Democratizing innovation and entrepreneurship

There is a widely accepted consensus that private venture investment in many sectors has not matched their business potential


Photo: Aniruddha Chowdhury/Mint
Photo: Aniruddha Chowdhury/Mint

To meet India’s aspirations as a future world leader, one that creates wealth to provide public services to our aspiring 1.25 billion people, a vibrant economy with sustained and well-distributed growth is critical. The prime drivers of economic growth will remain higher production and consumption driven by increasing incomes in the near term, but in the medium and long terms, more contextualized innovation and faster technology deployment will be needed to retain India’s competitiveness and improve service delivery. In the light of structural and technological developments in the last few years that have ever so slightly levelled the playing field for innovators from all backgrounds, India has a unique window to generate opportunities for its vast young population by promoting entrepreneurship. This final piece in this series by NITI Aayog officials examines some of these recent global trends, and the intent, design, and current efforts of the Atal Innovation Mission (AIM), which is mandated to strengthen the entrepreneurship and innovation ecosystem in India, to seize this opportunity.

Some trends from the recent past that have democratized innovation, and inspired first-generation entrepreneurship, include unbundling the provision of growth capital and access to distribution channels from large companies and family businesses to startups (as discussed in the first piece of this series); the Maker Movement and availability of rapid prototyping tools that reduce the costs and risks of failed hardware and software experiments (discussed in the second piece); and a growing ecosystem of incubation and handholding of start-ups (discussed in the third piece). These trends, coupled with greater business education and skills in the professional class, create the right set of enabling conditions that can be leveraged to create India’s enterprises of the 21st century.

The importance of innovation in economic growth is hardly debated any more, though the extent of its influence may be continuously under examination in academic circles. Many innovative technologies and business models will be deployed by the private sector, for segments of the population that are engaged with the global economy. As a prime example, advances in IT and communications have left hardly any soul untouched. However, the best of private efforts will under-serve some priority areas, either due to insufficiently high financial return, or due to societal or regulatory barriers. Even though sectors such as health, affordable housing, hygiene and sanitation, clean energy and sustainability, water and wastewater, and agriculture have seen immense technological innovation in recent years, there is a widely accepted consensus among policy and practitioner circles that private venture investment in these sectors has not matched either their business potential or their societal importance, leading to inadequate deployment.

Right from the era of Robert M. Solow’s quantitative demonstration in the 1950s of the role of technological change and innovation in growth, to more recent times when rapid deployment of new technologies distinctly changed human habits and lifestyles, there has been an interest among governments and nations to support innovation, as a means of spurring economic growth and creating jobs. The Silicon Valley’s successes in identifying and commercializing technologies have inspired many governments to replicate that ecosystem. However, caution is required, since failures to replicate that ecosystem outnumber the few successes, as noted by Josh Lerner in Boulevard Of Broken Dreams.

In the jargon of this field, entrepreneurship is usually taken to mean founding of a scalable business by first-generation entrepreneurs, supported by an ecosystem of investors, with low engagement from large companies or family businesses. The rise of low-cost entrepreneurship has closely tracked the growth and spread of the Internet. Its ubiquitous availability encouraged change of several prominent human behaviours, such as shopping, reading, social connection, travel, movie ticket purchases, etc. Start-ups encouraged and invariably led the global behaviour change. Once that happened, aspiring founders looked towards solving other challenges, many of them rooted in the 20th-century world, such as taxi hailing and food delivery. We believe that the next phase of entrepreneurship will expand into areas of public services delivery and infrastructure, bringing the efficiency and discipline of the private sector, coupled with the integrity of young founders looking to leave a positive impact. Currently, start-ups in India are tackling challenges such as clean water, telemedicine, rural electrification and solid-waste management, often filling gaps left by the state. In doing so, new technologies are introduced, leapfrogging many generations of technological development. The growth of social entrepreneurship will be fuelled by impact funds that invest in businesses that “do well by doing good”. There are tales galore of start-up successes and failures, but the critical mass for disruptive change has started to crystallize, hopefully leading to large-scale change in the next few years.

Keeping in mind the current favourable context for supporting entrepreneurship, the opportunity to bring efficiencies in public service delivery, as well as the cautionary tales of limitations of government support, AIM was established to support India’s ecosystem by building on existing systems as far as possible and by partnering with existing players. By some measures, India is currently placed third in the number of start-ups; the challenge is to increase the rate of their survival and accelerate scale-ups.

An expert committee comprising eminent individuals from various walks of life suggested efforts and programmes to provide a “pull” and a “push” for innovation, across various sectors and population segments, which led to the establishment of AIM at the NITI Aayog. The initial programmes such as Atal Tinkering Labs, Atal Incubation Centres, and Grand Challenges are currently being rolled out. In subsequent phases, AIM’s mandate is to bring more technologies in the service of the public, through partnerships with appropriate stakeholders, and facilitation of innovation-driven startups. In the entire programme, the intent is to keep procedural overheads and regulatory requirements to a minimum and to facilitate self-growth, in the spirit of “minimum government, maximum governance”.

C. Murlikrishna Kumar and Mudit Narain are with the management team at Atal Innovation Mission (AIM), NITI Aayog.

This is the final part of a series in which NITI Aayog officials examined each of their various programmes in greater detail.

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