science technology and innovation policies in india: changing perspectives and missing links k j...

Science Technology and Innovation Policies in India: Changing Perspectives

and Missing links

K J Joseph & Dinesh Abrol

An Overview

Introduction Evolution of S&T policies

Focus on Self–reliance (1947 to c1980) Scientific Policy Resolution (1958) Internal liberalization (c1980 to-1990) Technology Policy Statement, 1983 Globalization Phase Science and Technology Policy 2003 S&T Performance: Empirical overview

A critical Appraisal

Focus on self–reliance (1947 to c1980)

The background Colonial experience & and transforming an

economy that has been stagnant for a century Export pessimism and import substitution Soviet performance and memories of great

depression Development strategy by Nehru (first prime

minister), Gandhi and the Orthodox school Other policies (eg, industrial, trade, fiscal) also

had significant bearing on science and technology

Focus on Self–reliance (1947 to c1980)

Scientific Policy Resolution (1958)“The wealth and prosperity of a nation depend on the effective utilization of its human and material resources through industrialization. The use of human material for industrialization demands its education in science and training in technical skills. Industry opens up possibilities of greater fulfillment for the individual. India's enormous resources of man-power can only become an asset in the modern world when trained and educated.”

Friedrich List : National System of Political Economy 1841

“ the present state of nations is the result of the accumulation of all discoveries, improvements perfections ….. of all generations which have lived before us; they form the intellectual capital of the present human race,and every separate nation is productive only in proportion to which it has known how to appropriate these attainments of former generations and to increase them by its own acquirements”

Focus on Self–reliance (1947 to c1980

SPR (1948) “In industrializing a country, heavy price has to be paid in importing science and technology in the form of plant and machinery, highly paid personnel and technical consultants. An early and large scale development of science and technology in the country could therefore greatly reduce the drain on capital during the early and critical stages of industrialization” – Emphasis of self reliance

Friedrich List- Infant industry protection


The SPR (1948) interalia aimed to foster, promote, and sustain, by all appropriate means, the

cultivation of science, and scientific research in all its aspects - pure, applied, and educational;

to ensure an adequate supply of research scientists of the highest quality

to encourage, and initiate programs for the training of scientific and technical personnel, on a scale adequate to fulfill the country's needs

to encourage individual initiative for the acquisition and dissemination of knowledge, and for the discovery of new knowledge, in an atmosphere of academic freedom;

to pursue and accomplish these aims by offering good conditions of service to scientists and according them an honoured position, by associating scientists with the formulation of policies, and by taking such other measures as may be deemed necessary from time to time.


In the context of SPR (1948) Policy initiatives & institutional arrangements to promote

research in atomic energy, defense, space & electronics and areas

National wide net work R&D labs with regional and national focus under the CSIR

Setting up of IITs, large number of engineering colleges and universities for generating human capital

Promotion of agricultural research to usher green revolution and achieve self sufficiency in food

The Indian patent act on 1970 facilitated reengineering through process patent instead of product patent

Liberal approach to FDI and foreign technology in the initial years and later moving towards a much restrictive regime


An array of support measures (institutional & fiscal) Setting up of National Research Development Corporation

(NRDC), engaged in licensing of indigenous technologies to industry and also makes available, comprehensive know-how documents on the licensed technology to the potential user

Accelerated depreciation allowance on plant and machinery used for indigenous technology development,

Customs duty exemption on imported equipment; Price control exemption on domestic R&D based Bulk Drugs; National Awards for Outstanding R&D Achievements Income Tax Relief on R&D Expenditure; Donations to

Scientific Research Organisations; Tax holiday to Commercial R&D Companies; Customs and

excise duty Exemption to Non‑Commercial Research Institutions (SIROs);; Excise Duty Waiver on Patented Products.


