Why Indian firms don’t innovate

Why Indian firms don’t innovate

Context

A large proportion of Indian companies just don’t have the policy or human resource capabilities to invest in innovation though the country fares favourably in terms of research and development (R&D) spending when compared with its peers, according to a top World Bank official

Issues: Why Indian companies don’t innovate?

• There aren’t that many of the big and modern firms that are investing a huge amount in R&D and the vast majority of firms in India don’t have the capability to do R&D
• Firms in India lack the capability to take a careful look at their basic plant layouts, can’t make long-term plans, don’t have an innovation strategy and don’t have an HR (human resources) policy to staff their innovation strategy
• SMEs (small and medium enterprises) don’t have a five-year plan, they don’t have somebody keeping track of what new technology has come out of some place that they could bring to the firm. They lack managerial cpabilities

What can be done?

• Focus should be on increasing productivity and not simply focussing on R&D or single-mindedly increasing employment
• It is not feasible for a country or a company to do everything by itself, and that India still stands to gain a lot from borrowing technology from abroad, which then enables it to leapfrog some existing technologies, such as the case with 4G adoption or the implementation of BS-VI fuel norms
• One solution can be to attract talent from abroad by engaging with the Indian diaspora more and trying encourage them to come back and bring their training and expertise to India
• Indian government should help SMEs by helping them to identify their strengths and weaknesses in a systematic manner and then provide them with access to international best practices and advice on how those could help them