The fruits of frugal innovation

India's culture of jugaad, or frugal innovation, has helped produce a wide range of sustainable breakthroughs. Are there lessons there for the rest of the world? Ian Thornton meets the innovators.

"What we're doing is essentially space technology at low cost", says Lakshminarayan Kannan, Founder of Vortex Engineering, laughing. "To do anything in rural India it has to be cost-effective, robust, reliable and energy-efficient", he adds. "It's like sending something to Mars. You can't send an engineer up there to fix it. The only difference is that you don't have budget constraints in space technology!"

The cash machine (ATM) which Kannan and his colleagues in Chennai developed is remarkable. With the lowest power consumption in the world – up to 90% less than conventional alternatives – it can run on solar power. Moreover it costs just one-third of conventional ATMs, despite having sophisticated inbuilt fingerprint scanning which allows even illiterate farmers to access the formal banking system. It holds out the prospect of bringing basic banking services within reach of rural India, most of which is far from the electricity grid. It is already being taken up by the State Bank of India and others, and Kannan hopes to see 3,000 installed by the end of 2013.

In Punjab, two PepsiCo employees developed a completely different innovation with equally impressive sustainability credentials: they pioneered a new technique for growing rice. Traditionally, young rice saplings are transplanted to fields from a nursery, then the fields are flooded to inhibit the growth of weeds. The new direct seeding technique cuts labour needs by half, saves 30% of the usual water requirement and slashes carbon emissions by 70% – all while maintaining yield and quality. Reducing water required for rice cultivation is a major priority in India: it accounts for a startling 40% of the country's total usage. Through direct seeding, PepsiCo India saved nearly 1.5 billion gallons of water in 2009.

Both of these innovations provide high quality goods or services – as good as, or better than, existing alternatives – at a low cost and a small environmental footprint. As such, they are exemplars of 'frugal innovation': responding to limitations in resources, whether financial, material or institutional, and turning them into an advantage.

Successful Indian frugal innovations include new products, like the Vortex ATM, new processes, like direct seeding of rice, as well as new business models. In rural Karnataka, Harish Hande has brought solar power to over 150,000 poor households by devising a viable pay-as-you-go model [see 'Smaller, smarter grids on the rise in India']. Customers either buy or rent solar lights with the help of a loan. By partnering with banks and local entrepreneurs to create this ecosystem, Hande's company, SELCO, is providing clean, bright electric light well below the cost of kerosene (the normal lighting fuel for millions of Indians) to people earning barely $50-100 a month, and all without a rupee in subsidy.

Low cost doesn't mean low tech – you can be frugal and sophisticated

Low cost doesn't mean low tech. On the contrary, frugal innovation can use highly sophisticated technology. The Tata Swach water filter is 50% cheaper than its nearest competitor, and can clean 3,000 litres without electricity or running water. To do this it combines rice husks (a common waste product) with frontier technology in silver nano-particles, developed in collaboration with MIT.

Sometimes a mix of low and high tech can achieve remarkable results. In the high valleys of Ladakh, farmers can grow fresh vegetables through the freezing winters thanks to an innovative greenhouse designed by local NGOs in partnership with the French organisation GERES. The Ashden Award-winning greenhouses use traditional earth and straw insulation coupled with a specially developed UV-resistant heavy duty polythene.

A number of conditions have come together to make India conducive to frugal innovation. Above all, perhaps, is a culture of jugaad: a Hindi word that roughly translates as 'overcoming harsh constraints by improvising an effective solution using limited resources'. From connecting a diesel engine onto a cart to create a truck, to powering complex irrigation systems by motorbike, there are examples all over the country. And while some see these as an embarrassing reminder of a willingness to put up with poor quality stopgap measures, others celebrate them as creativity in the face of adversity.

Meanwhile, yawning gaps in basic service provision can stimulate demand for low-cost solutions in health, education and energy. Often, the people excluded from these services are the rural poor, a group which until recently was considered not worth companies' time and effort. Management Professor C K Prahalad did much to counter this assumption, highlighting the 'fortune to be made at the bottom of the pyramid' as sheer numbers of people make up for low individual purchasing power. The pursuit of this vast potential market is another key driver of frugal innovation. Dr R A Mashelkar, one of India's leading scientists and a board member of the Tata Group, is an enthusiastic advocate of frugal innovation. "It is fundamentally about doing more with less, for more and more people. Not only people excluded today, but also people likely to be excluded in future."

Doing more with less, and thinking about future generations, is clearly core to sustainable innovation, but in India this has not been driven directly by environmental concerns. "India, so far, has done this out of compulsion. The combination of scarcity and aspiration was the trigger", says Mashelkar.

Regardless, many of the tools and techniques used to reduce cost and increase access also have positive environmental benefits. For example, Gyanesh Pandey wanted to bring electricity to rural Bihar despite the conviction of the Government that some areas were too remote to reach. Pandey's Husk Power Systems developed local plants that generate electricity via a biomass gasifier, using rice husks as principal fuel – the same abundantly available waste product as used in the Swach.

This is not to say that frugality and sustainability are the same thing. The Tata Nano is the best known frugal innovation, bursting onto the scene as the world's cheapest family car. The company's chairman, Ratan Tata, was explicit in the car's social aim: to get families off precarious scooters (often bearing four or five people plus baggage) and into safer cars. But increasing the number of cars on India's already crowded and polluted streets is hardly a recipe for positive environmental change. That said, work is underway to develop an electric Nano. If powered by India's abundant sunlight, this could change the narrative dramatically.

Historically, much of the innovation taking place in India has been in spite of, and not because of, government action. Recently, however, there are signs that the Government has recognised the potential of new solutions, and is seeking to drive them. India's President declared 2010-2020 the 'Decade of Innovation', and a National Innovation Council has been formed to devise and implement a model of 'inclusive innovation'. In a speech last year, Prime Minister Manmohan Singh said: "Research should be directed to [finding] frugal solutions to our chronic problems of providing food, energy and water security to our people." While the scale of ambition is eye catching – including a proposed $1 billion Inclusive Innovation Fund – it is much too early to tell what impact government initiatives will have.

Whatever their success, frugal innovation will really thrive outside government. Multinational investment in R&D in India has grown sharply since the turn of the millennium, and companies like Unilever are leading a trend to focus this resource on affordable products and services. Venture capital investments crucial to developing and scaling innovations have quadrupled since 2005, and bounced back strongly after the financial crisis. Taken together, these suggest that the future for innovation that is both frugal and sustainable could be very bright.

Ian Thornton is a former Research Associate at Nesta, where he researched and wrote 'Our frugal future: lessons from India's innovation system' with Kirsten Bound. He is now Deputy Director at the UK Collaborative on Development Sciences.

This feature appeared in ‘India: Innovation Nation’, a Special Edition produced in collaboration with TERI, Unilever, Interface and Mlinda.

Photos: Martin Wright / Vortex