India's billion dollar innovation fund

25th January, 2013 by Martin Wright

Can a combination of venture capitalists and the best brains reduce poverty in India, where philanthropy has fallen short? 

“India has always been highly innovative”, says Saurabh Srivastava, the IT entrepreneur and venture capitalist who has been charged with spearheading a new  $1 billion Inclusive Innovation Fund under the remit of the National Innovation Council. He pauses for effect before adding, “except for the last 300 years.”

Historically, Indian governments have not made great innovators. “Back in the 17th century, India used to account for 25% of global GDP. Then we had the Raj, and then we had the Licence Raj [the few decades leading up to economic reform in the 1990s, when bureaucracy stifled business]. Imagine if mobile phones had been around then. They would have cost $1,000, and had a 10-year waiting list!”

The remit of the Inclusive Innovation Fund is to harness the dynamism of venture capital to address the needs of the poor. “There has been too much focus on philanthropy and on government grants and subsidies”, says Srivastava. “Both are inadequate and inefficient. You can’t depend on philanthropy because when the money stops (as sooner or later it does), the good work stops too. And government assistance often doesn’t reach the people for whom it’s intended.”

So given government’s track record, what hope is there for its much trumpeted Decade of Innovation? Sam Pitroda, who as a telecoms tycoon and later policy adviser did much to shape India’s communications revolution, is cautiously optimistic. Speaking at a conference in Delhi in October in his new role as Chairman of the National Innovation Council, he says its formation is evidence that there is “a political will to drive innovation in all walks of life”.

He talks of creating an “ecosystem for innovation”, linking venture capitalists with the best brains in universities and the country’s network of Indian Institutes of Technology (IITs), and strengthening intellectual property protection to incentivise innovators.

The key, he says, is to work with India’s industrial clusters such as auto parts, food processing, brassware, bamboo textiles and leather. “We need to go into those clusters and seed innovations; link them with banks, universities, R&D labs. The Council’s already taken on some pilot projects. “Take the food-processing cluster. The mango has a shelf life of around five days. We found ways to increase that to 35 days, so now it can be shipped to Europe … A little bit of innovation can mean a substantial change in income.”

At TERI, Industrial Energy Efficiency Director Girish Sethi is working on similar principles: bringing together the glassware manufacturers of Firozabad, near Agra, who are famous across India for their bangles, to work on designs for more efficient furnaces.

Pitroda wants to see a ‘national knowledge network’, with optical fibre links between universities, industrial clusters, libraries and more. He talks enthusiastically of its potential to crowdsource bright ideas. But there’s no mistaking the scale of the challenge, he concludes. “We have a 19th-century mindset; 20th-century processes; and 21st-century needs. We have a tremendous amount of young talent, but we also have the largest numbers of poor in the world. The best brains in the world are busy solving the problems of the rich, who really don’t have problems at all … We need to refocus that talent on the needs of the poor.” - Martin Wright

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

Photo: Comstock / Thinkstock

Featured in

Advertise block

I still can't work out how you manage to put such a brilliant mix of innovative subjects together with such consistency... An inspiring read which I genuinely look forward to.

Neville White, Ecclesiastical Investment Management