Major achievements In Atomic Energy, space defense and others Self sufficiency in food production Establishment of a broad-based industrial

structure R&D mostly by pubic sector units and limited

role for the private sector While major achievements in Big science “Regrettably, all these achievements have not

found proportionate reflection in the well-being of poor”- Prime minister in 1977

Also, import-substitution – self-reliance and associated bureaucratic controls has had its adverse impact on the growth performance of the economy

Internal liberalization (c1980 to-1990)

Technology Policy Statement (TPS), 1983 “Political freedom must lead to economic independence and the alleviation

of the burden of poverty. Our own immediate needs in India are the attainment of technological self-reliance.. Technology must be viewed in the broadest sense…Our directives must clearly define systems for the choice of technology, taking into account economic, social and cultural factors along with technical considerations; indigenous development and support to technology; acquisition of technology through import and its subsequent absorption, adaptation and upgradation; ensuring competitiveness;

Establishing links between the various elements concerned (NSI?) with generation of technology, its transformation into economically utilizable form - the sector responsible for production, financial institutions concerned with the resources needed for these activities, and the promotional and regulating arms of the Government.

Internal liberalization (c1980 to-1990)Liberalization Phase I & TPS 1983

The basic objectives “Will be the development of indigenous technology and efficient absorption and adaptation of imported technology appropriate to national priorities and resources.” It aimed inter alia to:

Attain technological competence and self-reliance; Building up of human capital

provide the maximum gainful and satisfying employment to all strata of society, with emphasis on the employment of women and weaker sections of society;

use traditional skills and capabilities, making them commercially competitive;

develop technologies which are internationally competitive, particularly those with export potential;

reduce demands on energy, particularly energy from non-renewable sources;

ensure harmony with the environment, preserve the ecological balance and improve the quality of the habitat; and

Internal liberalization (c1980 to-1990)

Different initiatives under TPS (1983) included

The Program Aimed at Technological Self Reliance (PASTER)- now known as Technology development and demonstration program (TDDP) aims at technology adaptation by research design and development executed by the industry and overseen by the exports from Lab/university: 150 projects were supported- 65 completed, 15 patents filed

Technology Absorption and Adaptation Scheme

National Register on Foreign Collaboration..

S&T for Weaker sections.., S&T for Rural Development

Science & Technology Entrepreneurship Park (STEP) –1984 jointly with financial institutions, state Govts and academic institutions – 15 such STEPs

Incentives for in-house R&D and technology development to industry Establishment of TIFAC

Globalization Phase (Since 1990s)

India Embarked on Globalization with a vibrant National Innovation system evolved over the years and its performance since 1991 has to be seen against this background

New Industrial Policy of 2002 and Science and Technology Policy 2003 During the 50 years since Independence, India has been

committed to the task of promoting the spread of science. The key role of technology as an important element of national development is also well recognized. There is today a sound infrastructural base for science and technology -research laboratories, higher educational institutions and highly skilled human resource.

Major national achievements include very significant increase in food production, eradication or control of several diseases and increased life expectancy


objectives included The alleviation of poverty, enhancing livelihood security,

removal of hunger and malnutrition, reduction of regional imbalances,generation of employment, by using scientific and technological capabilities along with traditional knowledge pool (inclusive growth).

To vigorously foster scientific research in universities and other academic, scientific and engineering institutions; and human capital formation

To promote the empowerment of women in all science and technology activities and ensure their full and equal participation.

To use the potential of modern S&T to protect, preserve, evaluate, update, add value to, and utilize the traditional knowledge base


Objectives.. To ensure, in an era in which information is key to the

development of science and technology, access to information at affordable costs;

To establish an IPR regime which maximises the incentives for the generation and protection of intellectual property by all types of inventors.

To promote international S&T cooperation towards achieving the goals of national development and security, and make it a key element of our international relations.

This Policy, reiterates India's commitment to participate as an equal and vigorous global player in generating and harnessing advances in science and technology for the benefit of all humankind.

Trends in Technology Import

Trend in Foreign Collaborations

245 271

525

1041

1520

23372270

0

500

1000

1500

2000

2500

1971 1975 1980 1985 1992 1995 2002

Series1

Globalization (Post 1991)

Different initiatives included Technopreneur Promotion Program (TePP) jointly by TIFAC

(DST) and DSIR in 1998 to tap the innovation potential by providing support to individual innovators for converting an original idea into working prototype : 50 projects completed 25 commercialized domestic patents to 10 US patents for 3.

