Economists, academicians for long have recognized the role of innovation in a country’s economic growth. National innovative capacity is defined as the ability of a country – as both a political and economic entity – to produce and commercialize a flow of innovative technology over the long term.
As India takes on its path to economic recovery, the time is apt to look at the state of innovation in India, reflected in its R&D capability. Though the growth of R & D services has been consistently high at around 20% in the last few years, but India ranks low in its capacity for innovation as compared to developed nations as well as other BRICS nations. In the global gross expenditure on R&D (GERD) of US$ 1.6 trillion for 2014, India’s share is around 3%, which is around five times lower than that of China.
The Economic Survey Report of India 2013-2014 has highlighted the current state of R&D services in India. A look at the following charts reveals the determinants of India’s innovative capacity and the opportunities for improvement in this area.
According to the Global Competitiveness Report 2013-14 released by World Economic Forum in Sept 2013, India’s capacity for innovation has been lower than 3 of the other BRICS countries (Brazil, China, and South Africa).
Though India scores better than China, Brazil, and Russia on quality of scientific research institutions, its poor score on university–industry collaboration on R&D as compared to some other BRICS nations like China and South Africa, indicates that research undertaken in such institutions is not percolating down for commercial usage.
In terms of company spending on R&D also, India is far below China.
Whereas India scores better than all BRICS nations on availability of scientists and engineers, owing to its large population, the country has one of the lowest ratios of scientists and engineers per million people. Part of this shortage is attributed to less number of quality higher education institutions. Even with a large population base, India is projected to have 25% shortage of engineers in the country by 2025.
In terms of patents granted per million population, India fares badly compared to other BRICS countries.
In the Budget 2014, the Finance Minister has proposed to set up
This is a step forward towards addressing the skill gap in higher education.
However, there still is the compelling need to have industry bodies to improve upon the University – Industry collaboration and facilitate the exchange of knowledge.
Additionally the, it remains to be seen if the ease of FDIs inflows or competition will incentivize companies to increase spend on R&D.