Research and development in India have made tremendous progress over the last two decades. It offers insights into how India can achieve the dual goals of economic and social development by focusing on the innovation landscape. In a rapidly changing market place the only way to stay competitive is ‘product innovation’. ‘Innovation is the creation, development and implementation of a new product, process or service, with the aim of improving efficiency, effectiveness or competitive advantage’.[1] In the past few years it is apparent that only the Indian IT/ITES industry has been able to learn, catch-up, develop, and successfully accesses global technological standards. Although the same cannot be said for our product market industry where innovation is far away from making a global footprint.
India spends around 0.7% of its GDP on research and development, which is much lower than the top spenders, such as Israel (4.95%), South Korea (4.8%), Sweden (3.6%), and Japan (3.5%). [i]This relative ranking puts India at par with other developing countries, such as Mexico, and much ahead of countries in the South and West Asian region. However, India lies below other BRICS nations in terms of the percentage of GDP spent on R&D[1].
Interestingly, the innovation ecosystem is run by two parallel economies, commercial and research. While fundamental research is the key driver of research economy, commercial economy is primarily driven by the marketplace. The most obvious challenge in putting together a commercial product startup in India targeting the global market from the sales and marketing viewpoint is nothing but the well-functioning incubators. If the indigenous market is small then there is no incentive for a company to build a product. A crucial step towards incentivizing product-based startups in India is by providing a robust R&D ecosystem and nurturing strong manufacturing networks to scale-up at the product stage. A hardware startup needs to invest capital way before expecting returns whereas mentorship and seed funding is also necessary at a later stage. Funding can be used for a lot of reasons depending what stage the startup is at. One must focus on how product-based startups need money for R&D, prototype development, manufacturing, mentorship, and marketing. Collectively these facilities are available in incubation centers.
The reason for having less product startups in our country are: Buying services is more inexpensive than buying any substitute product e.g., buying Ola and Uber services is cheaper than buying a car. India is not only a big consumer but a late adopter of technology (which pull out the early-stage mover leverage from a startup). Our early aberration was institutionalization of innovation without utilizing large-scale alternative that requires enormous political capital. [ii]After identifying the need of innovation in product development Government of India has incentivized start up incubation ecosystem and showed its will. One of them is Startup Incubation and Innovation Center at IIT Kanpur. It started when incubation itself was in infancy, mentorship was not considered prudent and seed funding did not exist. It promotes product development to make India ‘Aatmanirbhar’ in true sense. Driven by ‘Aatmanirbhar Bharat’ and ‘Make in India’ initiatives, there is a strong push to empower the local manufacturing sectors that would, in turn, contribute to the production of innovative products at economical rates. As we enter a new decade and explore ways of recovering from the shock of a pandemic, it has become even more crucial to strengthen the innovation ecosystem by promoting grass root product innovation. Startups incubator like SIIC at IIT Kanpur create value by combining the entrepreneurial spirit of start-ups with the resources that are typically available to new businesses.
This centre encourages inventions that are strenuous to itinerate from our culture, traditions, and territory to rest of the world, but they are also critical to how Indian inventiveness can be directly used to transform our lifestyles, in ways that many corporate research laboratories in the west or US never can. It promotes indigenous innovators who comes from two primary sources: first semi-literates or illiterates, slum-dwellers or farmers who managed to refashion objects by marrying their own innate genius to their inherent understanding of ground conditions; and, second, innovations from universities and independent engineers that are then adapted back to suit Indian traditional environments. when the revenue crunch caused by COVID 19 pandemic was real, a few Indian startups managed to weather the storm, post impressive figures, and raised funding to enter the UNICORN CLUB because their product met unmet need. It has been possible because of the rapidly evolving startup incubation ecosystem in India. The surge in private equity funding has helped address the shortage of risk capital; ground-up infrastructure improvements (roads, electricity, and data computing) have widened our market access.
Riding on the government’s push for digitization, India’s startup ecosystem now stands firmly with over 300 incubators and accelerators, about 30,000 active startups. In 2018, institutional venture funding of over $4 billion channeled towards tech startups only speaks of the growing size of this ecosystem. With over 50 central and state government policies for supporting startups, the rails of policy and regulation are also getting stronger in India. The recent thrust on building technological infrastructure and enhancing the ease of business is further fueling the growth of the ecosystem. While economic challenges remain, we are positive about the strong political will and the promise of bold reforms for the long run to get the economy to $5 trillion. [iii]
The Startup Incubation and Innovation Center (SIIC) of IIT Kanpur works under a section-8 company called F.I.R.S.T (Foundation for Innovation and Research in Science and Technology). FIRST is promoted by IIT Kanpur and is governed by an independent Board. The Chairperson of the Board is Prof. Abhay Karandikar, the Director of IIT Kanpur. Prof. Amitabha Bandyopadhyay, the KENT Chair Professor and Prof-in-charge of Innovation and Incubation at IIT Kanpur is a member of the Board of FIRST and oversees the functioning of the incubator. The objective of FIRST is to institutionalize an ecosystem of grassroots product and service innovation to make product affordable and accessible: it is set up to integrate business community with innovators.’ The centre has emerged as the best place of interaction between business community and academia, has taken many forms- Consultancies, Startup company by academician, joint ventures between academic organizations and commercial ‘blue-skies’ hypothetical technology projects. SIIC’s approach to incubation of high-technology, critical and grassroot innovation, business-generating ventures depends upon its ability to tailor prospective individual innovators to think individually with a comprehensive understanding of technology markets and with susceptibility to potential challenges of flourishing businesses. In the phase of incubation mentors act as a catalyst allows innovators idea to be developed into financially viable enterprise and in last phase these enterprises provided with opportunities of strategic networking.
At this juncture of institutionalization of innovation at incubation centers performance has enhanced because it promotes primarily the consumer-driven innovation. Consumer-driven innovations are based on real needs and they offer solutions and enhance our overall product experience. If NOCCA robotics keeps on thinking other ventilators are their competition, it would innovate less. When NOCCA started thinking of cost-effective, affordable and easy to access doctors and patients as its competition, it moved ahead and made the world class ventilator in 90 days only. It broke the conventional trend of Indian product innovation to keep consumers at backseat. If innovation is timely relevant, unarticulated and targets even unimagined costumers the profit, market share and leadership would definitely follow.
Incubation centre’s multi-faceted approaches to enhancing institutionalize innovation outcomes will definitely allow young entrepreneurs to bring about real impact in the neo-liberal market society. It can help innovators to bring innovation at scale within complex socio-economic demands of India. These centres are the hope to uplift the people’s life from margins by providing wealth and employment. Understanding the fact that innovations need adequate time to market their product, Government of India should continue to support these innovators for long run. This is the only way to make our country ‘Self-Reliant’ and ‘Vishwaguru’.
[i] https://www.statista.com/statistics/613735/japan-research-and-development-expenditures/#:~:text=In%20fiscal%20year%202018%2C%20the,in%20the%20measured%20time%20period.
[ii] https://www.rediff.com/money/2004/aug/12ariban.htm
[iii] https://economictimes.indiatimes.com/why-99-9-of-fmcg-innovations-fail/articleshow/46918237.cms?from=mdr
[1] Niti Ayog Report on Innovation 2020
Vikash Prakash studied M.A Development (Public Health) at Azim Premji University, Bangalore. He is a Young Professional working with StartUp Incubation and Innovation Center, IIT Kanpur.