NRF can help fast-track India's transformation to a knowledge economy

Many previous “ahead-of-their-time" research funding bodies such as the Technology Development Board (TDB), Science & Engineering Research Board (SERB), Global Innovation & Technology Alliance (GITA), and Biotechnology Industry Research Assistance Council (BIRAC) have fulfilled their purposes quite well. However, none of them had the mandate for a broader vision to transform the research and innovation landscape and take India towards a knowledge economy. With NRF, this now looks possible.

A robust “education-research-innovation" or knowledge-economy ecosystem of a nation can increase the intensity, speed and efficiency of economic and social development and touch every citizen. Many countries in the West and a few in Asia have proved this by prioritising knowledge-economy ecosystems with strategic planning and plenty of resources, and benefitting immensely.

India, which has exceptional education and research institutions, robust infrastructure and thriving industries remains unable to fully harness these strengths for development and technological leadership. While the country has done exceedingly well in space research and a few other areas, For India to become one of the world’s top five knowledge economies, it needs a tectonic shift in strategy, policy, implementation and, most importantly, private-sector participation.

It's time to adopt a new approach to strategic planning, starting with the goals we wish to achieve. From there, we can define the necessary outputs to achieve these goals and identify the inputs needed for delivering those outputs. Let’s go into the details of this reverse planning process.

For any nation to strengthen its knowledge economy, it must have some time-bound and measurable socio-economic goals front and centre. What key socio-economic goals do we wish to achieve from a strong knowledge economy? For example, we could aspire to increase India's value-added manufacturing from 13-15% of GDP to 25% or more, or increase India's high-tech exports from 10% to 25% or more of total manufactured exports.

We should aim to double the foreign investment in R&D infrastructure and co-development of technologies in India. There must be a concerted effort to transform Indian champion industries into global champions. The key goal we should aim for is a significant increase in high-value employment in India.

These goals should also be viewed against the backdrop of how we are performing vis-à-vis other competing economies. We can thus set our target to move India’s rank up to the top 5 nations in relevant global indices or rankings such as the Global Innovation Index, Global Competitiveness Index, and Global Startup Ecosystem Index. Once these goals are set, progress on them should be measured periodically.

Next, we need to define the outputs of the knowledge economy that will help achieve the goals we have set. In education outputs, we could aim for a substantial increase in the gross enrollment ratio (GER) in higher education from 27% to 50%. We aspire to see India’s 50 STEM institutions in the QS World University Rankings. There must be a substantial increase in the number of quality PhDs in STEM and an improvement on the Citation Index.

We would also like to see a significant increase in R&D professionals – say 50 R&D personnel per thousand people employed in India. Another major output on R&D & innovation could be co-developing critical platform technologies in sectors that are a national priority. This will lead to a significant increase in intellectual property filings by Indian residents from 30,000 to 75,000 patents a year and from 20,000 to 50,000 industrial designs a year. We should also aim for an increase in deep-tech startups every year.

Once the impacts and outputs are defined, NRF needs to determine what inputs are needed and what fundamentals should be in place to ensure them. This could be broken into three subsets – institutional reforms, investments, and (most importantly) political will and restructuring.

Institutional reforms could include bringing all publicly funded R&D institutions and educational institutions under one umbrella, with performance-based funding. This should be followed by creating a consortium of R&D and academic institutions of similar subjects for infra and manpower sharing, and to avoid duplication of research.

Key investments in the knowledge economy are crucial, such as raising government R&D investment from 0.7% to 1.5% of GDP – 0.5% for basic research and 1% for applied/industrial R&D – matched by industry investment. The industrial R&D programme should be led by industry, and the line ministries and state governments should also invest. Thus, gross expenditure on R&D will be 2.5% of GDP, comparable to that of some knowledge economies.

There must also be a significant increase in government investment in higher education. Education sector reforms that attract private players and foreign entities are vital. To encourage more technology-driven MSMEs, the government may provide credit guarantees to financial institutions to extend credit to MSMEs with patents/designs as collateral. The government may develop a model to co-invest with venture capital firms in deep-tech startups on a 50:50 share. Reforms in the public procurement policy will also encourage innovation by startups.

Finally, political will and restructuring will be key to the whole exercise – and it could take longer. The government may need to form a Ministry of Knowledge Economy (Education, Research & Innovation), and position it as one of the most coveted portfolios in the cabinet, led by a senior minister.

The participation of line ministries and state governments will also be vital, so they must invest in technology development programme in related areas as key stakeholders or users. A comprehensive knowledge economy policy needs to be framed to run this structure.

The big question is whether the NRF will be empowered to steer India’s journey towards a knowledge economy or whether this will remain a government funding agency like many others in the past. India has a big opportunity to unleash its prowess as one of the top knowledge-driven economies and NRF can play a big role in realising this dream. We can’t afford to keep missing the bus!

The author is chief policy advocacy officer, Sterlite Technologies Limited.