India to grow faster if firms innovate: WB

Written by ASHOK B SHARMA | New Delhi, October 4: | Updated: Oct 5 2007, 01:08am hrs
The World Bank has said that if Indias innovation potential is unleashed, the country would witness 5-fold increase in economic output.

`Unleashing Indias Innovation: Towards Sustainable and Inclusive Growth a study done by the bank said: While India is emerging as a top global innovator in sectors such as biotechnology and information technology, less than 3% of the Indian workforce is in the modern private sector, while roughly 90% remains in the informal sector. This heterogeneity translates into wide disparities in productivity levels wider than those in China, Mexico, Russia and South Korea.

Based on a 2006 World Enterprise Survey of roughly 2,300 manufacturing enterprises in 16 states in India, it was found that the output enterprises which adapted innovative technologies increased by 25%, said the World Bank country director for India, Isabel Guerrero on the occasion of the release of the new study here on Thursday.

The World Bank senior economist and the editor of the new study, Mark A Dutz said that Indias new domestic R&D and knowledge need to be better converted to commercial use. He said that out of the top 50 applicants for patents from India in the period 1995-2005, 44 were foreign firms, while only two were private Indian firms.

The Union science and technology minister, Kapil Sibal releasing the study called for global partnership in unleashing Indias innovation potential. He also called for public-private partnership and stressed the need for increasing public investment in science and technology to 2% of the GDP.

India would specially benefit from fostering more inclusive innovation, the study said and added that this could be achieved by promoting more formal R&D efforts for the poor people and more creative grassroots efforts by them as well as by improving the ability of informal enterprises.

According to the study India has one of the largest systems of higher learning in the world, but the small number of high-quality institutions are not enough to meet the countrys growing need for skilled personnel. To maintain its share of global knowledge services, India will need 2.3 million knowledge professionals by 2010. If the country does not gear up to the situation, it would face a deficit of 0.5 million knowledge service providers, the study said.

World Bank also noted that only 16% Indian manufacturing firms offer in-service training as compared to 92% in China. The firms which provided in-service training are 23% to 28% more productive. The report suggested providing matching public funds to firms for investing in R&D and to explore new ways to leverage entrepreneurs and technologists of Indias diaspora.