The economic liberalisation of 1991 was the second independence in Indian history. It represented a tectonic shift in policies, the start of the end of ‘licence raj’, and unshackled the growth of the country. Time has come for the third independence of India, the liberalisation of the academic, science and technology ecosystem in the country.
Historically, the growth of countries has been driven by continual advances in science and technology. According to Robert Solow, Nobel Prize winner in economics, capital and labour are not the only things that drive economic growth, half the economic growth in the US since World War II can be traced to advances in science and technology. Even China has realised this. At the current rates, China’s commitment to R&D is expected to surpass that of the US by 2022, when both countries are likely to reach about $600 billion in R&D. Unfortunately, successive governments in India have only provided lip service to the science and technology sector. Moreover, simply allocating money for science and technology is not in itself sufficient to drive economic growth. The new Government has the opportunity and the mandate to liberalise the Indian science and technology ecosystem, which is the transformative step required to take the Indian economy to the next level.
Academic and research institutions form the bedrock of the science and technology ecosystem, and are the fulcrum for creation of value. According to a 2011 report, sponsored by the venture capital firm Sequoia Capital, 39,900 active companies can trace their roots to Stanford University, creating an estimated 5.4 million jobs. If these companies collectively formed an independent nation, its estimated economy would be the world’s 10th largest. The reason that we do not have such institutions in our country is because our academic and research institutions are still stuck in the pre-1991 era. The new Government has the opportunity and the mandate to liberalise and transform this ecosystem so that our academic institutions move beyond producing skilled manpower to producing innovators and job creators for the nation.
Give autonomy to institutions
This will allow them to attract the best talents as researchers and faculty. This is critical as generation of new ideas require exceptional talent. New ideas can spawn industries that will generate employments for millions, creating a cascading effect on Indian economy. If institutions are given flexible grants rather than budgets under fixed heads, and allowed to compete for talent from all over the globe, we will see a resurgence of the sector.
Capitalise assets and resources
Most academic science and technology institutions and universities are endowed with significant land. These institutions should be encouraged and given the flexibility to build Innovation Clusters on unused land in partnership with the industry; academic institutions will own new infrastructure from where they get rent that can go towards building a corpus, while the industry gets access to knowledge capital. Such clusters will create jobs for graduating students and prevent brain drain, generate research partnerships and funding for faculty, and foster an ecosystem that supports innovation and entrepreneurship. Silicon Valley for example was seeded by Stanford University, while Massachusetts Institute of Technology owns the buildings in Tech Square at Cambridge, which house hundreds of companies.
It is obvious that such bold steps will create a lot of anxiety in the current ecosystem, where ‘profit’ has been seen as a dirty word. Similar anxieties were expressed when the Indian economy was liberalised. However, few people realise that our finest scientists did not restrict their work to the laboratory alone-C.V. Raman, who won the Nobel Prize in Physics, started the Travancore Chemical Company in 1943. This model, where faculty commercialise research, was a pioneering move, far ahead of its time.
Make policy friendly to R&D investment
Start-ups form the backbone of translating scientific ideas and technological advances from academia into products that drive economic growth, and the process requires significant capital. However, the toughest stage in the life of a start-up is the first few rounds of investment that leads to a product. Early investments in this sector have been dismal. Between 2007-2012, India saw 11 private equity deals totalling $43 million, and eight VC deals worth a combined $55 million in the life sciences/biotech sector. In comparison, the city of Boston saw an early stage investment of $869 million in 2012 alone. The new Government can put science and technology R&D sector on steroids by granting special tax exemption status to investments in science and technology start-up and innovation clusters for the initial 7-10 years of their operation.
Jagadish Chandra Bose was the first Indian to get a US patent
Respect ownership of intellectual property
Without this we cannot create a true knowledge economy, as we will never attract investments. Not many people know that the first Indian to get a US patent was Jagadish Chandra Bose, one of India’s finest scientists, for an invention that improved detection of electrical disturbances. Interestingly, Swami Vivekananda not only saw the importance of protecting intellectual property, but also influenced Tata group founder Jamsetji Tata to found the Indian Institute of Science in Bangalore. Time has come to emulate the visions of Vivekananda, and to liberalise our science and technology institutions such that they can truly reclaim their glory and transform the Indian economy.
(Co-authored with Dr Shiladitya Sengupta.)
Originally Published: India Today
Also published on Medium.