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Technological Environment In India

BY BMS TEAM+ ON JANUARY 24, 2013 IN BUSINESS ENVIRONMENT
Introduction:

The success or failure of any business is highly dependent on the type of technology in
use, the level of technological developments, the speed with which new technologies
are adopted and diffused, the type of technology that are appropriate etc.

For many years in the past, India did not have a favorable attitude towards latest
technology to meet foreign standards. The overemphasis on indigenous technology had
led to high costs and distorted developments. Further the reservation of certain products
exclusively for the small-scale sector promoted several companies including
multinationals to resort to such strategies as franchising and contract manufacturing in
some of these industries in India. The reservation of products for the small scale sector
sometimes comes in the way of adoption of modern technology if it involves capital
investment higher than the specified limit.

It is only after the introduction of liberalization and globalization of Indian economy
drastic changes have come in the technological standards in India. Prior to the
introduction of this policy, funds for imports were also not easily provided. Foreign
collaborations and joint ventures were not freely allowed. All these restrictions led
unfavorable technological environment in India and lack of good business opportunities.
Also very high duty structure made the import of latest technology not only expensive
but also almost impossible.

Today, the scenario has changed. Free availability of foreign exchange, welcoming
foreign collaborations, FDI, JVs, and setting up of MNCs have led to development of
various R & D centers in many firms. Even the development taken place in the
infrastructure has also facilitated the technological development.

The current Indian technological development is the outcome of:

Technological collaboration
Joint Ventures
Licensing
Merger & Acquisition
Increased exports
Liberalized imports of foreign made new /second handed machineries
Liberalized imports.


Some of the areas of technology objectives are>>

- Method of manufacturing a product
- Improvement in product design or manufacturing process
- Reduction of waste
- Reduction of manufacturing cost
- Using new raw materials
- Using eco-friendly materials
- Improving process quality and reliability
- Introducing new products and services
- New methods of delivery and distribution
- New ways of management control and information (like ERP, VSAT, Video conferencing, and now
Convergence technology)

For utilizing this - a country needs following>>>

1. Computer literacy and skilled computer programmers
2. Efficient and deep penetration of telecommunication like Land and cellular phone network with high
bandwidth availability
3. Inventory of technically qualified persons in the country
4. World class Education and Training facilities.
5. Innovation Culture (Missing in India vis--vis USA, Japan)
6. In-house R & D facilities with Companies (Ranbaxy)
7. R&D support and Infrastructure by National and State Governments (DRDO, RDSO,CDRI and so on).
8. A network of research Laboratories, training centers, Tool rooms and Incubation centers for developing
entrepreneurship.
9. Strategic global alliances for research and application of technology which in many cases has
prohibitive costs, like in Pharmaceuticals, Genetic Engineering, Space and nuclear research.
10. Incentives for capital to flow into R&D in the country both internal and external investments.

MEASURES OF TECHNOLOGICAL ENVIRONMENT:

India's Expenditure on R&D is less than 1% of GDP as against 2.5 % of developed nations and the GDP
itself being very low compared to these countries, the absolute investment and expenditure on R&D is
very poor (As against USA 247 Billion $ India had barely 3.5 Billion $s). Apart from this the contribution of
Corporate India is poor (only 15%) in this. A good part of it goes into Strategic research budget like space
and defense.

Another Measure of technological Environment in the country is the Number of International patents filed
by the Laboratories and Firms from a country. Just compare this for India with Lucent Laboratories USA
(Now headed by an Indian), which files more than almost one patent every day.


