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.

BACKGROUND

  • 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.

DISCUSSION

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.

Way forward

  • 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

  1. Innovation economy is the solution for India to achieve its economic goals. Discuss (200 words)