The Program Aimed at Technological Self Reliance (PASTER)- now known as Technology development and demonstration program (TDDP) aims at technology adaptation by research design and development executed by the industry and overseen by the exports from Lab/university: 150 projects were supported- 65 completed, 15 patents filed -

National Innovation Foundation (2000) promoting grass root innovations traditional knowledge systems for poverty alleviation & employment generation -

Globalization (Post 1991)

Different initiatives Contd.. Home grown technology Program of TIFAc (1993) to

achieve international competitiveness – by improving the existing products

Science & Technology Entrepreneurship Park (STEP) –1984 jointly with financial institutions, state Govts and academic institutions – 15 such STEPs

Technology Development Board (1996) providing financial assistance for innovation from the fund raised through the cess on technology import

The New millennium India Technology Leadership Initiative (NMITLI) –2000 to enable Indian industry to

attain global leadership in selected areas

India currently has bilateral S&T cooperation agreements with following countries

Australia;Argentina;Armenia;Bangladesh; Belarus; Brazil; Bulgaria; Canada; China; Cuba; Egypt; European Union; France; Germany; Hungary; Indonesia; Iran; Israel; Italy; Japan;Korea(DPR);Kazakhstan;Lao;Malaysia;Mauritius;Mexico;Mongolia;Mozambique; Myanmar;Nepal; Oman;Peru;Philippines; Poland; Portugal; Republic of Korea;Romania; Russia; Singapore; South Africa; Sri Lanka; Sudan; Switzerland; Syria; Taiwan; Tajikistan;Thailand; Trinidad & Tobago; Tunisia; Ukraine; United Kingdom; United States; Uzbekistan; Vietnam;Venezuela;Yemen,Zambia.

In addition to Bilateral there are initiatives at Multilateral level

Multilateral Programmes are being implemented under South Asian Association for Regional Cooperation (SAARC); BIMSTEC (Bay of Bengal Initiative for Multi-sectoral Technical and Economic Cooperation); and IOR - ARC (Indian Ocean Rim - Association for Regional Cooperation), STEPAN; UNESCO;TWAS (Third World Academy of Sciences); and IBSA(India,Brazil,SouthAfrica) .

Recent Developments

India emerged as the second fastest growing economy Major player in the field of IT, Auto Pharma and others Foreign exchange reserve of $200 billion from $ 400 Mill in

1991 Phenomenal increase in the Outward investment by Indian

companies ($212 mill in 1995 to $8181mill in 2006) Preferred location for outsourcing of both commodity

production and knowledge production (R&D outsourcing) Unprecedented increase in the inflow of FDI Increased Patenting in the US (22 in 1991 to 363 in 2004) Much more….

These achievements are indeed are a delayed return to the National innovation system built up over the years…

The crucial issue is; are there enough initiatives under globalisation to strengthen the NIS such that these achievements could be sustained?

The answer appears to be a qualified No… Why????

Aspiring to be the Global Player by R&D in the backseat?Trend in R&D as % GDP

0.16

0.27

0.33

0.47

0.58

0.83

0.880.91 0.90

0.86

0.78 0.770.79 0.78

0.70 0.700.72

0.760.78

0.820.85

0.820.80

0.78

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

1958

-59

1965

-66

1970

-71

1975

-76

1980

-81

1985

-86

1986

-87

1987

-88

1988

-89

1989

-90

1990

-91

1991

-92

1992

-93

1993

-94

1994

-95

1995

-96

1996

-97

1997

-98

1998

-99

1999

-00

2000

-01

2001

-02

2002

-03

2003

-04

R&D in India- Compared

0.39

1.55

2.21

1.04

2.00

1.30

2.51

0.19

2.27

2.64

1.231.01

0.80

5.11

1.11

3.112.91

0.27

1.24

2.20

1.04

0.20

4.27

1.88

2.67

0.38

0.00

1.00

2.00

3.00

4.00

5.00

6.00

Argen

tina

Australi

a

Austria

Brazil

Canad

a

Czech

Rep

.

Denm

ark

Egypt,

Arab

Rep.

Fran

ce

Germ

any

China

Hunga

ry

India

*

Israe

lIta

ly

Japa

n

Korea

Rep.

Pakista

n

Russia

n Fe

d.

