In the first two parts of our three-part series, we explored the unique challenges of innovating in India (Part 1) and the origins of these challenges in the country’s culture, history, and institutional structures (Part 2).
In this final part, we will discuss strategies for overcoming these challenges and fostering a more innovative ecosystem in India, something that IdeaScale and I are both proud of contributing to. Some of these approaches are micro-economic in nature, through the individual actions of individuals, and others require macro-economic change, at the level of institutions and culture.
Regulatory Reforms: Simplify and Streamline
One of the key challenges of innovating in India, for both businesses and individuals, is navigating the country’s complex regulatory environment. Opening a business in India, and getting the required approvals and certifications can take months (as compared to minutes in the US), which disincentivizes entrepreneurs from opening new companies through raising the cost to do so.
To address this challenge, governments can and are simplifying regulations, making it easier for entrepreneurs to start and grow their businesses. This is occurring in a bipartisan way where, regardless of which political parties are in power at the federal or state levels, regulatory simplification continues as the leaders of nearly all of India’s major political parties understand how valuable a simplified legal and regulatory system is to drive economic growth and innovation.
As a secondary benefit, Corruption, which has historically been ubiquitous in India and naturally thrives under complicated legal systems with gatekeepers, continues to decline as the regulatory landscape improves.
In summary, the “License Raj” system is not quite dead, but continues to lose ground.
Access to Funding: Encouraging Risk-Taking
To overcome the funding challenges faced by Indian entrepreneurs, it is essential to encourage risk-taking and create a more supportive investment ecosystem.
The good news is that is this occurring naturally as generations shift. The younger generation of India, is not only better educated but is more cosmopolitan in its world view, with many having travelled and studied overseas, and with the hunger and aspirations to build new and amazing things. This is most visible in the tech sector, where both Indians in India and overseas Indians, are founding and leading technology companies disproportionately to any other group. Moreover, older generations of India are increasingly realizing that this sort of risk-taking mindset shift is necessary to drive India’s success in the global economy, so their mindsets are changing as well.
One additional opportunity for solving the funding gap we see as possible is driven by the large cohort of Indian ex-pats who have made their fortunes in the technology and finance industries and still maintain strong ties to India. Prominent examples include Satya Nadela, CEO of Microsoft, and Sundar Pichai, CEO of Alphabet.
Building A Skilled Workforce: Investing in Education and Training
Investing in education and training is critical to building a skilled workforce that can meet the demands of innovative industries. India’s post-secondary education system is highly competitive, with universities competing aggressively to get the best students and turn them into prominent alumni, which has led to significant incentives for self-improvement, including a shift away from rote learning. For example, the curriculum of the IITs (India’s leading engineering institutions) is significantly different today than twenty years ago, driven by the IITs innate desire to be world-class institutions.
However, while India’s post-secondary institutions are evolving their pedagogical methods and curricula to be more focused on critical thinking, driven by economic and social incentives, this is not yet the case at the primary and secondary levels of education. To improve the education for younger students will require significant educational reform at the government level, ranging from new curricula to state and national educational exams that evaluate a more diverse array of skills.
Infrastructure Development: Prioritizing Investment
Infrastructure development is critical to supporting innovation and economic growth. The government can prioritize investment in critical areas such as power generation, transportation, and logistics, particularly in the Tier Y (2nd tier) cities. Additionally, public-private partnerships can be a valuable tool for financing and implementing infrastructure projects.
The good news is that India is making huge strides in improving infrastructure, much of which is independent of government intervention and driven by natural economic incentives, as evidenced by the emergence of major private infrastructure companies in sectors ranging from steel, concrete, civil engineering, and telecommunications.
Cultural Shift: Encouraging Risk-Taking and Entrepreneurship
To foster a more innovative ecosystem in India, there needs to be a cultural shift towards risk-taking and entrepreneurship. This can include introducing entrepreneurship education in schools, creating mentorship programs for entrepreneurs, and celebrating and promoting successful entrepreneurs. The government can also play a role in this cultural shift by providing tax incentives and subsidies for startups, as well as establishing a national innovation policy that recognizes the importance of innovation to economic growth.
In conclusion, while there are unique challenges to innovating in India, the path forward is very bright.
For each of India’s innovation challenges, there are provable and actionable strategies to overcome them to create a more supportive environment for innovation.
By simplifying regulations, encouraging risk-taking, investing in education and training (both formal and informal), prioritizing infrastructure development, and fostering a culture of entrepreneurship, India can continue to advance as a global leader in innovation.
We at IdeaScale are proud to contribute to India’s innovation ecosystem.