India & innovation: Why hasn’t India produced an Apple, Google or Microsoft?
January 8, 2010
A New York Times article recently made an interesting observation: While American and European workers worry about their jobs being outsourced to India, Indians are worried that their country will be more like “Scranton PA” rather than “Silicon Valley.” In other words they worry over the fact that while India has achieved phenomenal success in becoming the world’s back office, it has not quickly moved up the value chain into more lucrative work. So why hasn’t India itself produced an Apple, Google or Microsoft and can India actually innovate?
The New York Times article cites historical reasons for some of India’s present difficulties on innovation front. After all and during British colonial rule, economic activity was dictated by imperial interests while after independence, socialism and state ownership of companies and banks stifled entrepreneurism. India’s embrace of the free market staring in the 1980s and 1990s did lead to the creation of successful outsourcing giants like Infosys and Wipro and to the rise of Bangalore as a major IT hub but outside the services sector and especially in manufacturing, the economy remains largely mired in bureaucratic regulations.
And while India has made progress in freeing up the services sector which, in theory, should foster innovation, the country slipped by 18 ranks from 23rd to 41st position in the Global Innovation Index 2008-09 (which is compiled by the INSEAD Business School and in collaboration with the Confederation of Indian Industries). And although India did well compared to other developing countries in certain categories such as ranking 23rd place for knowledge (between Canada and Norway), 24th for competitiveness (between Malaysia and Norway) and 28th for human capital (between Chile and the United Arab Emirates); it also ranked 76th for ICT infrastructure (between Venezuela and Syria) and 50th for business sophistication (between China and Panama). Digging deeper into the category rankings, India ranked 3rd for the quality of its scientific research institutions and 11th for the extent of local staff training, it also ranked 51st for Intellectual Property (IP) protection, 64th for the burden of government regulations, 94th in ‘Internet Users per 100’ and 115th in ‘Mobile phone subscribers per 100’ categories. Furthermore, the report warned that overall, India could slip even further in the innovation rankings for 2009-10.
However and while the above statistics about India and innovation are mixed, some companies are betting big on Indian innovation. For example, the Hindu Business Line recently noted that when EMC Corp. held its third EMC Innovation Conference, 617 submissions out of a total of 1,400 were from India. The company has also announced that it will invest up to US$1.5 billion in India over the next five years and R&D spending will account for a major chunk of this spending. In addition, India has recently signed a Memorandum of Understanding (MoU) with the UN’s World Intellectual Property Organisation (WIPO) to help promote the use of Intellectual Property (IP) for economic, social, cultural and technological development as well as assist in the implementation of its national IP and innovation strategy and to build awareness about how critical IP is for promoting innovation.
Hence, we would like to ask our readers what they think of the state of innovation in India. Simply put, is India right now capable of creating the next Apple, Google or Microsoft? If not, what does India need to do in order to foster innovation at home?