland, Sweden and Denmark, who have been classified as among the top five most competitive nations by the World Economic Forum, have fallen sharply. The US alone was granted around 77,500 patents in 2008 (Figure 6.1).

If the current rates continue for the US, China and India, India and China will have more utility patents than the US in 25 years. In essence, in the next 25 years, the US, India and China will not only be the largest economies but will also be the most innovative nations in the world. If India’s post-independence science and technology drive established a science foundation, what globalisation has achieved for Indian innovation is an economic foundation – a strong economic foundation upon which the next wave of innovation-led growth can be seeded, funded and grown. The numbers show that trend. The number of patents filed in the last five years have grown dramatically (Table 6.2).

Gaps in India’s innovation system

Availability of manpower has always been India’s strength as much as it has been its curse. With over 300,000 engineers graduating each year, India sits on a goldmine of human capital. However, the issue of global leadership is not only about numbers. It’s about what they produce and the efficiency of their output. With only 7000 engineers graduating each year, Israel, with a population of 7.3 million, has over 100 innovative companies listed on NASDAQ. Numbers can be misleading too. As an aside, India has over 250 million cattle – the world’s largest cattle population Yet India is not even a player in the global dairy business. India needs to assess the impact and scale of its contribution to the world as perhaps the television (1927), jet engine (1930) or the xerox machine (1938) have influenced human life. There is much to be done for India to become a significant player in innovation-led growth.

The mindset that improvements in productivity can be achieved by throwing people at the problem needs to be shifted towards cheaper, better and faster outcomes that can be achieved by the use of technology or improved processes. Some of these mindsets are deep rooted. For example, India had the world’s biggest cotton industry in the seventeenth and the eighteenth centuries. David Landes, in Wealth and Poverty of Nations, described the Indian cotton industry as being locked into a mode of production that was labour intensive.⁴ If output needed to be increased it was simply a question of hiring more people, although in practice cotton was a cottage industry of self-employed craftsmen. The spinners and weavers had no interest in technological innovation and neither did Indian middle men merchants. The East India Company did not force machinery and new methods on reluctant Indian workers when to have done so would have been seen as acting against the interests of the workers and mill owners in Britain. Landes notes that innovation in India took place within a conventional manual context and large conceptual and social differences separated machines and hand tools. This continues to be an impediment. The human versus machine challenge impedes productivity in many sectors in India. Innovation should by-pass the productivity paradox and leapfrog into changing the way things are done rather than improving them. So the future of India’s growth should not be a head count game.

The other challenge for India is to coordinate research in strategic areas where a national presence is required and where research labs often work in isolation. The area of smart materials⁵ is one such area where there has been much focus to build a national innovation network. Understanding and using these advanced materials in new product development efforts require labs with differing and complementary competencies to come together in partnership. For example, design centres for smart materials such as the Solid State Physics Laboratory, Delhi, IISc, Bangalore, IIT- Kharagpur, IIT-Bombay and IIT-Madras need to work with manufacturing centres such as Semiconductor Complex Ltd, Chandigarh (which has a national foundry for micro-electro-mechanical systems devices), and Bharat Electronics Ltd, Bangalore (which is also being augmented for such purposes). The logistics of engaging in smart materials research in India is a perfect example of the kind of network and infrastructure required.

The technological and innovation challenges faced by economies at different stages of economic development are different. In India’s case, a one-size-fits-all approach will not work. As I explain in Chapter 9, the country needs to look at national innovation as a portfolio of initiatives addressing the needs of the resurgent India, the emerging India and the rural India. The innovation focus, outcomes and activities for each element of the portfolio will look very different. For example, investments in innovation for the resurgent India will be for global competitiveness involving new labs, IP protection regimes and ensuring that the best talent is both nurtured, developed and rewarded for the country’s top research jobs, delivering results of global impact. Investments in innovation in emergent India will include those in inclusive innovation – innovations that support the uplifting of the rural poor, innovations that improve the productivity of domestic manufacturing and process industries, and innovations that support the enhancement of rural GDP. Investments targeted at the rural poor will then focus on diseases such as tuberculosis, malaria and Japanese encephalitis that reduce life expectancy and increase infant mortality. Investments will provide the rural poor with access to information, telephony or access to capital at low cost.

India has gaps in spending and capability as compared with the current superpowers of innovation. For example, the Indian space programme’s current annual budget is less than US $1 billion whereas NASA’s budget is over $17 billion. As a result, India is 60 years behind in sending an unmanned craft to the moon. However, launched in 1969 the space programme does provide a foundation upon which to build national capability. For example, in 2009 the government increased the Indian Space Research Organisation’s (ISRO) budget by 27 per cent. And such investments are producing results. Today India has an aggressive national space programme that includes the full range of remote sensing and communications satellite applications, a man-in-space programme, and an active space launch programme that is offering launch services on a commercial basis. The Indian Remote Sensing satellite system has the world’s largest constellation of remote sensing satellites in operation today. It provides space-based remote sensing data in a variety of spatial, spectral and temporal resolutions, meeting the needs of diverse applications. With the discovery of water on the surface of the moon using Chandrayaan-I in September 2009, success for ISRO’s $79 million moon mission paid off in part.

Along with the investment, India needs to attract people into research. But the idealism with which people went into research labs, the talent, the leadership and the vision appear to have vanished. One reason may be the general weakness of the tertiary education system. Another reason is that fewer people are going into pure sciences as employment opportunities for engineering and management disciplines have skyrocketed in the last 25 years. A series of measures now need to be put in place when organisations embrace innovation, compensation and reward schemes in terms of both financial and professional growth. Public interest in basic sciences is beginning to change with the new salary structures in place for research positions. Such jobs have become secure with accelerated promotions in place. However, India needs a number of high-level initiatives to drive the change it needs to emerge as an innovation superpower within the next 40 years. I discuss these in the following chapters.