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'Innovation Hot Spots' in India

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'Innovation Hot Spots' in India ‘Innovation Hot Spots’ in India 27th July, 2011 1 Private & Confidential Table of Contents 1. Executive Summary 3 2. Scope of the Report 7 3. Methodology 9 4. India – At the Crossroads 10 5. Healthcare 26 6. Information Technology 57 7. Telecommunication 102 8. Automotive 131 9. Energy 158 10. Nanotechnology 186 11. Defence 229 12. Space 248 13. Conclusion 266 14. APPENDIX 269 2 Private & Confidential 1. EXECUTIVE SUMMARY The report on ‘Innovation Hotspots’ was commissioned by TAFTIE to study the present R&D landscape in India and highlight thematic areas that may emerge significantly based on future demand. The study also aimed at mapping spatial agglomerations that offer ecosystems conducive for propagation of innovation activities for these thematic areas. These findings are expected to provide directions, which acted upon concertedly, will open up a plethora of opportunities for TAFTIE member agency’s internationalization program. To begin with, it is important to understand the historical perspective. Therefore, the report starts with the evolution of economy and socio-political development. India has come a long way from its socialist principles and economic liberalization ushered by Dr. Manmohan Singh in 1991. Since independence, then there has been a drastic shift in the composition of GDP with agriculture falling below 20% and the services sector reaching an overwhelming proportion of 60%. Over the years, political developments too have been quite significant. Today, India is the largest democracy in the world with the most diverse coalition government. The days of single party rule is over and with coalition governments there is a new set of challenges in terms of reforms pace and decision making. Society too has undergone enormous changes. From being a poor agrarian population, there has been a steady rise of the educated middle class which has had profound impact on the country’s economy. This section of the population has become the prime mover for value added products and services. Further, the report analyses present science and technology system with various government agencies involved in IP development and propagation. The current contour of R&D is studied in terms of patent filings and research paper publishing. The scientific community has made great strides in this aspect and has put India firmly in the global map. Since 2004-05, the number of patent filings has gone up from 17,466 to 36,812 and concurrently, patents granted have risen from 1,911 to an impressive 16,061. However, most of the output (84% in 2008-09) has come from foreign organizations through their R&D centers in the country. Paper publishing too has tripled since 1996, though it still remains a lowly 10% and 30% of USA and China respectively. Based on IP activity and patents granted, the report then tracks major sectors and technologies that are being developed therein. These sectors are also looked at from the standpoint of future demand potential. The thematic areas studied in detail are: 3 Private & Confidential 1. Healthcare (Pharmaceuticals and Bio-Pharma) 2. Information Technology 3. Telecommunications 4. Automotive 5. Energy (Renewable) 6. Nanotechnology 7. Defence 8. Space While India has held pre eminent position in some sectors like space, others have emerged in recent years like IT and Pharmaceuticals due to the cost benefits and availability of skilled manpower. Nanotechnology is at its nascent stage but is one of the thrust areas of the government. Automotive, Telecom and Energy are driven by demand from a burgeoning population while focus in Defence is due to India’s near obsolete hardware and dependency on foreign suppliers. Each sector is presented as separate chapters in the report. The areas covered under each sector include: a) Market assessment b) R&D spend c) Major participants d) Type of Innovation activities e) Geographic clusters (infrastructure and ecosystem) f) Government initiatives and policies g) Future outlook Analyses of innovation activities by sectors reveal interesting findings. Predominantly, most of the research conducted in India is basic research done for processes and applications rather than for product development. In certain sectors the focus in on the local market while for others it is targeted at developing markets. Indigenous research is still dominated by Government institutions and agencies that provide bulk of the funding. Spending on R&D/innovation is comparatively low but this trend seems to slowly changing. Most Indian companies now harbor global ambitions and are active in M&A’s resulting in acquisition of R&D capabilities. Companies that have acquired R&D skills are steadily moving up the value chain to remain competitive. Some organisations are using innovative business models for driving innovations e.g. hiving off of R&D unit in to a separate entity by Pharma companies. Innovation needs to be firmly established in the business and academic environment covering the complete spectrum from pure science to business processes to product development. This phenomenon is 4 Private & Confidential starting to emerge in India, particularly in the pharmaceutical, biotechnology and IT industries. However, an all encompassing innovation culture is still in its early stages in the country. The present Innovation (R&D) ecosystem in India can be best described as unstructured. Over the decades, the government has promoted innovation and scientific knowledge accumulation in pockets like space research, defense, pure sciences etc. but never has this been institutionalized with a proper framework and ecosystem for its propagation and development. In the earlier days, it was only government sponsored research in its laboratories and universities that had the scientific community involved. Only since economic liberalization, has the private sector gotten involved with its fair share of R&D activities in order to develop and market newer products and services brought about by market pressures. Innovation in the private sector is dominated by foreign companies. Many now have their own captive R&D centers involved in high level innovations, while others often collaborate with Indian partners. However, apart from a few companies, it will take considerable time for truly global innovative companies to emerge from India. Major innovation hubs are concentrated in three regions of the country; NCR in the North, Mumbai-Pune in the West and Bangalore-Chennai-Hyderabad in the South. Favorable Government policies and incentives, presence of academic and research institutes and development of allied industries have made these regions hot spots for innovation. The huge domestic market and availability of skilled manpower at lower costs have made India an attractive R&D destination however; significant challenges still remain, to make the country a global innovation center. The extent of industry academia partnership is limited. Availability of funds remains an issue. There is lack of angel investors supporting innovation due to poor risk taking ability. There is also lack of coordination between several agencies and organizations involved in innovation especially in the public sector. Currently, the contribution of academic institutes to innovation is lower compared to developed countries. There are only few institutes deemed ‘Institutes of National Importance’ like the IIT’s, IISc, CCMB, etc. that are involved in high level innovation. Active steps need to be taken to build more institutes and attract more students towards research activities. India also does not have enough number of expert advisors and the necessary social acceptability for risks associated with innovations. Finally, the report concludes with the potential areas of opportunity and ways to engage Indian organisations. For European innovation agencies, there exists excellent opportunities at various levels in 5 Private & Confidential the present innovation ecosystem. Possible areas of engagement include project financing, knowledge creation and exchanges, managerial expertise, manpower training, course curriculum and pedagogy and joint development programs. These agencies need to create better visibility and establish a compelling value proposition amongst Indian counterparts. As a first step, promotions can be done through bilateral interactions, ministerial delegations, industry events and conferences. For government laboratories and universities approach can be made via respective ministerial departments of the central and state governments while private industries can be approached through industry bodies like CII, FICCI, ASSOCHAM or Chambers of commerce in different states. To tap into private universities, trust foundations or management boards can be independently contacted. The appendix at the end provides contact details of major industry bodies, trade associations and some important collaboration. It also lists key sectoral events which can be a useful starting point for outside observers looking at entering this vibrant market. 6 Private & Confidential 2. SCOPE OF THE REPORT This report makes an attempt to objectively analyze existing Innovation landscape in India from the perspective of technology/product R&D activities, focusing on the most active and demand generating thematic areas along with the underlying ecosystem. For the purpose of this report, ‘Innovation Hotspots’ refer to a combination of thematic areas and geographic clusters. The European Association of Innovation Agencies (TAFTIE) is currently looking into how its member
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