On the heels of the welcome news of India improving its ranking in the Global Innovation Index (GII) in 2016 against last year, came a more pressing development. The Indian government announced that a team would be set up to advise on how India’s position could be bettered in the sphere of innovations.

India also made a case for modifying the methodology for calculating the index so that it could be more reflective of conditions existing in the developing nations.

Commerce minister Nirmala Sitharaman told World Intellectual Property Organisation (WIPO) director Francis Gurry that WIPO should have an external office in India. A formal proposal in this regard has already been submitted and India is ready to offer free-of-cost premises for opening the office.

Initiatives such as these are certainly appreciated. Not to say that the improvement of ranking by 15 positions from 81 to 66 over the span of just one year is by any means a small feat. But one has to remember that coming after five years of decline, the improvement, although commendable, is far from satisfactory.

First, the positives

India maintained its numero uno position in the GII this year as in 2015 among South Asian countries. Switzerland, Sweden, UK and the US led the index, while China joined the world’s 25 most innovative economies, in the process also becoming the first middle income country to enter the league in its nine editions of surveying over 100 economies.

The positive change in the case of India has been the improvement in its ranking among lower-middle-income economies. India moved two spots up to be in the sixth position this year. The country ranks among the top 50 economies overall in market sophistication (33rd), and knowledge and technology outputs (43rd).

“Some progress can be detected among lower-middle-income economies. India is a good example of how policy is improving the innovation environment,” the report stated.

In case of the quality of universities and number of citations, too, India’s score is beginning to approach that of China. India came in 2nd among middle income economies and 20th overall in the case of university rankings. In patent families, India ranks 37th overall but third among middle-income countries.

Most of the improvement witnessed in India could be dedicated to positive changes in human capital and research and Business Sophistication.

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India has done better in a new value of index – graduates in science and engineering

One point that is worth mentioning here is the increase in India’s data coverage within Human capital and research, specifically in the case of graduates in Science and Engineering – which was a missing value in 2015. Data availability in India is anyways patchy and often incredulous, so any effort in improving that is commendable.

In terms of the quality of innovation, which includes assessing the worth of universities, scientific output and patents, countries that showed excellence were Germany, Japan, UK and USA. In fact, China is the only middle-income country showing a comparable innovation standard with these giants, with India coming in second.

To add another feather in India’s cap, India also figured among the ‘innovation achievers’ in South Asia, along with Tajikistan. The report defines ‘innovation achievers’ as economies that perform at least 10 percent higher than their peers for their level of GDP.

So much for the good news

On the flip side, India showed weakness in two areas: Business environment, where it ranked 117th and Education at the 118th position. The report stated that India needs to address limitations in the areas of starting a business in the case of the former, while in the case of latter, improvement is critical in pupil-teacher ratio and tertiary inbound mobility.

Among the BRICS bloc of nations, China had the best ranking at 25, followed by Russia at 43, South Africa at 54, and Brazil at 69. In case of the input index, India fared poorer than all other BRICS countries ranking at 72nd position, while in case of output index, India’s rank was 59, just above Brazil and South Africa.

Data provided by the Ministry of Human Resource Development testifies to the poor state of pupil-teacher ratio (PTR) in the country. In the year 1951, PTR in primary school was 24. This increased to 28 in 2013-14. Only in the case of secondary and higher education levels did we see a decline in the ratio.

On the input side, progress is needed in environmental performance and on the output side indicators measuring new businesses, global entertainment and media market and printing and publishing manufactures all show room for improvement.

In the case of efficiency ratio, India ranked 63. Efficiency ratio shows how much innovation output a given country is getting for its inputs. In this case, India fared better than Russia (69), South Africa (99) and Brazil (100), but significantly badly compared to China, ranked at 7.

This just goes on to show that despite the huge demographic advantage India has, it has not been able to deploy it to optimum use, unlike the case of China. The Prime Minister’s Skill India Mission is one such initiative which targets skilling youth in the country to ensure them jobs. But its one year report card has highlighted poor results. A recent instance proving India’s challenge with producing quality outputs has been brought forth in the Welspun India case where the US retailer Target Corp has severed ties with the former accusing it as passing off cheaper sheets as premium Egyptian cotton for two years.

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India started to excel in ICT services but challenges persist – Image credits: Noopur28 (Own work) [CC BY-SA 3.0], via Wikimedia Commons

In dimensions such as ICT services exports and creative goods exports, the report states that India is starting to excel – a trend which has been observed in the case of other middle-income economies as well. But if we consider India’s realization of ICT-enabled gains, challenges persist at even the most basic level. Majority of people in India do not have access to the internet. The World Development Report 2016 showed that India has the highest number of offline people in the world at 1063 million, followed by China at 736 million. ICT employment also constitutes a very small share of overall employment at a meager 0.87%.

Just how long a road India has to travel to become an innovation powerhouse is well explained by India’s patent application figures.  An analysis of patent applications by a 2014 Mint report shows that while the numbers have increased over the last decade, India still trails its peers. According to the study, the number of patent applications by residents in India is much lower than the numbers for comparable economies such as China and Russia.

Again, the GII report has identified India and China as the most important destinations in the Global South for technology-driven foreign direct investment (TFDI), with China receiving nearly 17% of all the R&D cross-border investments and India at 14.7%. But despite this, investment growth rate in both these countries for TFDI has not been steady. “The number of TFDI projects towards China had dropped 2.3% and towards India had dropped 7.3% by 2012,” the report stated. This has also been because TFDI in the Global South is not a raging phenomena. Most economies investing in technology tend to go North.

A jump in final score based on Human capital – graduates in science and engineering does not necessarily mean that we have great innovation potential. Recent national employability report by Aspiring Minds points out that the country continues to consistently produce huge number of unemployable engineering graduates. In addition, the study finds only 3.84 percent of graduates qualify for start-up technology jobs. The World Development Indicators also show that India has consistently performed poorly as compared to the world average as well as against its peers in the case of researchers in R&D per million people.

For India to move up the innovation ladder, it is important that both the public and the private sector participate actively in research and development related work. On the other hand, more people also need to participate in reducing the backlog and improving speed and efficiency so the world can take notice. Clearly, the road to innovation excellence is going to be a long one for India.

 

 Featured Image:India moved 15 positions up in Global Innovation Index 2016 – Image Credit: ISRO Media Gallery