Innovation Index 2019

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TOPIC: General Studies 3

Indian Economy and issues relating to planning, mobilization, of resources, growth, development

In news: India improved its ranking in Global Innovation Index, 2019 by five notches to 52nd position in a survey of innovative capacity among 129 countries by the World Intellectual Property Organisation (WIPO). India also outperformed on innovation relative to its GDP per capita for nine consecutive years, only matched by three other countries. (Vietnam, Republic of Moldova, and Kenya)

While Switzerland continued to top the ranking, Israel (10) was the only new entrant in the top 10 ranking, China further improved its ranking to 17th position from 20th last year.
India has improved its innovation ranking from 29 spots in last five years from 81th position in 2014 to 52th position in 2019. In comparison, India’s rank in World Bank’s Doing Business survey has improved 65 spots to 77th position in 2018.

In Detail

India improved its ranking in four out of seven pillars of GII, such as knowledge and technology outputs (up 11 spots to 32nd), market sophistication (up 3 spots to 33rd), human capital and research (up 3 spots to 53rd), institutions (up 3 spots to 77th). By contrast, in business sophistication (65th), infrastructure (79th), creative outputs (78th), it lost one, two and three spots respectively.

The Jumps

In the “knowledge and technology outputs" pillar, which saw the highest 11 spot jump, India’s ranking improved for IP-related variables, notably patents by origin (52nd) and PCT patents by origin under Patent Cooperation Treaty (51st), and IP receipts (50th). In this pillar, India maintained its top position in ICT (information and communications technology) services exports, where it ranks 1st in the world, and in labor productivity growth with 4th position.

India ranks 2nd among the middle-income economies, with top positions in quality of universities and in quality of scientific publications. Indian Institute of Technology situated in Bombay, Bengaluru and Delhi occupied the 8th, 9th and 10th rank respectively among the top 10 universities in the middle income countries.

In “Human capital and research" pillar, two important variables have improved for India: Gross expenditure on R&D (50th) and expenditure by global R&D companies (15th) which is a relative strength for the country.

“India is consistently among the top in the world in innovation drivers such as ICT services exports, Graduates in science & engineering, the quality of universities, Gross capital formation—a measure of economy-wide investments—and Creative goods exports. India also stands out in the GII ranking of the world’s top science and technology clusters, with Bengaluru, Mumbai, and New Delhi featuring prominently among the global top 100 clusters. Given its size—and if progress is upheld—India will make a true impact on global innovation in the years to come," the report said.

The lows

Among the sub-pillars, where India lost relative strength to other countries, the largest drops are found in logistics performance (down 9 spots to 43rd), Females employed with advanced degrees (down 10 spots to 103rd) and Printing and other media (down 12 spots to 88th).

“While India improved in the GII ranking, some relative weaknesses still persist. These include Environmental performance (125th), New businesses (100th), and Entertainment and media market 60th)," the report said.

The Way Forward

Improvement in innovation index is great, but India must do more. India needs to boost its innovation ecosystem by intertwining among various stakeholders like the government, industry, academia and society to transform India as an attractive innovation destination.

Although the STEM talent pool in India is large, a large section of this pool may not be of high-quality. Moreover, the GER at the tertiary education level in India is a low 26% meaning, a vast reserve of potential research talent is lost. Thus, while India is within touching distance of breaking into the top-50 innovator countries in the world, it is still quite far from a China, which filed, for instance, 53,345 patent applications with the WIPO in 2018 versus India’s 2,013. India is an odd juxtaposition of stellar successes like the Chandrayaan and digital payments and a large number of unemployable engineering graduates and institutes that have virtually no autonomy.

Take lessons from Israel

Israel has entered into the top 10 list — first by any country from the Northern Africa and West Asia region. It was not an easy journey for the ‘Startup Nation’ which has given the world innovations such as drip irrigation, USB drive, firewall (cyber security) and precision farming to name a few. Israel, which came into being around the same time as India in 1948, has a lot of lessons to offer for its ally — especially when it comes to converting challenges into a competitive advantage. With a population of just 8.5 million, it has a very small domestic market.

Its policy-makers decided early to invest in human intellectual capital and create a knowledge-based economy. By doing so they hoped that Israel could become home to technology focussed industries that do not depend on natural resources that their country sorely lacks while, at the same time, offering products that could be easily exported (despite an unfriendly neighbourhood) to meet the demand anywhere in the world.
They began by investing in a strong education system. Today, Israel spends 7 per cent of its GDP on education. Over 45 per cent of its adults complete tertiary education. Its investment in R&D is the highest in the world (4.2 per cent of its GDP) with a third of that going into universities. Israel has the largest number of hi-tech startups per capita than any other country in the world. Tel Aviv houses the second largest startup eco-system after Silicon Valley. Not surprising that, hi-tech exports accounts for 45 per cent of its overall exports.
To tackle the security issue that comes from being surrounded by enemies and constantly fighting terrorism, the country invested heavily in cutting-edge technologies. Today, the Israeli military is a national incubator and a significant catalyst for innovation.
Faced with adversities, Israeli’s are never happy with status quo and constantly try to improve things. This has given birth to a trait they call ‘chutzpah’. Failure is accepted in the society and you are encouraged to try again. It helps that mentoring is a deeply entrenched habit.

Like Israel, India needs to invest heavily in education and R&D. Our investment in R&D is a paltry 0.7 per cent of GDP. Very little of this goes to universities considering that a bulk of public R&D goes into space, energy and defence sectors. China, another large economy, has managed to up its R&D investment from 1.3 per cent in 2006 to 2.18 per cent in 2018. So size is not an issue here. It is just the intent.

Many experts have faulted India’s innovation that focusses on getting products and services to people at an affordable cost, rather than aiming for global leadership. They are wrong. Solving India’s challenge will eventually open opportunities for Indian enterprises globally. That is exactly what Israel did.

Note

The Confederation of Indian Industry (CII) has been orchestrating initiatives towards creating and fostering innovation among the Indian industry and encouraging entrepreneurial ventures.

Global Innovation Index

The GII has been jointly developed by the WIPO, Cornell University and Paris-based business school Insead and includes more than 80 indicators exploring a broad vision of innovation, including political environment, education, infrastructure and business sophistication.
This year’s GII theme “Creating Healthy Lives: The Future of Medical Innovation” is important and relevant for India because we would need a strong focus on medical innovation towards the goal of bringing healthcare and its delivery to all Indians.
This year, India is hosting the launch of the 2019 edition of the GII. India is also currently engaged in opening WIPO-supported Technology and Innovation Support Centers (TISCs) in the country, which will help local innovators and creators research and market their products.
In 2016, India created a high-level Task Force on Innovation to improve its innovation system based on the GII metrics. In collaboration with WIPO, the first India Innovation Index — focusing on ranking Indian States — was released in 2018.