The fact that India has climbed four spots on the Global Innovation Index (GII) 2020 and is ranked 48th among 131 countries, should make us proud. India is also the third most innovative lower-middle-income economy in the world, marking its growing heft in the global innovation landscape. Also, India’s position as the third-largest startup economy with around 50,000 startups — and counting—is a good indicator that we are progressing in the right direction.
Undoubtedly, in recent years, we have made significant headways in the overall development trajectory to support and foster India’s innovation story.
However, the larger question remains: how can India leapfrog into the league of the top ten most innovative countries within the next five years? The improvement in the GII ranking should inspire the nation to work towards creating a robust, sustainable, and inclusive innovation ecosystem that encourages innovators to create new categories of solutions to address the existing innovation gap.
As innovation is one of the key drivers for economic growth and prosperity, it is crucial to sustain the momentum, especially during an unprecedented global economic downturn triggered by COVID-19. If we need to achieve success at scale, I recommend that we take a more strategic and collaborative approach by actioning the below recommendations:
Building a comprehensive innovation ecosystem
A holistic social innovation journey starts with the understanding that innovation doesn’t exist in silos. Intractable problems plaguing society require a change in mindset that is led by a desire to bring forth new solutions to age-old problems.
Thankfully, positive India-focused trends point to the larger story of innovation within our ecosystem. In recent years, the Government of India has rolled out significant initiatives to foster a culture of entrepreneurship and strengthen the innovation ecosystem for sustainable and inclusive growth.
For example, Startup India, Accelerating Growth of New India’s Innovations (AGNIi), Atal Tinkering Labs, new intellectual property rights (IPR) policy and Smart City Mission are some of the ways in which the government has attempted to position India as a country focused on innovation.
Further, the clarion call for Aatmanirbhar Bharat by the prime minister has given a direction to promote homegrown innovation through the concept of self-reliance and sustainability.
All these policy initiatives are supported by the high standard research conducted by India’s premier academic institutions and corporates that are now breeding grounds for startups.
For instance, The Indian Institute of Technology (IIT) Madras has been adjudged the Top Innovative Educational Institute in India for the second consecutive year by the Government of India, owing to its commitment to foster a strong entrepreneurial ecosystem and for generating jobs.
The government has also played a pivotal role in supporting innovation through several fiscal initiatives. Financial institutions such as the Industrial Development Bank of India (IDBI) and the Small Industries Development Bank of India (SIDBI) have laid the foundation for a resilient entrepreneurial ecosystem that champions innovation.
Strengthening funding ecosystems
Despite the fiscal incentives offered by the government, the unprecedented economic and social crisis created by COVID-19 has put a spanner in the works that could stymie the pace of India’s innovation. The pandemic has raised the concern that in the years to come, global economies and corporations alike will find it challenging to finance innovation due to the paucity of financial resources.
As the world adjusts to the new normal, governments everywhere are in overdrive to rebuild the innovation ecosystem that has been hit hard by the pandemic.
In India, it will be imperative to fund specific domains such as biopharmaceuticals, vaccines, biosecurity, digital health, and data science, where there are gaps in research capability and capacity. The government also needs to foster and finance COVID-relevant solutions and sustain funding around the Sustainable Development Goals (SDGs).
One of the primary reasons for the low levels of innovation in a developing economy such as India’s is the dearth of incentives for the private sector to join hands with the public sector to work on technological breakthroughs. The Indian government has to prioritise the financing of product innovation and enable more policy interventions that will encourage the private sector to innovate and ensure long-term economic sustainability.
To cope with the challenges posed by the pandemic, the Government of India has swung into action to encourage innovation and foster a climate of collaboration among major stakeholders to ensure India retains its global competitive edge.
In my view, to progress on the path to Aatmanirbhar Bharat, policymakers should look beyond R&D funding from corporates and seek novel ways to fund innovation. It becomes crucial to have diversified funding opportunities to expand the scope of social innovation. For example, microloans, social banking, crowdfunding, and innovation checks are some of the new models of financing schemes to successfully implement social impact activities.
Strengthening MSME sectors for innovation and digital transformation
Currently, the Indian MSME sector contributes 29 percent to the GDP and the government aims to raise the sector’s contribution to 50 percent in the next five years. Since China is no longer a viable alternative for manufacturing, global organisations are looking to India as the next manufacturing hub.
Thus, the government should invest in technology upgradation in the MSME sector to enable manufacturing units to produce high-quality products at the global level and ramp up their innovation efforts. The COVID-hit sector could benefit from new fiscal policy measures to retain its competitive edge and work towards self-sufficiency.
Since innovation does not occur in silos, MSMEs require collaborative support systems to gain institutional access and attract R&D funding. Thus, the government should continue to facilitate the growth of MSMEs through its various schemes and programs.
I truly believe if MSMEs are moved to the next level of growth, not only will they stay relevant in these uncertain times, but also contribute to the GDP in a much larger way.
Tapping the potential of grassroots innovation
In recent years, western nations have successfully implemented social innovation models in areas such as public health, microcredit, climate change, and education, among others. India, too, needs more innovators who will be game-changers in the social impact ecosystem as this would pave the way for economic inclusion and ramp up the scale of solutions to improve society.
– Ravi Narayan, CEO, T-Hub
