In spite of the fact that India is fast being acknowledged as a global innovator for high-tech products and services, its real innovative potential remains underutilized. Though India has amongst the largest number of scientists and engineers engaged in R&D, the informal sector accounts for roughly 90 percent of the workforce. Less than 3 percent of the Indian workforce is employed in the modern private sector. Over and above this, only 10-25 percent of general college graduates are found to be employable.
Need for more inclusive innovation
It is, therefore, of prime importance to foster more inclusive innovation which can be adopted and exploited by the informal enterprises. In spite of isolated efforts by certain major organizations, such as low cost cars by Tata Motors, Bharti’s ultra-low telephone prices, and innovative supply chains provided by E-Choupal through its cyber kiosks, the World Bank has observed that the effects of innovations have failed to percolate down to the informal sector of the economy and has remained concentrated in a small segment.
Business in India can be classified into three categories: established business families, business dominated by young management graduates, and product-based business entrepreneurs. In the last category educational qualifications do not mean much. They are entrepreneurs who rely on sheer entrepreneurship ability that include training, experience, customer service skills, networking, hard work, and innovation.
Shortage of entrepreneurs in India
There is also an overall shortage of such entrepreneurs in India, primarily because capital isn’t easily forthcoming. Though there is enough capital available for major enterprises, the mindset to invest in start-ups in India is still in its infancy. Bureaucratic help is slow to come by, and the country’s educational system is also not good at promoting entrepreneurial skills and attitude.
In Silicon Valley on the other hand, the culture is to create ideas to build global businesses. Deals are regularly being negotiated, effective teams are built and partners are identified. There is almost unlimited access to multiple venture capital and angel investors. There is no dearth of critical support services, including professional managers, legal firms, venture capitalists, angel investors, and placement agencies. Excellent infrastructure – connectivity, communication, and office space – makes life for start-ups easier.
Harnessing Indian Diaspora
In India there is an increasing need for diffusion and absorption of existing national and global knowledge to wider areas, specially the rural areas. One way is to leverage the talents of the Indian Diaspora. It is estimated that 2 percent of India’s population, 20 million people, live abroad, earning the equivalent of two-thirds of India’s GDP. They should be given enough incentives to invest both in terms of knowledge and capital in Indian start-ups.
Watch a video on how Business Incubators help to improve the survival and growth of innovative start-up companies by providing facilities, management advice and support services.
