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NATIONAL INNOVATION SYSTEMS

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A Case of India

General Data
http://www.india.gov.in/knowindia/india_at_a_glance.php
India is a Sovereign Socialistic Democratic Republic with a Parliamentary System of Government.
Land area: 3.3 million square kilometers
Coast line: 7516.6 kilometers
Capital: New Delhi
Population: 1.027 billion (March 1, 2001)
Fiscal year: 1April to 31 March
Exchange rate Rs. 45 =US $ 1 (as on June 27, 2006)
GDP - Real growth rate 8% (July – September 2005)
GDP per capita: US $ 543 (September 2005)
Inflation rate: 4.02% (February 11, 2006)


Background

India has a long and rich history of innovations. It is embodied in the societal culture and civilization for over the past several centuries.

There have been remarkable achievements in many fields like materials, astronomy, metallurgy, medicines and others and has significantly contributed to the mankind’s knowledge. It is estimated that in about 600 years, between 12th and 18th century, over 10,000 books were written in India on science and technology and many were translated into Persian and Arabic.
About six decades ago when India attained independence, it had a sound scientific base, will and vigor to move ahead with innovation as a driving force for industrialization. The pioneers who laid the foundation of India’s science and technology in the formative years of modern India had faith and affirmation of a dream that India could only progress on the strength of its innovative capabilities. It is said, “ long long ago the country that knew efficiency, science met nature, today in India, science and technology meet business”. With a rich infrastructure in science and technology in terms of research laboratories, a network of technical institutes, a number of them of international repute and some of the finest scientists and technologist, the foundation for innovation in modern India is indeed very strong. India’s achievements in science and technology since independence has been brought out in a publication “Innovative India” (Published by Medialand London.
www.internetindia.com/intech)

Objectives of NIS
NIS is an enabling mechanism. Through NIS it is proposed to achieve the following:

  • Enhance economic growth and social development on a sustainable basis
  • Enhance quality of life of people particularly of weaker sectors of society
  • Employment generation
  • Enable industry to face new challenges of globalization and intensely competitive environment effectively
  • Harness natural resources
  • Protect environment
  • Mitigate impacts of natural hazards
  • Harness the potential of innovation in all spheres of activity particularly keeping in view the ripple effect of innovation.

Developing Systems Framework – Major Factors
Following are the major factors that need to be taken into consideration while developing framework for NIS:

  • Innovation is an integral part of Indian civilization and culture
  • The country has a sound infrastructure base for science and technology in the form of research laboratories, educational institutions for higher learning and highly skilled human resource
  • The country has impressive capabilities in science and technology over a large range of diverse disciplines
  • It has a large domestic market
  • It has a strong manufacturing base.
  • It has remarkable and impressive global achievements in IT sector
  • Knowledge has become a source of economic might and power
  • The industry has to face intense national and international competition
  • There are now strict laws for protection of innovator’s intellect.

The content of India’s National Innovation Systems (NIS) has been changing over time, depending upon the requirements and available resources. Today it is a very comprehensive system covering Government policy measures, support and incentives offered by the Government, efforts by industry and non government organizations, a widespread network of scientific and industrial research institutions, a large number of technical institutes and universities, a large technical manpower rated as one of the finest in the world. Most of the Government policy measures are in the form of guidelines; a few are mandatory in nature. The subject is under the scope of both the Federal Government and Governments of different States of the Indian Union. While the state governments have their respective systems for promotion of innovation, major thrust has been by the Federal Government.

