the science technology and innovation policy 2013

8/12/2019 The Science Technology and Innovation Policy 2013

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Economic & Political Weekly EPW march 9, 2013 vol xlviII no 10 17

by Indias private sector enterprises asthese enterprises have experienced verysignicant increases in their sales turnoverespecially during the recent ve-year-period ending 2010.

Statistically speaking, this requires theshare of private sector R&D in GERD torise from the current 30% to almost 50%in the next ve years. In order to achievethis STIP 2013 envisages the creation of aconducive external environment withoutelaborating anywhere as to what it meansby this environment or the means through

which it is to be enhanced to precipitatesignicant increases in R&D investmentsby business enterprises at a time whenmuch of the business enterprise sector isgripped by recessionary conditions. So the2% target in the GERD to GDP ratio maynot actually fructify in the next ve years.

At this point, it is worth reminding our-selves that the 2% target is nothing new,the earlier policy of 2003 had targeted itsrealisation by the end of the Tenth Five-

Year Plan (namely by 2006-07) and theactual spending, even ve years after thisdate is as low as 0.8%. Further, as has beenshown earlier, private sector investments inR&D are highly concentrated in two orthree industries, namely, the pharmaceuti-

cals, chemicals and automotive industries. Another important dimension that has

not so far been factored into the policydocument is the growing importance ofmultinational corporations ( MNCs) in R&D in India (Basant and Mani 2012). Basedon the successive surveys of nances offoreign direct investment ( FDI) companiesconducted by the Reserve Bank of India,the share of FDI companies in R&D hasbeen increasing on yearly basis and not-

withstanding the measurement prob lems,currently (c2013) stands at around 20%or so. For a number of MNCs R&D done inIndia forms an important part of theiroverall R&D efforts and these companieshave been quick to take out intellectualproperty rights (almost entirely in theform of patents) based on their researchdone in India (Mani 2011). This meansthat the ownership of their knowledgeassets created in India rests with themalone and through this they prevent any

kind of spillovers to local companies.If this trend continues, while industrialR&D performed by the private sector may

actually show an increase over time, theimplications of this increase are very dif-ferent from what they may be if they

were to happen through the efforts ofdomestic private sector companies. ButSTIP 2013 is virtually silent on thisimportant aspect.

Focus on Supply On private sector investments in R&D,the policy document attempts to make adeparture from the past by trying to giveequal importance to both supply- anddemand-side policies for stimulatingprivate sector investments in R&D. Theprevious policies have relied almost ex-clusively on the supply-side aspects, whileSTIP 2013 claims to be giving an equalemphasis to both demand for inno vationsand its supply. However almost all thepolicies listed under the section, Attract-ing private sector investments in R&Ddeal with enhancing the supply of inno-

vations from the sector.STIP 2013 fails to realise the fact that

stimulating demand for innovation arisesfrom industrial and trade policies thatstimulate competition between rms,sometimes by making markets contestableby lowering barriers to entry. Further, a

demand for innovations also arises fromhaving adventurous consumers who are

willing to try out anything that is new(Bhide 2008). All these are beyond thescope of an innovation policy. As far asIndia is concerned, some of the demand-side measures for stimulating investmentsin R&D are contained in the NationalManufacturing Policy of 2011 and STIP 2013 makes no reference to it whatsoever.In fact, this lack of awareness of the com-plementarity between various policies isa hallmark of recent announcements.

A very refreshing aspect is the identi-cation of eight areas of technologiesas priority areas. These are agriculturein general, telecommunications, energy,

water management, drug discovery,material science including nanotechno-logy, climate change and space techno-logy. There is, of course, a cursory refer-ence to interdisciplinary research as

well, although this reference gets repe-

ated all the time. Considerable care willhave to be taken in spelling out thespecics of these priority areas.

Innovation Policy?STIP 2013 like its predecessor considersinnovation to be almost exclusively theproduct of R&D. However in recent under-standing of the generation of innovations,it is almost universally accepted that in-novations do arise from a whole host ofnon- R&D activities such as the acquisitionof new vintages of capital goods, trainingof scientists and engineers, acquiring in-tellectual property rights from externalsources, etc. The results of successiveinnovation surveys rst conducted amongEuropean Union countries and later acrossother deve loped and increasingly amonga variety of developing countries lendempirical support to the importance ofnon- intra-mural R&D as a source of in-novation. This is especially so in coun-tries such as India where the industrialsector consists of a skewed distribution ofrms with a large number of small andmedium enterprises (Mani 2011) which

very often do not have in-house R&D de-partments but nevertheless do introducea variety of product and indeed processinnovations. So if STIP 2013 considersitself to be an innovation policy and notan R&D policy, it should have containeda host of measures for enhancing the

non- R&D route to innovation. But thedocument is totally silent in this respect.

At this juncture it is also important topoint out the fact that the country lackstimely data on both R&D and innovationin general. The depart ment of science andtechnology, which is charged with theresponsibility of publishing R&D data ona biennial basis, has been very late andirregular in publishing its agship publi-cation, R&D Statistics . The latest publisheddata on R&D at the industrial sector levelrefers to 2005-06. 1

Further these data have also not beensubject to any validation processes so thatits accuracy is beyond doubt. Regardingnon- R&D innovation generating activitiesand routes, there is some information froma recently conducted national innovationsurvey. Once again this survey was alsonot a comprehensive one as it covered only10 states and the response rates to thissurvey are not indicated, raising serious

questions about the generality of the re-sults obtained. The results of the survey, 2 notwithstanding the doubts about its


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robustness, once again conrm the viewthat non- R&D routes are more importantthan intramural R&D. This once againraises the need for and importance ofdevising policy instruments and institu-tions that can increase the capability ofrms to use these non- R&D routes to in-novation. Although the policy documentraises the importance of evidence-basedapproaches to investment in innovation,it has nothing much to say about devel-oping these innovation indicators.

