Can India become a technology leader?

News: India-born techies are chosen as the leader by technology giants.

Despite having so many celebrated technologists around the world, India is still not a major player in technology. As a consequence, the talent in India left the country. For instance, as of 2019, there were 2.7 million Indian immigrants in the US.

How other countries are able to succeed in becoming a major player in technology?

In the US: the Invisible hand of the government has been behind the Success of enterprise and the free market:

For instance, research by Mariana Mazzucato shows that the state has been crucial to the introduction of the new generation of technologies, including the computers, the Internet, and the nanotech industry.

Example: Public sector funding developed the algorithm that eventually led to Google’s success and helped discover the molecular antibodies that provided the foundation for biotechnology.

The case of China:  The role of the government has been prominent in shaping the economic growth of China.

For instance, before a decade, China was known for its low-wage manufacturing. However, due to sustained government efforts, it has made successful ventures into ‘new strategic industries’ such as alternative fuel cars and renewable energy.

What India can learn from China’s Experience?

Strengthening the role of the public sector in strategic sectors:

The Chinese state restructured its state-owned enterprises (SOEs)instead of privatizing.

SOEs were strengthened in strategically important sectors such as petrochemicals and telecommunication and in technologically dynamic industries such as electronics and machinery.

On the other hand, the state retreated from light manufacturing and export-oriented sectors, leaving the field open for the private sector.

Localization: China has used its large market size as a bargaining chip in negotiations with foreign firms. Foreign firms were allowed to stay in their markets only when they were ready to localize production and share technologies with the local firms

Aggressive efforts to enhance technological strengths: through its research institutions and SOEs.

What steps were taken by India for the development of the technological sector?

India’s planning and industrialisation in the early 1950s: Public sector funding was provided in the latest technologies of the time, including space and atomic research and the establishment of institutions such as the Indian Institutes of Technology (IITs). As a result, many of these institutions have over the years attained world-class standards.

The growth of information technology and pharmaceutical industries in Bengaluru and Hyderabad: was mainly due to government support.

What are the impediments for India in becoming a major player in technology?

Firstly, India’s poor achievements in school education.

Secondly, the spending on research and development as a proportion of GDP declined in India from 0.85% in 1990-91 to 0.65% in 2018. In contrast, this proportion increased over the years in China and South Korea to reach 2.1% and 4.5%, respectively, by 2018.

Thirdly, the country is operating far below its potential in electronic manufacturing. For instance, electronic goods and components are the second-largest items, after oil, in India’s import bill.

What are the existing Prospects for India to become a major player in technology?

India still possesses favorable supply and demand factors that can propel it into the frontlines of technology.

First, the number of persons enrolled for tertiary education in India (35.2 million in 2019) is way ahead of the compared to all other countries except China.

Second, graduates from STEM (Science, Technology, Engineering, and Mathematics) programs as a proportion of all graduates was 32.2% for India in 2019, one of the highest among all countries (UNESCO data).

Third, India has a large market for all kinds of new technologies. India will soon have twice the number of Internet users as in the U.S.

What needs to be done?

First, increase public spending to improve the quality of and access to higher education.

Second, universities and public institutions in the country need to be facilitated to enter areas of technology development for which the private sector may have neither the resources nor the patience.

Third, the ‘Make in India’ initiative will have to go beyond increasing the ‘ease of business’ for private industry. It should support Indian industry to deepen and broaden its technological capabilities.

Fourth, Strengthening PSU’s. So that they can create, and the strategic and knowledge assets they can build.

A strengthened public sector will create more opportunities for private businesses and widen the entrepreneurial base.

Finally, there is a need to establish a mechanism in place for the diffusion of publicly created technologies, along with greater availability of bank credit and other forms of assistance.

Source: This post is based on the article “Can India become a technology leader?” published in The Hindu on 20^th Dec 2021.