Forging a culture of innovation

(The Hindu)

 

Indian ports

(The Financial Express)

 

Forging a culture of innovation

(The Hindu)

Synoptic line: It throws light on issue that we have enabled an ethos of publishing, but not “patenting, publishing and prospering”.

(GS paper III)

Overview

 

  • India ranked third in the world in number of science and technology PhDs awarded and have improved our ranking in the Global Innovation Index, from 66 to 60. And yet, there is no Indian university in the top hundred (QS World University Rankings, 2018) and only 46,904 patents were filed in India in 2016 (China filed over a million patents).

 

  • India should be in a good position in terms of research and development (R&D) spending. 

 

Assessment

 

 

  • India’s gross expenditure on R&D has increased by three times over the decade 2005-15, crossing the ₹1 lakh crore marks in 2016-17. In comparison to the West, the contribution of higher educational institutions in R&D spending was lacklustre. The government’s R&D spending is equivalent to an Amazon or Alphabet’s R&D spend, while only 26 Indian companies figure in the list of top 2,500 companies globally by R&D spend. Our R&D activities still seem to be conducted in an ivory tower, instead of being market-focussed.

 

 

  • India’s R&D spending, as a percentage of GDP, still lags significantly, at 0.69% in 2015, this share has been stagnating for the last decade. Even among other BRICS countries, only South Africa lags behind India in terms of R&D expenditure. Allocation of spending is also significantly constrained.

 

  • Over 90% of Indian start-ups face a risk of failure in their initial failure, partially due to a lack of access to financing. Access to such financing streams, to public and private players needs to be improved significantly, with a reduction in institutional barriers.

 

  • The translation of R&D spend into patents can be affected by institutional constraints as well. Only 28% of patents registered for applications are eventually filed. Meanwhile, patent pendency times in India are among the highest in the major economies, with a patent taking about 6-7 years between a request for examination and a final office action.

 

  • Also India should be concerned about the lack of transformative innovation across industries. Over 77% of Indian venture capitalists believe that India lacks unique business models or new technologies. The number of scientific publications has risen from 62,955 papers in 2009 to over 106,065 papers in 2013, with India’s share of global research publications rising from 2.2% in 2000 to 3.7% in 2013.

 

  • The CSIR’s patents, mentioned earlier, were mostly “bio-data patents”, and are claimed to have been filed primarily to enhance a scientist’s resume. The hoarding of patents has a significant cost; acquiring a higher number of patents, without due regard for quality, has become an institutional mark of success, to up our index of innovation.

 

Measures

 

  • India needs to push itself beyond metrics, papers and patents to focus on providing solutions to development and economic challenges. A focus on building an innovation culture is necessary, particularly giving the transformative shifts under way in sectors critical to India’s economy from electric cars in automobiles to insourcing in IT services, the economy is exposed to significant job losses and a fall in exports over the coming decade.

 

  • Our innovation policy has to shift beyond a focus on increasing R&D spending to inculcating a mindset of “out-of-the-box” thinking in our universities, start-ups and corporates.

 

  • The Atal Innovation Mission is an encouraging start, focussing on facilitating school-level financial grants to help nurture an initial layer of innovation. But we need to move beyond this to focus on taking advantage of the data analytics boom, improving educational qualities beyond our existing islands of excellence to the whole university system.

 

Way ahead

 

  • India’s intellectual property rights (IPR) policy is ripe for transformation requiring an amendment encouraging start-ups to utilise filed patents on an initial no-royalty basis, with revenue sharing occurring once significant commercialisation is achieved.

 

QuestionAs the future state of India’s R&D activities demands significant attention, the Atal Innovation Mission is important. But we need to move beyond this to focus on taking advantage of the data analytics boom, improving educational qualities beyond our existing islands of excellence to the whole university system. Analyse.

 

Indian ports

(The Financial Express)

Synoptic line: It throws light on the issue of low quality infrastructure which raises business costs and reduces global competitiveness. 

(GS paper III)

Overview

 

  • India’s domestic infrastructure is not up to the global standards. It is also a common knowledge that low quality infrastructure raises business costs and reduces global competitiveness. Despite efforts to improve infrastructure for several years, the results are still not enough.  It is evident from the challenges India is facing in developing a global maritime hub through the port-led development initiative of ‘Sagarmala’.

