Policy framework to foster innovation
In less than 18 months–and it is noteworthy-India has jumped more than 40-odd ranks to now come within the top 100 in Ease of Doing Business. Budget 2018 introduced a new idea, the Ease of Living index.
Clearly, the focus is on “ease of doing” business and living–for now. For the future, we should include innovation as well. Whether we articulate in as many words (not wanting to sound hackneyed) but we do require a firmer policy framework which makes for a conducive environment that fosters innovation.
India is known for Frugal Innovation, and undoubtedly in its time—clearly not overlooking the constraints either—it has delivered results. But, with advanced technologies at the fore, we are required to go way deeper with more concerted efforts.
Globally, we have seen innovations work best in clusters–the Silicon Valley and London’s Silicon Roundabout are potent examples. In India, we need a similar cluster for deep tech, and for an umbrella organization to develop it and oversee progress. This entity, preferably under the government, will also be required to facilitate collaboration between stakeholders, build consensus and position India globally as an Innovation Hub. But, then, it has to be supported by the industry, apex bodies like Nasscom and the academia as well. The cluster will have to establish deep linkages with the best institutions of the country (IITs, IIMs, etc.) to draw on cutting-edge research, which really is at the core.
Clusters require vibrant networks. Funding, trend-spotting, talent hunt, facilitating cross-pollination between disciplines and industries are some of the obvious benefits to be had. Support to industry consortia or even benchmarking of corporate best practices will create interest, drive competition and increase awareness to bring in desired results.
The most crucial element is about building capabilities. The Indian IT BPM (business process management) industry employs 40 lakh people directly, of which, approximately 4.5-5 lakh are equipped with digital skills.
The target is four-fold (at least) or 20 lakh. Moreover, the nation produces more than 2.6 lakh STEM (science, technology, engineering, and mathematics) graduates annually who also need to be included in the re-skilling drive. Advanced technologies like AI (artificial intelligence) are data driven so for training measures to mirror real-life situations, access to data (humongous) and its sanctity is most important. It will be quite impossible for academic institutions to address these expansive needs off their own accord which opens up opportunities for PPP (private-public partnership) models.
If data is the new oil, then we need to have a strong regulatory environment in place for its valuation, protection, taxation and such other considerations that one would normally associate with exchanges of great value, for both tangibles and intangibles.
While we are on the subject of taxation, it is imperative that startups are given adequate support through tax breaks and reduced paperwork. Undeniably, investing in startups is risky, so we need easier exit norms for investors, particularly angels. There has been an alarming drop in Series A funding, and I would like to add here that for a while now, we have been recommending the removal of Angel Tax.
The line between hardware and software is blurring. Perhaps it’s only apt that we also address the needs of the hardware industry and look towards lending heft to the ‘Make in India’ initiative of the government. But, we should remain mindful of the fact that in our bid to protect domestic manufacturers, we don’t end up looking inwards by creating protectionist barriers ourselves. After all, these are the very same forces we are combatting in some of our most prominent markets.
Finally, India’s needs will be different from those of developed nations.
To build scale and create impact, deep technologies, particularly AI / ML (machine learning) and IOT (internet of things) are being used to solve the country’s challenges in healthcare, education, financial inclusion, agriculture among others. While not wanting to sound quotidian, a “double whammy” is foreseen, when the government too adopts deep tech in their core processes which will be the best encouragement for innovators.
R. Chandrasekhar is President of software body Nasscom
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