India and the Knowledge Economy
India has high potential to grow in the knowledge economy. It has many ingredients, advantageous to it. A few are mentioned below:

Key ingredients of growth in knowledge economy – Advantage India

  • A strong manufacturing base
  • Impressive Diaspora
  • Institutions fore higher education
  • A large technical manpower of high quality
  • Valuable knowledge linkages and networks
  • Dynamic private sector
  • Global provider of software services
  • Broad and diversified S&T infrastructure
  • Microeconomic stability
  • English speaking knowledge worker

India has achieved remarkable growth in economic and social development particularly during the past two decades. It is poised to realize even higher growth in the years ahead. After growing at about 3.5% from 1950s to 1970s, the economy of the country expanded during 1980s and reached an annual growth rate of about 5.5% at the end of the period. It increased to 6.7% between 1992-93 and 1996-97. It, however, dropped to 5.5% from 1997-98 to 2001-02 and to 4.4% in 2002-03 attributed mainly to the impact of poor rains on agriculture outputs. It again increased to an all time high of 8.2% in 2003-04.

A World Bank Report (www.info.worldbank.org) has made projections of Gross Domestic Product (GDP) per worker (1995 US$) for India up to 2020. The GDP could be increased by the country’s ability to use knowledge. The World Bank in its Report has taken Total Factor Productivity (TFP) as a proxy for nation’s learning capability. Four projections have been made.

Projection 1: This is based on 2.09% growth in TFP, which was achieved during the period 1991-2000
Projection 2: This is based on 1% growth in TFP, which was achieved during the period 1971-80
Projection 3: This is based on 3% growth in TFP, which was achieved during the period 1981-1990
Projection 4: This is based on 4.25% growth in TFP, which is based on actual growth rate of TFP in Ireland during 1991-2000. Ireland is a country that has been using knowledge effectively to enhance its growth. This is feasible in India too.

In TFP, labour force figures have been taken rather than total population, as labour is more appropriate to be taken as a factor of production in the economy as against total population. Figure 4 shows the four projections.

graph
Fig 1: Growth projection of GDP per worker in India 1995-2020
Source: World Bank Report
http://www.info.worldbank.org
It is interesting to note that India was the world's largest economy in the first millennium producing a third of global GDP. By 1500 AD its share declined to 25% and further to a low of around 4% in 1950. It then increased to around 5% in 1998.
graph1
Fig 2: India's share of global GDP - Years 0-1998
Source: Maddison 2001

Salient Features of NIS

The following are the salient features of India’s NIS

  • Efforts have been made to integrate innovation with all spheres of national activity
  • It has a well laid down Science and Technology Policy
  • It strengthens enabling mechanisms that relate to enhancement of innovation
  • It provides close and productive interaction between private and public institutions
  • It provides a strong, supportive and comprehensive policy environment, which maximizes incentives for the generation and protection of intellectual property by all innovators.
  • While the Ministry of Science and Technology (which comprises of three Departments namely the Department of Science and Technology, Department of Scientific and Industrial Research and Department of Biotechnology) is the nodal Ministry for development and implementation of national systems but all socio-economic ministries have programmes and activities relevant to their areas of operations. Department of Secondary and Higher Education has a special focus for enhancing educational infrastructure and human resource development.
  • Ministry of Science and Technology is headed by a Minister of Cabinet rank and holds an important position in the political system.
  • SAC-PM, SAC-C and Scientific Advisor to the Government provide linkages and policy directions at the Prime Minister and Cabinet levels.
  • Efforts are directed towards allowing autonomy and flexibility in operations of research and development organizations and academic institutions.
  • It is the endeavour that highly science and technology based Ministries and Departments of the Government are run by scientists and technologists and major socio-economic Ministries have high level scientific advisory mechanism
  • Secretaries to the three Departments of Ministry of Science and Technology are Scientists of world renown.
  • The Systems provide strengthening infrastructure in science and technology institutes
  • Efforts are made to enhance mobility of scientists and technologists between industry, research & development laboratories and the academia.
  • Stress is laid inter-alia on grass root innovations
  • An important component is development and enhancement of traditional knowledge.
  • Attainment of synergy between industry, research & development organizations and academic institutions is an important component of the Systems.
  • As a motivator, there are number of National Awards for innovation.
  • There are a number of Schemes that give financial support to development of innovative products and processes.
  • There are a series of both tax and non-tax fiscal instruments for motivating innovators.
  • Importance is given to diffusion of innovation.
  • Simplification and enhanced transparency in Government systems and procedures is an integral part of NIS.
  • A large number of Technology Parks and Incubation Centers have been established to enhance innovation.
  • There are a number of Institutes and Programmes that encourage development of techno-entrepreneurs.
  • There are close linkages between different actors of innovation and instruments for implementation of innovation and related policies.

