Is India Innovative?

A new study by the credit rating agency Standard and Poor's suggests that India may become the first "BRIC" country to lose its investment grade rating. Is a lack of innovation the reason?

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Just a few weeks ago, global credit rating agency Standard and Poor’s (S&P) released a study titled, “Will India be the first BRIC fallen angel?” The report suggests that India may become the first “BRIC” country (Brazil, Russia, India and China) to lose its investment grade rating. While it remains to be seen if India can escape this ignominy, the country has earned another dubious distinction: It ranks the lowest among the BRIC nations on the Global Innovation Index 2012.

This innovation index was released recently by the international business school INSEAD and the World Intellectual Property Organization (WIPO) along with the Confederation of Indian Industries (CII), Alcatel-Lucent and Booz & Co. The index ranks 141 countries on the basis of their innovation capabilities and results. Brazil, Russia and China were ranked 58th, 51st and 34th respectively. India stands at the 64th position, two notches below where the country landed last year.

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According to the study, “The innovation front in India continues to be penalized by deficits in human capital and research; infrastructure and business sophistication, where it comes last among BRICs, and in knowledge and technology outputs, where it comes in ahead of Brazil only.” The report also notes that the BRIC countries need to invest further in their innovation capabilities to live up to their expected potential.

Vijay Govindarajan, a professor of international business at Dartmouth College and the first professor-in-residence and chief innovation consultant at General Electric, points out that innovation is critical to India’s future. He suggests that the government must provide seed capital to strengthen applications research and create incentives for universities, research labs and industry to collaborate. “Much is at stake if India does not move up on the Global Innovation Index,” Govindarajan says. “Without business model innovations, India cannot solve the problems for 90% of Indians. Such innovations can then be used to launch global strategies. This is the essence of reverse innovation [innovations adopted first in the developing world] — where India can lead.”

As part of the same report, India is ranked second (behind China) in the global innovation efficiency index. (The innovation efficiency index is the ratio of innovation input and innovation output.) Chandrajit Banerjee, director-general of CII notes that innovation efficiency is “a ratio and not a direct measure …. [This implies that] while India can produce innovation output best in the world when equal amounts of input are fed into its innovation ecosystem, it also needs to strengthen certain innovation drivers that will improve the situation.”

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Gopichand Katragadda, managing director of General Electric’s John F. Welch Technology Center in Bangalore adds: “The results of the study point to the fact that, in India, the innovation ecosystem (input) is poor while the knowledge/creative output under the constraints is good. One interpretation of this is that we need better government measures on regulations, education and infrastructure to tap the demonstrated potential of talented people.”

According to Katragadda, if India does not get its act together on the innovation front, the country could lose the opportunity “to make this a century of Indian innovation, tapping into the brilliant technical minds of the region.”

Republished with permission from Knowledge@Wharton, the online research and business analysis journal of the Wharton School of the University of Pennsylvania.

10 comments
zensprings
zensprings

Things are changing. India will prove it.

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Chhajuram Induscharwak
Chhajuram Induscharwak

India works in poorest of poor situation and the reason is that at that point of time all Hippocrates go to frustration and then real talents come into play without hinderance. 

Sreedhar
Sreedhar

There are lot of factors that can be attributed to this crisis. One of the factors that needs special mention is the continued brain drain. Innovation triggers from human brains :) The brightest of the talent are heading to the States. From what is left in India, they are seeing a great hindrance in terms of shabby politics,  autocratic bureaucracy and  rampant corruption. Innovation has to come from all sectors.  The young generation in India is highly inclined towards Information Technology due to quick bucks and nice opportunities to go around the world. This trend has to soon change or else we will reach a point where our imports far exceed our exports.

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Raymond Chuang
Raymond Chuang

Between too much political/religious factionalism, the inability to shed obsolete/unneeded business regulations, and having to support nearly 1 billion people on the Indian subcontinent, no wonder why India may lose its "investment grade" status. Indeed, the country is starting to regress into its old ways....

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Yashwanth Dhakshana
Yashwanth Dhakshana

whenever india appears to "regress into its old ways" it always rebounds and shocks and awes the world. whether it was in 1990 when the economy was collapsing and the country unleashed a wave of reforms changing it from one of the poorest economies on earth to one of the wealthiest in a mere 22 yrs. or more recently, the commonwealth games which appeared to have been a disaster but were saved at the last minute and declared a grand success; the opening ceremony was one of the best if not the best in the history of the games. right now people are writing india off again but - as history has shown - that's never a smart decision. indian politicians have realized that reforms are the need of the hour and working hard to push them through by october; the country will rebound stronger then ever. 

sumitron_2k
sumitron_2k

This is where the problem lies. It is evident that a problem is looming on the economy primarily because of the corrupt, slow amp; indecisive govt. But people would rather talk about the Indian greatness than  addressing the issue. No body denies the fact India has potential to do well but its not a miracle which would make thsi happen. 

Commonwealth was just a waste of money where taxpayers or common   mans money became wealth of corrupt officials. How does so called grand success of the game translate to a successful economy idk.