MAKING INDIA A START-UP NATION

THE CONTEXT: India’s economic growth over the past decade has been fueled by three transformative events: the rollout of UPI, the telecom revolution, and the pandemic-driven boost to e-commerce and startups. To sustain this growth, integrating critical sub-systems is crucial for creating a long-term roadmap for a robust Indian economy.

CURRENT STATUS OF KEY INDICATORS RELATED TO INDIA’S ECONOMIC GROWTH:

GDP Growth:

• India’s estimated nominal GDP in 2024 is $3.9 trillion.
• In 2022, it became the fifth-largest economy, surpassing the UK.

GDP growth has accelerated over the decades:

• 60 years to reach $1 trillion after independence.
• Seven years for the second trillion.
• Five years for the third trillion (achieved in 2019).

Startup Ecosystem:

• India has the third-largest startup ecosystem globally, with over 140,000 DPIIT-registered startups.
• On average, one unicorn has been added every 20 days over the last 7-8 years.
• Startups created over 1.55 million direct job opportunities.
• In 2023, startups generated 390,000 jobs, a 46.6% year-on-year increase.
• Startups contributed about 4% to India’s GDP in FY2023.

Internet and Mobile Penetration:

• Over 800 million internet users and the cheapest data rates globally.
• 2 billion cell phone users.

Higher Education Enrollment:

• 43 million students enrolled in 1,168 universities and 45,473 colleges.

Graduate Employment:

• Around 10 million graduates join the workforce annually.
• Projected to increase to 17.5 million by 2035 and 24 million by 2050.

Entrepreneurship Among Graduates:

• Less than 2% of graduating students from top institutions like IIT Bombay opt for entrepreneurship.

Research and Development

• India’s R&D investments stand at 0.7% of GDP.
• R&D in higher education institutions is only about 10% of total R&D spending.

ISSUES BENEATH THE ECONOMIC INDICATORS NEED IMMEDIATE REDRESSAL:

• Low R&D Expenditure as a Percentage of GDP: India’s Gross Expenditure on Research and Development (GERD) has declined from 0.8% in 2008-09 to 0.64% in 2020-21. This is significantly lower than other major economies like China (2.41%), the US (3.47%), and Israel (5.71%).
• Insufficient Private Sector Involvement: The private sector’s contribution to R&D in India is only 36.4% of the country’s GERD, compared to 77% in China and 75% in the US. This indicates a need for greater private sector engagement in research and innovation.
• Low R&D Investment in Higher Education: India’s higher education institutions’ R&D spending as a percentage of total country R&D spending is far lower than that of countries like Australia (36%), the UK (24%), and Canada (39%).
• Limited Research Output: Despite improvements, India’s share of high-quality research articles remains significantly lower than China and the US. India has a relatively low number of researchers per million inhabitants (255) compared to countries like the USA (4,245) and China (1,225).
• Slow Commercialization of Research: The survey points out that institutions in India develop technologies, but their transformation from the lab to societal benefit is slow.
• Inadequate Industry-Academia Collaboration: Strengthening the link between higher education, industry, and research is needed to better translate GERD into research output.
• Low Per Capita R&D Expenditure: India’s per capita R&D expenditure of $42.0 in 2020-21 is among the lowest in the world.
• Sector-specific R&D Imbalances: Some sectors, like drugs and pharmaceuticals, dominate R&D spending, while others lag. Indian companies spend about 5-6% of their revenues on R&D, compared to 15-20% by global pharma giants.
• Limited Focus on Emerging Technologies: To stay competitive globally, increased investment is needed in artificial intelligence, quantum computing, and other emerging technologies.

THE WAY FORWARD:

• Increase R&D Expenditure as a Percentage of GDP: Aim to increase GERD to at least 2% of GDP by 2030, with a long-term goal of reaching 3% by 2047. South Korea increased its R&D spending from 2.18% of GDP in 2000 to 4.81% in 2021, becoming a global innovation leader.
• Enhance Private Sector Participation: Implement policies to incentivize private sector R&D investment. These include enhanced tax incentives for R&D expenditures, Matching grants for industry-academia collaborations, and streamlined regulatory processes for R&D-intensive sectors.
• Strengthen Academia-Industry Linkages: Establish dedicated innovation hubs and university technology transfer offices modeled after successful international examples. Stanford University’s Office of Technology Licensing has facilitated the creation of over 1,000 startups and generated $2 billion in licensing revenue since 1970.
• Develop Sector-Specific R&D Strategies: Create sector-specific R&D roadmaps and funding programs for renewable energy, pharmaceuticals, and artificial intelligence. India’s success in the pharmaceutical sector, which ranks third globally in volume, can be replicated in other strategic sectors through targeted R&D initiatives.
• Foster a Culture of Innovation and Entrepreneurship: Integrate entrepreneurship education into university curricula and establish more incubators and accelerators within academic institutions. In the US, 16% of students plan to start their businesses after graduation, compared to less than 2% in top Indian institutions.
• Streamline Intellectual Property Rights (IPR) Processes: Digitize and simplify patent application procedures, increase the number of patent examiners, and support international patent filings. China’s rapid improvement in patent filings reached 1.4 million in 2019 compared to India’s 53,627.
• Enhance International Collaboration: Establish joint research centers with leading international institutions and increase funding for international research exchanges. The Indo-US Science and Technology Forum (IUSSTF) has supported over 300 bilateral workshops and facilitated numerous joint research projects.

THE CONCLUSION:

India needs to transition from a linear growth approach to a synergistic paradigm where education, entrepreneurship, and employment are integrated. This integration can lead to exponential economic growth during the Amrit Kaal, positioning India as a global economic powerhouse.

UPSC PAST YEAR QUESTION:

Q. What is the status of digitalization in the Indian economy? Examine the problems faced in this regard and suggest improvements. 2023

MAINS PRACTICE QUESTION:

Q. Discuss the role of higher education institutions in fostering an entrepreneurial ecosystem and suggest measures to strengthen academia-industry linkages for promoting innovation and economic growth.

SOURCE:

https://indianexpress.com/article/opinion/columns/making-india-a-start-up-nation-9562903/