India should encourage low-cost innovations: Gururaj Deshpande4 min read . Updated: 13 Aug 2013, 11:45 PM IST
Deshpande, an adviser to US President Obama, on building innovative ecosystems for social empowerment in India
New Delhi: Gururaj ‘Desh’ Deshpande, an adviser to US President Barack Obama on innovation and entrepreneurship, said in an interview that more attention should be paid to low-cost innovation in India. The founder of Sycamore Networks also set up the Deshpande Center for Technological Innovation at the Massachusetts Institute of Technology (MIT), besides heading non-governmental organization Akshaya Patra, which was started a decade ago as an initiative to feed school children in Bangalore. Deshpande spoke about building innovative ecosystems for social empowerment in India. Edited excerpts:
What is the role of governance in making the environment conducive for innovative entrepreneurship?
You have to create the culture of innovation. When you experiment, only a few will succeed. It will promote innovation, the penalty of failure should be small. In the US, if you start a company, and it doesn’t work, you can file for bankruptcy and start over. In fact, if you are a failure, you are valued higher because it is like being a (veteran) soldier in a war. In India, we need to clean up the legal environment. At present, if a company fails, there are investors, creditors etc., and it is not easy to walk away. Since entrepreneurs need to give a lot of personal guarantees, when they fail it is very hard for him to start something else. We need that. That’s part of a maturing economy.
To build a company, you need a good idea, a good entrepreneur, a good mentor and easy access to capital. Effective governance would be in reducing the friction in these four aspects. The only mistake the government can commit is that when they come up (for) money, they start picking who to fund and who to not fund. Government officers are not in the business of figuring out who wins or who loses. They should be in the business of encouraging innovation. In India, all four aspects are there, but a lot needs to be done.
What is the type of innovation required in India to meet social challenges given the fiscal constraints?
Typically, people relate innovation to hardware/software, little start-ups in basements. Sometimes innovations are profound technological breakthroughs which are patentable—the kind we do at the centre in the Massachusetts Institute of Technology—but other times it is social innovation. This might not be a breakthrough or a patentable innovation but, like Akshaya Patra, social innovations cannot be undermined. MIT is a powerhouse of innovation but if I ask them to replicate something like Akshaya Patra, they will come up with a $5 meal and think it is very affordable. Because they don’t have the Indian context. So, there is a space for social innovation and then there is technological innovation and we need them both.
Do you think the regulatory environment in India fosters innovation?
The regulatory ecosystem for innovation is a work in progress. It is evolving. I graduated from IIT (Indian Institute of Technology) Madras in computer science in the 1970s but had never seen a computer before. The first wave of innovation was when IT companies were set up in India to solve international problems. The next wave is here now when companies in India choose a problem to solve and then they innovate accordingly. So, that is a very different approach to innovation. A lot more patentable ideas are required. Where India will shine is low-cost innovation and skill set that will drive everything. So the solutions that people come up with—telecom, health etc.—will have a level of innovation that cannot be ignored globally.
I had two of MIT’s presidents visit India recently. It is very clear that if MIT does not observe what is happening in India, the US will miss the bus. They will be sitting in a bubble and coming up with solutions like a $5 meal and thinking it is a good solution, while people in India will be running away with 12 cents a meal. As long as you have an innovative culture—not all may work—but government policies should encourage a lot of this activity. The government should be in the business of letting a lot of people innovative.
In the past year, several patent cases have gone against multinational companies. Do you think India’s patent laws are hostile?
Encouraging patents is a good thing, particularly in global competition. I think China now has more patents than the US. First, the government has to encourage innovation that is relevant to the Indian context and then patents should be encouraged. It should not be the other way round.
The number of patents in a country cannot be a measure of innovation, otherwise every university professor will get patents but it won’t solve any problems.
Is it right to say that in the US, India has acquired an image of not respecting patents?
Actually, they trust India a lot more than they trust China right now.
That does not say much.
That is the nature of the developing market. The only time you will start seeing courts and patent laws in India is when there is enough innovation within India. When Indian companies will spend a lot of money (on research and development) and start getting patents, then the law will start protecting these patents automatically. It is not happening right now because there is not enough innovation. Or at least there are not enough patentable innovations. Right now, people don’t need huge innovations to get into business. In fact, globally, businessmen are jealous of entrepreneurs in India because they don’t need to come up with profound ideas to start a company. Examples like Red Bus (a bus ticketing site) are big ideas, but are not patentable. It is not that we don’t need patents, but it will just take time. Once you do 10 Red Buses, you will need something little bit more profound. It is a question of maturing economy.