 

  • Though India is spending a few billion dollars to build so-called ‘container transhipment ports’ to cut its dependence on facilities located in Colombo and Singapore to send and receive about a fourth of its annual container cargo. But its inability to tackle and address issues that facilitate transhipment could torpedo the objective.

 

Sagarmala project

 

  • Sagar Mala project is a strategic and customer-oriented initiative of the Government of India entailing setting up of 6+ mega ports, modernization of several dozen more ports, development of 14+ Coastal Economic Zones and at least 29 Coastal Economic Units, development of mines, industrial corridors, rail, road and airport linkages with these water ports, resulting in US$110 billion export revenue growth, generation of 150,000 direct jobs and several times more indirect jobs.

 

  • It aims to modernize India’s Ports so that port-led development can be augmented and coastlines can be developed to contribute in India’s growth. It also aims for “transforming the existing Ports into modern world class Ports and integrate the development of the Ports, the Industrial clusters and hinterland and efficient evacuation systems through road, rail, inland and coastal waterways resulting in Ports becoming the drivers of economic activity in coastal areas.

 

  • Vision of the Sagarmala Programme is to reduce logistics cost for EXIM and domestic trade with minimal infrastructure investment. This includes-

 

  • Reducing cost of transporting domestic cargo through optimizing modal mix
  • Lowering logistics cost of bulk commodities by locating future industrial capacities near the coast
  • Improving export competitiveness by developing port proximate discrete manufacturing clusters
  • Optimizing time/cost of EXIM container movement

 

Assessment

 

 

  • Ports integrate host countries with global production networks. Countries with high shares in global goods trade, or having trade as a major source of their national incomes, have no alternative other than having efficient ports.

 

 

 

  • Depending on the size of the country’s coastline and degree of integration with regional and global economies, ports play multiple roles. These include not just facilitating exports, but also supplying imported resources and commodities to their hinterlands.

 

 

 

  • Some ports specialise in trans-shipment and are vital for enabling cross-continental traffic and smooth functioning of global value chains. Singapore, Hong Kong, Shanghai, Busan, Jebel Ali and Colombo are some examples.

 

 

 

  • India is yet to develop major trans-shipment ports; Vallarpadam in Kochi was supposed to be a major trans-shipment port, but hasn’t got going. Its trans-shipment container terminal is functioning at just around half of the installed capacity. More trans-shipment capacity is in the pipeline, as the Vizhinjam port develops on the Kerala coast.

 

 

  • As the Sagarmala aims to, India must develop good trans-shipment facilities. But such facilities, as well as facilities not necessarily focused on trans-shipment but on basic port function of handling high container cargo traffic for servicing hinterland needs, are unlikely to produce results simply from more new ports or upgrading of existing ports.

 

  • Except JNPT (which ranked in the mid-30s on global port efficiency scale), no Indian port figures among the top 50 best ports in the world because of high logistics costs of Indian ports. India’s low rank of 146 in the World Bank’s Trading Across Borders Index underlines the high cost. The costs for Indian ports continue to be high for two major sets of factors.

 

  • The first of these are due to features of the ports themselves. While some of these point to quality of existing infrastructure, a substantive part includes procedures. The most important among the latter are lengthy processes that are still necessary for export and import.

 

  • While customs operations in India are rapidly going paperless and converting to digital, inspections and scrutiny continue to be lengthy for cargo and other shipping operations. The second important set of reasons for high logistics costs of Indian ports pertains to issues arising from problems of movement in hinterland.

 

  • Even if India is able to substantially reduce logistics costs over the next decade, plugging a few of its ports deep into global supply chains would require major regulatory changes. Cabotage laws in India continue to remain restrictive. Foreign-flagged vessels are not allowed to ship cargo from one Indian port to another as that remains a protected turf for domestic shippers. Some initial reforms have been introduced here, such as for roll-on, roll-off (RoRo) vessels. But, further change in cabotage laws is essential for encouraging trans-shipment functions on Indian coasts. 

 

Way forward

 

  • Without trans-shipment, India’s port-led industrial growth strategy through Sagarmala would remain ineffective. Even after 70 years of independence, notwithstanding stated ambitions of becoming an economic superpower, basic maritime facilities continue to remain inefficient. India needs to give priority otherwise, outward-oriented infrastructure reforms in India continue to suffer from.

 

Question What are the challenges faced by India in developing a global maritime hub through the port-led development initiative of ‘Sagarmala’?