Singap

ore

Spain

Sri La

nka*

Sweden

United

King

dom

United

Sta

tes

Venezu

ala, R

B

Series1

R&D Expenditure by Major Scientific Agencies under the Central Government (%)

CSIR 15.74 9.37Defense 18.18 30.32Atmic Energy 16.76 12.16Space 12.78 21.32Agriculture 22.23 13.50

Preferred location for R&D Outsourcing

Outsourcing, if harnessed properly, could be beneficial. But could also undermine the NSI and its strengths

Are there initiatives to understand its implications under the heightened competition for skilled manpower?

How to mitigate the plausible adverse impacts?

Are there policies and programs to take advantage of its spillover benefits?

Even the policy announced in 2003 keeps a silence…

STI under liberalization: A Critical Appraisal

External liberalization & the patterns of corporate

technological accumulation

Decline in the breadth & depth of imported know-how is directly related to the loss of control over markets. decline of independent TCs increase of Tcs under the JV mode lump sum payments increased by many times low technology content of agreements continuing increase in the import of finished goods, SKD/CKD

imports, imports of components & capital goods Merger & acquisitions linked FDI increased

during the phase of external liberalisation.

Technology assimilation & in-house R&D performance

Share of industrial development in total R&D in pvt. sector industry fell from 71.3% in 77-78 to 33.9% in 96-97

More than two third of firms in basic chemical industry passive & vertical integration had a negative impact on the technology investments; medium sized firms invest much more in in-house R&D.

Composition of RDD changing in engineering industry; CDOT will focus on subcontracting in R&D and on patents and not on technology development

Technology accumulation & exports

Technology licensing negatively related to exports

MNC affiliation matters to the increase in exports

No improvement in technology intensive export-import ratios

Global integration of industrial & technology investments

Denationalization of network organizers

MNCs successfully position themselves as network organizers in information, electronic and mechanical engineering

Failure of improvement in the productivity, efficiency & growth of the Indian private sector (Siddarthan, Nagesh and others) in the information, electronic and mechanical engineering

Industrial innovation through public sector undertakings; impact on PSU R&D; share of PSU R&D declined, PSU R&D intensity came down

Public sector weakened as network organizer in infrastructure related industries & newly emerging technology systems

Utilization of Incentives by Private Sector

Aspect Previous LatestIn house R&D 1100 1207

R&D Intensity Public Pvt

Custom Duty Exemption 18 9

Section 80-1A Companies 2 1

Excise Duty Exemption - 1

High tech. R&D 30 applications

Accelerated depreciation 185 (417. 0 Crs) 10 (9.6 Crs)

Indigenous Drugs Exempted forPrice Control

0 1

Outstanding R&D achievement 12 6

Gains not due to liberalization but due to the continuation of selective protection

Take pharmaceutical and automobile industries; Both were beneficiaries of calibrated protection;

external liberalization was put on hold till 2002-03,

Performance requirements insisted; sectoral reservation continued

Public sector firms used to create the capabilities that have spun off individuals who have come into private sector & have benefited both the industries in terms of human resources & backward linkages

Costs of emerging tensions for the IS

New patterns of technological integration reduce the private risks & costs of introduction of new technologies for the large firms only by enhancing the social costs and risks for the Indian people that are already quite well manifest in the forms of technological fragmentation, import dependence, unsustainable production and shift into luxury consumption.

Loss of autonomy in decision-making

Changes in the Sectoral Contribution of National Expenditure on R&D(In Percent)

Year Central Govt. including Public Sector & Higher Education

State Sector Private Sector

1985-86 79.95 7.87 12.18

1994-95 74.96 8.63 16.41

2002-03 71.2 8.5 20.3%

2004-05 (estimated)

72.0 9.0 19.0

Contribution of public and private sector industry

A trend of stagnation evident in the proportion of national R&D expenditure incurred by the public sector around the figure of 10% between 85-86 & 94-95, which in 2002-03 is down to the meager figure of 4.5%. For public sector, only 0.26% of STO was spent on R&D in 2002-03.

Although the share of private sector industry financed R&D in % terms of total investment on R&D has risen from 12.18 to 20.3, but the private sector R&D intensity is not rising.

R&D intensity of the private sector has been only declining (from 0.83 in 81 to 0.70 in 86 to 0.61in 91 to 0.60 in 97 to 0.59% in 2002-03)

While the industry spent 0.38% of GNP on R&D during 1985-86, its current expenditure on R&D is down to 0.20% of GNP.

