Importance of innovation for India

New report: Importance of Innovation for India

India is the world’s fastest growing major economy, supported by an increasing concentration of innovative firms and industries. Recognizing the need to continue to foster a strong innovation ecosystem, the National Institution for Transforming India (NITI) Aayog – the Indian government’s premier think tank – with the Institute for Competitiveness recently published the first India Innovation Index. The Index evaluates who and what are driving innovation at the state and regional levels in the country and provides feedback on the existing environment and recommendations for best practices going forward.

Introducing the report, lead author Amit Kapoor referenced the importance of innovation in driving economic progress and social welfare for India: “Throughout history innovation has been one of the most powerful means of driving growth and prosperity of nations. This is especially true in modern times where innovation in every field is taking place at such a pace that failing to do so can sound the death knell for economies.”

Indian policymakers may be embracing this fact, working to introduce a New National Intellectual Property Rights Policy and making innovation a centerpiece of the government’s New India 2022 strategy. Indian leaders have also aimed to ease restrictive laws that slow down progress through the Make in India campaign, and have expanded entrepreneurship through the Startup India initiative.

That said, as the report notes, there is still plenty of work to be done to improve India’s innovation ecosystem. The Index finds significant regional innovation disparities with respect to enablers of innovation, like the concentration of research institutions in the southern part of the country. Indian states can, therefore, learn from their peers to address these gaps. The level of expenditure on research and development can also be improved across regions to improve innovation outcomes.

“Regions at any level of economic development can enact and enforce fair and open procedures, protect property rights, regulate markets efficiently, and lower the burden of regulations.” – India Innovation Index

The report further notes several institutional gaps that India can overcome to support innovators and drive innovation. For instance, there needs to be better coordination between the industry and the government with respect to the country’s IP environment and its harmonization with global standards. Such efforts can better incentivize innovation and encourage investment from both Indian and international companies. The Indian government can work in consonance with the industry to address these aspects of its legal environment with respect to innovation.

Nevertheless, Indian leaders are aware of the opportunities for growth and improvement, with the potential to develop best practice approaches more universally. In fact, “regions at any level of economic development can enact and enforce fair and open procedures, protect property rights, regulate markets efficiently, and lower the burden of regulations.”

A roundtable of academic and business leaders convened by the report’s authors last year and noted in the Index emphasized the importance of encouraging innovation and maintaining transparent and predictable patent standards. They specifically highlighted the need to communicate with manufacturers instead of rushing into policies such as compulsory licensing that violate international intellectual property standards.

Dr. Kapoor concluded his letter on a positive note: “Countries around the world are beginning to understand the urgency to innovate and shifting their policy focus towards building innovative capacities. Countries like China and Saudi Arabia are pursuing innovation as a long-term strategy. It is heartening to see that India is showing equal enthusiasm towards enhancing its innovative spirit.” By affirming their commitment to intellectual property rights, Indian leaders can empower the innovators that drive the Indian economy forward and set a positive, innovation-friendly example for other emerging economies.

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