Template-type: ReDIF-Paper 1.0
Author-Name: Mani, Sunil
Author-Email: mani@intech.unu.edu
Author-Workplace-Name: United Nations University, Institute for New Technologies
Title: Role of Government in Promoting Innovation in the Enterprise Sector An Analysis of
	 the Indian Experience
Abstract: The purpose of the paper is to analyse the role of the Indian state in promoting
	 innovations in enterprise or manufacturing sector. The country's manufacturing
	 sector is dominated by the Chemicals and pharmaceutical sector which also accounts
	 for the largest share in R&D investments and in the number of patents granted. The
	 paper begins by mapping out the broad external environment within which innovative
	 activities of firms are encouraged. This environment consists of a series of
	 policies. A detailed analysis of them showed that policies lack specificity in
	 targets, the time dimension and budget. Four possible dimensions of the innovation
	 system are considered, namely the (a) policies with respect to the supply of
	 technically trained human resource for R&D; (b) the physical technological
	 infrastructure; (c) fiscal incentives for encouraging innovation; and (d) promotion
	 of technology-based ventures through venture capital funds. The country suffers
	 from a chronic shortage of research scientists and engineers of the type that is
	 required for R&D. The basic cause of this could be traced to the quality of science
	 and engineering education in the country and to the ever-increasing brain drain. A
	 network of government research institutes, which have been undergoing a major
	 restructuring, specifically since 1996, dominates the physical technological
	 infrastructure. However they continue to depend upon governmental grants and
	 projects for their sustenance and their interaction with the domestic manufacturing
	 sector is very limited. India does not have any major research grant schemes and
	 even the one that it has, in actual operation, is directed largely at public sector
	 enterprises. Most of the schemes are research loan schemes. In other words the
	 extent of public subsidies for private sector R&D is quite low in the country. The
	 country has a variety of direct and indirect tax incentives for R&D. However both a
	 macro and micro exercise revealed that most enterprises do not perceive its
	 existence as important. In most cases the level of R&D performed would be the same
	 even in the absence of direct tax incentives. Finally an examination of the
	 operation of venture capital funds showed that they conform to the ideal model of
	 providing, by and large, equity support to technology-based ventures in their early
	 stages. The paper also makes some critical comments on the quality of India's R&D
	 statistics and makes suggestions for their improvement. 
Keywords: Research and Development, Innovation Policy, Government Policy, India 
Series: Discussion Paper
Creation-Date: 2001
Number: 3
File-URL: http://www.intech.unu.edu/publications/discussion-papers/2001-3.pdf
File-Format: application/pdf
File-Size: 389 Kb
Handle: RePEc:unm:unuint:200103