Approach to the Study
In this study, measures taken by Government Ministries/Departments, Government supported organizations, Industry associations, non-government organizations and others, who are the major actors in the innovation systems, are highlighted. These measures or instruments for action are then grouped together functionally, to facilitate clear understanding of the national efforts taken to enhance innovation. The functional groupings also demonstrate the interaction between various actors and instruments for implementation. Since this is an IT Powered system only highlights have been presented, for details the related websites could be visited.

An Overview of India’s NIS
While studying and analyzing India’s NIS, a systems approach has been adopted. The NIS in India mainly comprises of the following components:
Actors: These are the organizations, institutions and others, which help in development and implementation of various activities that enhance innovation in the country. These are Government Ministries/Departments, R&D Organizations, Technical Universities/Institutes, Autonomous Organizations, Industry Associations and the like. There is close interaction amongst the Actors.

Instruments/Support systems for Implementation: These are policies, support measures, guidelines, facilities, facilitators and the like that are generated and/or created by Actors. These take into consideration the internal and external environment. A few examples are: Science and Technology Policy, fiscal incentives for innovation, guidelines for financial support to innovative projects, incubation centers, policy for protection of innovator’s intellectual property and others.

Beneficiaries: Major beneficiary is the society through improvement in national economy, industrial units, service organizations and others.

Since the entire process is dynamic, the NIS is ever evolving.

fig3

Fig 3 : India's National Innovation Systems - An overview

Science & Technology Related Data
The Government has attached considerable importance to science and technology right from the time the country attained independence in 1947. An impressive infrastructure has been developed in the country, over the years. This includes a chain of national laboratories, research and development organizations, academic institutions and others. The Government has been the major spender on R&D. The industry has also; lately increased it’s spending on R&D.

graph3

Fig 4 :National R&D Expenditure - 1990-91 to 2004-05
Source: Research and Development Statistics at a Glance 2004-05 published by Department of Science and Technology
http://www.nstmis-dst.org
Note: Figures for 2003-04 and 2004-05 are estimates

The major expenditure on R&D is by the Government - about 70% (Central Government 62 % and State Governments 9%). Industry spends around 25% and higher educational system, around 4%.

graph4

Fig 5: National R&D Expenditure Sector wise for 2002-03

Source: Research and Development Statistics at a Glance 2004-05 published by Department of Science and Technology
http://www.nstmis-dst.org

The national expenditure on R& D as a % of GNP during 2004-05 has been around 0.79%.

graph3
Fig 6: National R&D expenditure as a % of GNP 1990-91 to 2004-05
Source: Research and Development Statistics at a Glance 2004-05 published by Department of Science and Technology
http://www.nstmis-dst.org
Note: Figures for 2003-04 and 2004-05 are estimates

Human resource is very important in the innovation process. It is the human intellect that is the creator of new things. In any innovation policy, systems for identifying, nurturing, developing and retraining human resource are of utmost importance. In India this aspect has been given importance right from the time it attained independence in 1947. As a result of various efforts, today the stock of science and engineering personnel is very impressive. At the end of year 2000, it was 7.7 million.


Table 1: STOCK OF SCIENCE & ENGINEERING PERSONNEL

graph6

Source: Data Book of Department of Science and Technology 2002
www.dst.gov.in

More R&D statistics is available in 'Research and Development Statistics at a Glance 2004-05' brought out by NSTMIS Division of Department of Science and Technology, Government of India, New Delhi. www.nstmis-dst.org

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