Publicly funded civilian R&Dduring liberalization

Public investment declining for the mission oriented civilian technology development, weak technological infrastructure (NSF, 95)

Nature of civilian socio-economic goals in the efforts being made for BT& IT

Impact of self-financing paradigm & global platform orientation on technology development & transfer and other aspects suvh as ECF and linkages with industry & R&D capabilities

R&D Agencies & their institutions & institutions of

socio-economic sector

Of all the S&T sectors in the country, the R&D sector is the second largest in terms of publications output in S&T

Of all the socio-economic ministries in the R&D sector, the Health Ministry contributed 46.7% publications in 2001-02.

Of all the R&D agencies, CSIR has been the largest contributor, followed by DAE, DST, ICAR, DRDO, DOS, ICMR & DBT.

Nearly three-fourth of the R&D sector publications output continues to be published in low impact journals.

Declining trend in publications share & activity index of the R&D sector in agricultural sciences

Collaborative research profile of the socio-economic ministries is better, compared to R&D agencies.

Priority areas for research of various agencies did not change significantly during the period between 85-86 and 2001-02

Bulk of research output in the industry sector is published in low impact journals.

Patenting Activity

There were 1051 patents filed by India during the period between 1990-2002, 669 were India owned organisations, 273 were Foreign owned patenting organisations & rest 109 belonged to unassigned category

Pharma sector patents a key area, process patents were the dominating patenting category; from 1995, IMDs related product patents have too appeared.

Only 8 organizations had more than 10 patents and accounted for 519 patents (80%); CSIR accounted for 378 (57%) of the IOP, Texas Instruments, Hoechst, GEC, IBM dominated the FOP

CSIR: No portfolio planning; piperine story,4% of patents alone have been able to earn a meagre amount, huge costs involved in filing patents

IMDs are yet a priority of only Ranabaxy, IPA is uncertain & wants the change to wait in this regard.

FDI in R&D sector

R&D services has emerged as the third segment in Export of IT services, it occupies a share of 18.4% of software exports accounting for 2.3 billion US $

R&D investment worth of $1.13 billion has flowed into India during 1998-2003 22980 R&D workers consisting of scientists, software engineers & other support

staff are working in this segment Availability & price of work count with MNCs; Indian scientist costs 10,000 dollars

per year, 1/10 of the costs abroad in US. The bulk of R&D investment entered during 99-01 period, computer based R&D

dominates , while drugs, auto, chemicals, agro have followed Nearly half the FDI Cos are cases of relocation of in-house R&D in home country

to offshore location 56% of FDI Cos prefer to work alone in India, with 100% foreign equity without

local partner in equity. No reporting system for the R&D based FDI in the country; No govt. agency to

monitor these organizations; not many attract income tax;safety, security & benefit sharing arrangements related issues

Non-open science, spillovers management, would not happen automatically

Policies and institutions matter

Structural changesimpact on user-producer interactions connection with home market Connection with interactive learning

Science, Technology & Economic Growth:

Before and After

Shifts in the STI policy & practice influenced by the strategic

requirements of political-bureaucratic order to bring about an alignment between the world of S&T and the world of industry-market;

interests of the industry-market order are not a new influence; even earlier it had much success in shaping the world of S&T priorities.

Change in the World of S&T

The world of S&T itself has undergone a change in its ideology; changes are evident at the level of the ethos of S&T leadership, relative power and interests of S&T workers in the prevailing organizations; the outcome (s) of new alignment are more myopic than before in terms of the achievement of coherence and flexibility in the Indian NSI.

Changes in the culture of innovation

orientation of the changes in development priorities

direction of the changes in policy instruments

changing nature of balance in the ethos of individuals and institutions

changing character of core constituencies

Challenge before the S&T World

In respect of how to deal with the challenge of transformation of culture of innovation, it is posited that neither it is desirable nor it is possible to conceive the existence of total autonomy either for the world of S&T or for the communities of practitioner(s) of innovation. Particularly, if the culture of innovation is to be transformed in the democratic direction, it is certainly desirable for the state and civil society to exercise sufficient influence on the worlds of S&T and industry.

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