Prof. M. K. Bhat
Prime Minister Narendra Modi in his Independence Day speech from the ramparts of Red fort gave the mantra of Jai Anusandhan (innovation)for the growth of country.He added jai Anusndhanto the slogan, of Jai jawan jai kisan by Lal Bhadur Shastri, prior to him Atal Bihari Vajpayee had added Jai Vighyan to it. P.M. Modi said on the micro blogging site twitter that “innovation is the buzzword across India.Proud of our innovators. we have come a long way and want to scale even newer heights”. This has been corroborated by the Global innovation index. As per the global innovation index unveiled by world intellectual property organization, India in 2022 has entered for the first time in the innovation list of 40 economies, jumping six places from last year. It stood at 50th position in 2020 and today at 40th position it stands ahead of central and South Asian region. In 2015, India stood at 81st position. “India is slowly growing into the Global innovation hub” as per Piyush Goyal,commerce and Industry Minister, GOI.
Ministry of Education has established innovation cells since 2018,in the institutions of higher studies to foster the culture of innovation among the youth of the country. Many people have enterprising ideas who dream of their own business but lack resources to do so; their capabilities remain untapped and the country loses on wealth creation, employment and economic growth. The innovation cell encourages,inspires and nurture young minds by supporting them to work with new ideas and transfer them into prototypes while they are in institutions of higher learning.
Earlier these institutions were in the rat race of packages only, thereby produced job takers rather than job givers. The entrepreneur incubation centers like Atal labs help students to give a practical shape to their ideas and create vibrant local innovation eco system. It is a fact that startups are making a landmark difference on the economic scene of the country in terms of employment, accelerating the growth rate,and increasing production at low cost etc. They help to increase the innovation and competition in the economy.
Startups have become a beacon of the economic growth of the country in recent years.Their success is being globally noticed and the ecosystem in India is being streamlined to help them to grow in unicorns at a much greater speed than it used to be earlier.India has emerged as the 3rdlargest eco system for startups globally with over 77000 DPIIT recognized startups across 656 districts of the country as on August 29th 2022.It may be held that till financial year 2016-17 Unicorns used to grow at the rate of one unicorn per year since than this number has increased at an alarming rate of 66% year on year growth every year.As on sept.7, 2022 India has got 107 unicorns with a total valuation of $340.79 billion,out of the total number of unicorns ,44 unicorns with a valuation of $93billion were born in 2021 and 21 unicorns were born in 2022.The unicorn boom in 2021 was mainly due to Pharma sector and digitalization of business during pandemic.Indian Business used the pandemic as an opportunity and got success in e-commerce, fin tech,supply chain, and logistics, internet software and lately unconventional sector such as gaming, hospitality, data management and analytics are also making their presence in the list. The Techade 2020 highlights 9 technologies, three basic technologies- big data and analytics, cloud computing, and cyber security; six advanced technologies namely artificial intelligence, internet of things, 3D printing, Robotics and block chain can contribute a lot to the growth of startups.
In India, innovation is not confined to any sector rather we have recognized startups solving problems in 56 diverse industrial sectors with 13%from IT services ,9% health care and life sciences ,7% education ,5% professional and commerce services,5% agriculture and 5% food and beverages.
The journey of every startup to become a unicorn varies from 6months to 26 years.Mensa Brands took only 6 months to become a unicorn in 2021 and thereby became the fastest unicorn of Asia in 2021.The high potential of unicorns is universally being recognized and every country is trying to upgrade the system accordingly.This has made the transition of startups from unicorns to decacorns easy.As on July 2022,46companies world over had achieved the decacorn status and India has 4 startups in the decacorn cohort.
It is no doubt that Indians bear a good temperament for innovation. Their “Juggad” technology got international acceptance.It is however, worthwhile to mention here that lack of support infrastructure like incubators, science and technology parks, business development centers and other such facilities can increase the chances of failure.
It is a fact that large number of unicorns have come up in last three to four years but sustaining of unicorns is even more important.The achievements through startups can grow and sustain only by spending more on science and technology.The gross expenditure on research and development as percentage of India’s GDP hovers around 0.7 percent while as in Israel it is 4.6%,South Korea 4.5%,Japan 3.2%Germany 3% USA 2.8%,France 2.2%,U.K1.7%, Canada 1.6%, China 2.1%,Brazil 1.3%Russia 1%. India’s spending onR&D is lower than even BRIC nations.
Under the union budget 2022-23 govt. announced an allocation of Rs 14217 crore (US$ 1.86 bn) to the Ministry of science and technology,Dept. of atomic energy was allocated 22723.58 crore(us$2.97 bn),the department of science and technology (DST was allocated Rs 6000 crore (US$ 785.64million) and the Ministry of earth sciences was allocated Rs 2653.51crore(US $ 347.45 million).India’s national gross expenditure on research and development in2012-13 stood at Rs 73892.79 crore.
It is not only low investment in Research and development but the interest for research also lacks. In health care there is interest for research while as in other fields the interest for research is on a lower side. There is over bureaucratization and red tape that inhibits the growth of research. The orientation towards research is lacking in the curriculums. The education system has to be research oriented. Many times, the corporates complain about the usability of the work force.
Government has taken various initiatives to help the startups, mention can be made of First, Startup India;this initiative gives three years tax and compliance break intended for cutting government regulations and red tape. Second in this respect is Mudra Yojana; through this scheme a startup gets loans from the banks to setup,grow and stabilize the business. Third initiative in the row is SETU(self-employment and talent utilization)Fund. Government has allotted Rs 1000 crore in order to create opportunities for self-employment and new jobs mainly in the technology driven areas.Fourth E biz portal;Government launchedE biz portal that integrates 14 regulatory permissions and licenses at one source to enable faster clearances and improves the ease ofdoing business in India.Fifth Royalty tax;Govt of India has reduced the royalty tax paidby businesses and startup firms from 25% to 10%.
The chances for startups to grow in India are quite high especially for those catering to local and niche markets as at the bottom of the pyramid there is an ample scope for basic products and services like food,clothing, household appliances, hospitality etc. This could be viable and sustainable. They have potential of early revenue generation too.
The author is Professor (M.A.I.T) Guru Gobind Singh Indraprastha
University, Delhi