The new growth theories incorporate technological change endogenously as a factor of production in its own right. Similarly, the neo-technology theories of trade emphasize the role of technology in determining a country’s international trade and competitiveness. With the onset of the Digital Revolution or Industry 4.0, technology and innovation will assume an even greater criticality as determinants of competitiveness and economic growth. Under this theme, ISID’s work explores the firm-level R&D behaviour of Indian enterprises to identify policy lessons to enhance it. ISID has also started analyzing the opportunities and challenges that Industry 4.0 poses before the country, particularly the manufacturing sector.

The neglect of innovative activity by Indian enterprises, which is a key factor determining their competitiveness, is key policy concern. This project will analyze the determinants of R&D behaviour of Indian enterprises by large firms, MSMEs as well as MNE affiliates (revisiting the patterns observed by Kumar and Aggarwal, 2005), using a large panel data set. It would also examine the determinants of R&D activity across key sectors and technology groups. It will draw policy lessons for designing appropriate policies to strengthen the innovation capability of manufacturing firms in India.

Research Team: Prof Nagesh Kumar and Dr K Seenaiah

Status: [Ongoing], project launched in 2022-23; time frame: 12 months.

New technologies such as e-Commerce and digital marketing can be a really powerful tools especially for women-led MSMEs enabling them to conduct their economic activities from the convenience of their homes. ISID collaborated with UNESCAP SSWA Office to organize a roundtable discussion on the role that the new technology can play in empowering women entrepreneurs at a special session of the FIWE-ISID-MSME International Conference on “Women-led MSMEs as Catalysts of Transformation” on March 24, 2022. The distinguished speakers of the session included Mrs. K. Ratnaprabha, Former Chief Secretary, Government of Karnataka & President, UBUNTU; Dr. Rajan Sudesh Ratna, Dy. Head, UNESCAP-SSWA Office; Mr. Anurag Awasthi, COE Manager, GeM; Ms. Shirley Jayawardena, President, Federation of Chambers of Commerce and Industry of Sri Lanka (FCCISL); Ms Arundhati Mukherjee, Marketing Consultant. The session was moderated by Prof. Nagesh Kumar, Director, ISID. The roundtable highlighted the potential of women-led MSMEs in the development of the economy in terms of potential contribution to the GDP, and creation of millions of additional jobs and incomes. It discussed the challenges faced by women entrepreneurs in accessing markets and accessing finance and technology on equal terms. In this context reference was made to the Government of India initiative of Government–e-Marketplace (GeM) – an online public procurement platform that is also helping women entrepreneurs participate in government procurement. It also highlighted the UNESCAP-SSWA initiative to build the capacity of women entrepreneurs to leverage new technology such as digital marketing and e-Commerce. The report of the Roundtable has been submitted to UNESCAP-SSWA. Prof Nagesh Kumar was the project coordinator.

This study argues that innovations for the poor (inclusive innovation) are in short supply because of poor “market access” due to underdeveloped or missing markets in rural areas where most of the poor are located, and because of poor “technology access” due to the absence of domestic innovative capability and high costs of adapting technology products for poor populations. Based on a review of 58 recent cases of inclusive innovation, which have been discussed in the media, in policy circles and in the academic literature, we identify the agency and areas where inclusive innovations have been successful and areas where significant gaps exist. Our findings reveal that domestic private firms, MNEs and other non-state actors have played a significant role in introducing pro-poor innovations but have mostly concentrated in areas of low market access and/or high technology access. Inclusive innovation efforts are scarce in situations where technology access is low, although multilateral charities and agencies are targeting such areas. Policy support in India has taken the form of finance provision but our analysis of the Indian cases suggests that this should be complemented by more adaptive R&D in public sector bodies and public investments in marketing infrastructure. These are also factors that constrain overall R&D.

Research Team: Prof Suma Athreye

Status: [Ongoing], project launched in February 2022; time frame: 8 months.

Advances in technology, artificial intelligence, machine learning, deep learning, data mining, internet of things, cloud computing, mobile robotics, and so on, which are essential features of the Fourth Industrial Revolution or Industry 4.0, not only facilitate the increasing automation of routine jobs or task, but also facilitate automation of non-routine jobs. This automation, as predicted, are most likely to take away around 50 percent of the total jobs in developed and developing countries. Developing countries, like India, are striving to adopt advanced technologies or automation technologies to revitalize their manufacturing sector. Given the capital-intensive nature of production and increasing adaptation of Industry 4.0 and automation technologies, the question arises: Is it feasible to boost employment in the manufacturing sector? In this context, this study intends to understand the extent of diffusion of automation technologies and its purported impact on employment in the manufacturing sector in India. A working paper on conceptual issues has already been prepared. Another paper takes a stock of the opportunities and challenges in harnessing the potential of the new revolution. ISID has also hosted a policy roundtable on the subject and has issued a policy brief based on the discussions.

Research Team: Prof Nagesh Kumar, Dr Satyaki Roy and Dr Sanjaya Kumar Malik

Status: [Ongoing]; project launched in 2021-22; time frame: 24 months.

Several policy reforms in India, including FTAs, have focused on attracting FDI to promote GVC engagement. This study explored electronics industry’s GVC engagement within a new analytical and methodological approach. The nature of value chain participation was assessed through in-depth analyses of related and non-related party transactions of selected foreign and indigenous companies, using firm-level financial and customs trade data. The study found that the gains from greater inter- and intra-industry specialisation and scale economies expected from FDI-led production restructuring associated with FTAs accrued predominantly to the lead firms. In-depth case studies established that in the case of both foreign-invested and indigenous firms, India was largely serving as the market for final products. Further, whatever success has been achieved under the industry-specific policies for increasing domestic value addition and export promotion was not translating into the creation of an indigenous manufacturing ecosystem; rather it was leading to forex leakages. Breaking this cycle requires the indigenous ownership of productive and knowledge assets to be built up through vertical industrial policies. The project was sponsored by the ICSSR. Dr Smitha Francis was the project director.

Two studies, IT Industry of India and Post-TRIPS Pharmaceutical Industry in India, are taken up as part of the project on Innovation, Economic Development and IP in India and China sponsored by Max Planck Institute for Innovation and Competition, Germany and Applied Research Centre for Intellectual Assets and the Law in Asia (ARCIALA), Singapore Management University, Singapore. The first study IT Industry of India highlights the role of government policy in the development of electronics industry and the ITES sector. However, it is argued that these industries have not been driven by continuous innovation. The dynamics of these industries in India was very different from their global hubs where innovation systems together with intellectual property regimes played an important role in their growth.

In the second study, Post-TRIPS Pharmaceutical Industry in India, the TRIPS compliant patent law of India as well as the performance of Indian pharma industry during the post TRIPS-era are discussed. Most of the performance indicators show an upward trend during the last two decades; but their growth rates have been falling. This makes it difficult to draw firm conclusions on the performance of the industry. However, on two indicators — R&D and patenting, there is a clear upward movement, which indicates much better performance. Both the studies are under review process for publication. The study was undertaken by Dr. Reji K. Joseph, Associate Professor, ISID and Prof. Biswajit Dhar, IPR Chair Professor, Jawaharlal Nehru University, New Delhi.