Report Card

Wed, Oct 28 02:39 PM

There is a strong feeling that India is becoming very innovative, especially in the West. This study* takes the reader through the empirical evidence on whether this is indeed the case since the reform process of 1991:

India is definitely on a higher economic growth path. There is evidence to show that innovative activities in the industrial sector have shown some significant increases during the post-reform process. Hi-tech industries now contribute over 5% of India's GDP. The innovative activity is, of course, restricted to a few hi-tech industries. There is even some macro evidence to show that the productivity of RandD investments in India is higher than in China, although this proposition requires careful empirical scrutiny before firm conclusions can be reached. This rise in innovative activity is largely contributed by the domestic private sector if one takes into account all the indicators. Within the domestic private sector innovative performance is largely confined to the pharmaceutical industry. In short, India's national system of innovation is to a large extent dominated by the sectoral system of innovation of its pharmaceutical industry and as such this trait is not widespread. Increasingly, MNCs operating from India are also contributing to enhancing the country's innovative performance. This is very likely the consequence of ever increasing FDI in RandD. Most of the MNC patents are in the IT industry. In short, it may not be incorrect to draw the conclusion that India's pharmaceutical and IT industries are becoming innovative, although domestic enterprises are more active innovators only in the former industry, while it is the MNCs that are active in the latter industry.

—* Sunil Mani, Has India Become More Innovative Since 1991? Analysis of the Evidence and Some Disquieting Features, Working Paper 215, Centre for Development Studies, September 2009

Inside News

Editor's picks