Financing of R&D An area of R&D policy where STIP 2013 is very specic is in the area of nancingof R&D through the establishment of aNational Science, Technology and Innova-tion Foundation on the public-private part-nership mode. Implicit in this initiative isthe establishment of a number of researchgrants for nancing R&D not only in hightechnology areas (as STIP 2013 visualisesa doubling up of Indias share in world hightechnology trade) but also for introduc-ing innovations that are affordable and

will aid in the more general policy of socialinclusion. Success on both these counts

will depend very much on the size of thesefunds and the modalities that will be put

in place to disburse funds from it in sucha way that the accumulative advantageof grantees does not result in the grantsending up in the same group of rmsand individuals. The country may do

well to learn from some of the best prac-tices in this area, in specic terms learn-ing from the research grant scheme ofthe Ofce of the Chief Scientist ( OCS) inIsrael (Mani 2002; Trajtenberg 2002). TheOCS has been very successful in stimulat-ing and broad-basing investments in R&D.

Further, STIP 2013 is silent on tax in-centives for R&D. This is perhaps because,according to a recent study by Stewart,Warda and Atkinson (2012), India has oneof the most generous tax regimes for R&D in the world. The country has a 200% supercorporate income tax deduction for R&D and this facility is available to all rms inall industries. However, the importantquestion is whether such a generous taxregime has facilitated incremental inves t-

ments in R&D. We require carefully doneanalytical studies to inform us of the ef-cacy of this important policy instrument.

STIP 2013 ought to have referred tothis possibility.

Apart from these schemes for promo t-ing investments in R&D, an area whereSTIP 2013 has devoted considerableamount of emphasis and rightly so are theproposals for the promotion of knowledge-based entrepreneurship in the country.

A number of new schemes and strength-ening of older ones are proposed. Theestablishment of research grants schemeslike the Small Idea-Small Money andRisky Idea Fund, and newer mechanismsfor fostering technology business incu-bators ( TBIs) are all specic steps in theformer category. Strengthening of TBIs isa step in the right direction to promoteknowledge-intensive entrepreneurship asthe country has an increasing number ofengineering gra duates, some of whommay be encou raged to establish innovative

ventures. Experien ces of such knowledge-intensive entrepreneur-based rms fromplaces such as Silicon Valley show usthat this is yet another successful wayof promoting innovations.

Quality of Human ResourcesSTIP 2013, like its predecessor, recognis-es the importance of improving both the

quality and quantity of our scienticmanpower. A series of studies done in thepast including the earlier 2003 policyhad explicitly referred to the fact thatthe core Human Resource in Science andTechnology (core HRST, that is humanresources in science and technology basedboth on education and occupation) isactually very small in the country andthis is primarily due to the fact that scienceand technology as a career option is not

very attractive to young graduates, evento those graduating from our premierhigher education institutions such as theIndian Institutes of Technology. In orderto increase the private sector investmentsenvisaged in the document, STIP 2013expects the total number of R&D personnelto increase by at least 66%. But STIP doesnot spell out how these growth targets

were arrived at and the specic schemesfor incentivising science and engineeringas a career option to young graduates.

On this issue, STIP 2013 merely repeats what was stated in the earlier 2003 policy.So there is every reason to worry that

just like the eternally elusive GERD to GDP ratio, the pronouncements on increasingthe size of core HRST will remain pro-nouncements merely to be repeated atregular intervals. A new area in this con-text of promoting core HRST is STIP 2013introducing for the rst time a Perform-ance Related Incentive Scheme for pro-moting basic research through publica-tions. However this scheme is more tiedto the desire to raise the quality andquantity of science production in thecountry in the form of increasing publi-cations in high impact international

journals. Indias current share in this areais only 2.5%. Apart from incenti visingscientic research through these rewardschemes, STIP 2013 also aims at improv-ing and modernising phy sical infra struc-ture for carrying out R&Dprojects.

In addition, STIP 2013 also makes ref-erences to improving the ecosystem forinnovations, increasing the participationof women in science, technology andinnovation activities, improving publicunderstanding of science and techno-logy so that people participate more ef-fectively and constructively in scienticdebates (for instance, on the pros andcons of genetically-modied food, climate

change issues, etc). All these are laudableobjectives and needless to add success

will lie in implementation within anacceptable time frame.

Despite its numerous shortcomings,the policy does have some fresh ideas inareas such as the nancing of R&D andin promoting knowledge- intensive entre-preneurship. It is, of course, important forthe government to put in place a crediblescheme for implementing the variousinitiatives set out in the document andto develop a systematic scheme for itsconcurrent evaluation.

Notes1 See R&D Statist ics 2007-08 , http://nstmis-dst.

org/ rndstst07-08.htm, accessed on 30 Janu-ary 2013.

2 See the document, Understanding Innova-tion, The Indian Context, http://www.na-tionalinnovationsurvey.in/download/August-Bulletin- 2012.pdf, accessed on 30 January2013.

ReferencesBasant, Rakesh and Sunil Mani (2012): Foreign

R&D Centres in India: An Analysis of Their Size,Structure and Implications , Ahmedabad, Indian


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Stewart, Luke A, Jacek Warda and Robert D Atkinson(2012): Were #27!: The United States Lags

Far Behind in R&D Tax Incentive Generosi ty

(Washington DC: The Information Techno logyand Innovation Foundation).

Trajtenberg, Manuel (2002): Government Supportfor Commercial R&D: Lessons from the IsraeliExper ience in A Jaffe, J Lerner and S Stern (ed.),

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