India lagging behind in R&D
B.S.RAGHAVAN
SHARE COMMENT (3) PRINT T+
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November 18, 2012:
All talk of raising the GDP growth rate in India will be so much hot air if the level of research and
development (R&D) in terms of quality of performance and investment do not measure up to the
exacting demands of knowledge economy. The percentage of 10-12 being talked about is itself totally
inadequate in view of certain factors casting their ominous shadows.
There is, first, the burgeoning population which is feared to touch 120 billion or more in the next
decade, if the present state of seeming official indifference to its adverse implications continues. It is
going to throw into utter disarray all priorities and predictions relating to provision of basic
amenities and daily necessities, leave alone availability and affordability of goods and services to
meet the clamour of a free-spending consumerist society.
Second, the demand for natural resources is going to lead to an unsustainable exploitation of more
and more of less and less, with the distinct prospect of rapid depletion by the end of century staring
India in the face.
Next, the higher the growth rate, the greater the strain it imposes on processes of production,
maintenance of supply chains, marketing and after-sales services, transport and real estate. The
offshoots may ricochet on the primary sector of agriculture and food and nutrition security.
FRIGHTENING DIMENSIONS
Most importantly, economic growth is impossible to conceive without energy. It is best here to bear
in mind certain axioms that inescapably apply to energy management: All estimates of demand
invariably prove to be underestimates, and all estimates of supply based on assumptions of increase
in installed capacity turn out to be overestimates.
If India is to keep pace with, if not be abreast of, the scenario, in all its frightening dimensions, it
should put in the best efforts it can in the field of R&D, as that is the only sure way of maximising its
potential for creativity and innovation.
In the light of the relentless competition that it is bound to encounter from technologically-advanced
countries, its so-called comparative advantages will come to nothing, and it will soon fall by the
wayside, unless it enters the domain of high-end technology, instead of merely being content with
imitative or extrapolative pursuits. There is even a danger that the hopes built round its putative
status as an economic power will come crashing.
All economic players, including the Government, therefore, need to take note of some interesting
trends and warning signs already brought out in studies by reputed consultancy firms such as
Deloitte and McKinsey.
For instance, out of a total global R&D spend of $1143 billion, the percentage claimed by the US is
33.6, Europe 24.5, and Japan and China 12.6 each, while Indias share is a meagre 2.1.
In India, Government sources pick up 75-80 per cent of the R&D expenditure, and only 20-25 per
cent spent by private sector and a mere three per cent by universities. Whereas the break-up of
percentages for OECD countries is 69 by private enterprises, 18 by universities, 10 by government
agencies and three by non-profit bodies. FDI in Indias R&D was only $0.5 billion in each of 2010
and 2011.
As a share of GDP also, India figures at the bottom with 0.9 per cent, which is proposed to be raised
to an unmentionable 1.2 per cent by 2012, as against at least four per cent if a growth of 10-12 per
cent is to be achieved.
AT THE BOTTOM
This is despite India having gone all out, as the Deloitte report points out, to make the tax regime
attractive for R&D outlays in the form of super deductions for expenditure incurred and allocations
made, Customs duty waivers and various State government incentives.
The rates of super deductions go up to 200 per cent in India, being comparable with those across the
globe and on par with countries such as Singapore, Malaysia and Hungary.
The avenues for innovation are vast, possibilities virtually endless and the areas waiting for
development practically untouched. To cite a few: Energy, consumer electronics, pharmaceuticals,
food processing, post-harvest technologies, bio-technology, pharmaceuticals, automotive parts and
assembly, information technology, software and
IT-enabled services, transportation, you name it.
It is time the Government set up a high-powered Commission to recommend measures to accelerate
R&D in India to touch the required level by 2020.



Tech. transfer in india
It has long been held that economic growth of a nation is closely dependent on its openness to generation
and transfer of knowledge, which cannot be kept within the confines of an arbitrarily drawn national
boundary. Thus protectionist policies that are often adopted to safeguard the interest of domestic players
of a nation become an impediment to its growth and development potential.
India inherited a poorly defined and monopolistic domestic sector from its colonial past. However, Indian
industry has been growing steadily since liberalization from its normal interactions with probable tech
donors. It now has policies like automatic approval to all industries for foreign collaborations, so long as
there is a decent lump sum payment (although there are regulatory ceilings on royalty payments). The
result has been a blossoming of a few primarily Indian biopharmaceutical groups into multinational
enterprises. Also, India has seen that projects with international collaborations have recorded minimal
economic dispersion. This has enhanced the confidence of India, a nation that already has conspicuous
human resources primed for research and development activity.
Still, India has not reached anywhere close to the biotech global top spots, despite its solid positioning in
the low technology sectors, such as agriculture and dairy. Clearly something has gone amiss in this whole
process. Either Indian corporations do not see a good market for hi-tech products, or there is no
indigenous generation of high technology, or international groups offer only last-generation technology for
collaborations. It must be said, however, that Indian research laboratories are close to global current
trends on conceptual and technical terms. Obviously a lot of potential remains unharnessed, demands
unmet and dreams unrealized.
Perhaps the problem in India is that elite researchers tend to not necessarily be technology oriented. I
vividly remember an honest academic colleague of mine being at a total loss when asked what salable
product he might deliver out of his research in plant response to stress without that, he could not ask for
grants from a biotechnology resource. He was simply not inclined to view the applicable aspect of
scientific research.
Another colleague sold the funding agency on his claim of having generated value-added potatoes, but
those potatoes have yet to reach the market. More recently, there was an initiative from the Department
of Biotechnology, which was met with all kinds of apprehension and resistance from academic institutions
of repute. Also, there is a trend where an influential group will try to quickly glorify its protgs through
favors or by conferring recognition and unduly supporting grant proposals. Unfortunately the review for
international proposals also has to pass through that same group, and the bias remains uncorrected.
India needs to chart its own independent priority in tech development, translation and transfer. Those
writing the policy documents of India have to work in concert with the needs on the ground in agriculture,
manufacturing, and healthcare, as much as on the global demand and supply situation. Being a populous
country, it will be prudent to develop a model that also lifts the people. The biotech graduate has to have
hands-on training not only in fundamental research but also in one of the biotechnological processes. We
know this can work because when given the proper background, Indian researchers invariably do well
when posted abroad.