GS3: Indian Economy and issues around it
What is the issue?
- The gravity of business growth is shifting from capital to creativity, and in this, the market belongs to the most vigorous innovator.
- In this context, here is an assessment on the challenges and priorities for the business community in the innovation economy.
- Ever since the introduction of the LPG reform in India, the need for an innovation based economy is started to felt.
- Modern industrial economies are based on the scientific and technological innovations in the 21st
- Hence India is also aim to make it as one of the leading innovation economies with new start up companies.
- Innovation economy is based upon the idea that knowledge, entrepreneurship, innovation, technology and collaboration fuel economic growth.
- In 2016, the country launched its flagship innovation programme, Atal Innovation Mission, focused on scaling start-up incubation centres and promoting innovation culture among schoolchildren by providing them with hands-on experience in 3D printing, the internet of things (IOT) and robotics.
Requirements of an innovation economy
- Strengthen the IPR policies of the country to meet the international standards.
- Set up an enabling IT infrastructure for the smooth functioning of the innovation and newly developing companies.
- Crony unionism has to be avoided to strengthen the working conditions.
- Improve the ease of doing business to facilitate the start up companies.
- Ensure the adequate physical infrastructure and financial support to the new business ventures.
- Digital economy is a good booster to the innovation economy.
Yuva Sahakar-Cooperative Enterprise Support and Innovation Scheme
- To cater to the needs and aspirations of the youth, the National Cooperative Development Corporation (NCDC) has come up with a youth-friendly this scheme for attracting them to cooperative business ventures.
- The newly launched scheme would encourage cooperatives to venture into new and innovative areas.
- The scheme will be linked to Rs 1000 crore ‘Cooperative Start-up and Innovation Fund (CSIF)’ created by the NCDC.
- It would have more incentives for cooperatives of North Eastern region, Aspirational Districts and cooperatives with women or SC or ST or PwD members.
- All types of cooperatives in operation for at least one year are eligible.
Institution’s Innovation Council (IIC)
- Union HRD Ministry has launched the ‘Institution’s Innovation Council (IIC) program under Innovation cell of MHRD in New Delhi.
- Aim: To foster the culture of Innovation in all Higher Education Institutions (HEIs) across the country.
- It is a significant step in institutionalizing innovation and developing a scientific temperament in the country.
- More than 1000 Higher Education Institutions (HEIs) have already formed IICs in their campuses and enrolled for the IIC network managed by MHRD’s Innovation cell.
- Indian universities are setting up research centers through ‘Institution’s Innovation Council (IIC) program to improve global innovation ranking in next 2-3 years through this initiative.
Emerging in economy and business
- Innovation economy is that which is light on assets and heavy on knowledge.
- Data is overtaking experience in making decisions and directing strategy.
- ML (Machine Learning), IoT (Internet of Things), and blockchain are becoming vital for producing innovations.
- Businesses will have to be equipped with the tools for acquiring, analyzing and applying data intelligence.
- Skilling every employee to work in a highly automated environment is also essential.
- The innovation economy takes away security from businesses.
- But it offers unprecedented rewards in the form of lightning-fast growth and great market dominance.
- In the innovation economy, an unconventional and risk-taking mindset is the key to business leadership.
- It is also essential to break away from the business models that cannot keep up with the market’s evolution.
- A modern business leader must have a strategy to reinvent even a successful business.
- The first-mover advantage (gained by a company from being the first to establish itself in a given market) is brief.
- This is because capital and technology are now easily accessible to anyone.
- So it is much easier to imitate and enhance a successful product in the new economy than it used to be.
- Therefore, besides being quick with innovations, companies also have to continuously listen to the user and upgrade products frequently.
- The main feature of innovation in the new economy is the delivery of total solution to the customer.
- Aggregation and intermediation are central to innovation and delivering convenience, efficiency and economy to the customer.
- Innovation, in this context, is more of a collaborative venture.
- Business leaders have to persuade investors, employees, suppliers, customers and even regulators to back disruptive innovations.
- Regulators are increasingly playing a critical role in bringing innovations to market.
- Bringing an innovation to customers can take a lot of money and work hours without any guarantees of returns.
- Business heads thus need to be determined and resilient, and they have to keep betting on crazy ideas.
- It also requires them to be in touch with the ground realities as innovation is often a bottom-up process.
- Maintaining direct communication with customer-facing employees is essential to ensure that middle management does not block either information or ideas.
- Leaders of conventional businesses face the challenge of insuring the future with innovations while preserving existing revenues.
- One way of preserving a successful business and reinventing it at the same time is to sandbox innovations.
- A parallel organisation may be set up to experiment with disruptive products and models.
- If the alternate venture succeeds in taking the market away from conventional competitors, the mother company could be absorbed in it.
- Innovation economy should be supported by the environment for innovation and the execution of innovative ideas.
- A support system for the new age companies like incubators in district level is also feasible to support innovation based economy.
- India’s ongoing efforts in promoting bilateral investment and cooperation in the area of innovation had a strong impact.
- Amicably settling trade and technology transfer disputes between developed economies are important for the building of a strong innovation economy.
- Revamping higher and research education in India can also give an impetus to the innovation ecosystem.
- Linkage of various innovation schemes under a single central and sate level agencies are helpful to ensure the effectiveness of its functioning.
# Practice Question
- Innovation economy is the solution for India to achieve its economic goals. Discuss (200 words)