Why India Needs a Ministry of Innovation

Back in 2015, China was filing less than half global patents as the US: 25,000 vs Uncle Sam’s nearly 57,000. Fast forward five years, China filed almost as many patents as the US—roughly 60,000 each. Come 2022, China filed 70,015 applications compared to 59,056 of the US. For the first time ever, innovators in China had filed more global patent applications than innovators in the US. In case you are wondering where India is in all this, here’s the number: 2,000 in 2022.

The numbers I am talking about are from the Patent Cooperation Treaty overseen by the World Intellectual Property Organization, which allows innovators to file for patents across countries at one go, and not domestic patent applications.

As one can imagine, China stealing a march over the US has caused much consternation among businesses and policy makers in the US. The super power has responded by enacting laws that seek to choke China’s access to bleeding-edge hardware, software, and even skilled manpower. It’s a response to a belated realization that China had been helping itself to intellectual property (IP) from American universities and businesses for decades.

Now, China has no access to the latest semiconductor technology from the US, almost no one with American citizenship or residency do any work, directly or indirectly, for Chinese companies in chip design or manufacturing, and two of China’s biggest technology companies ZTE and Huawei are banned from doing business in the US.

If America’s first big fight for global supremacy was with the erstwhile USSR, the second is clearly with China. America recognizes that the only other country with the intent and heft—economic, military, and technology—to reshape the global order is China. And if China’s technology advancement can be pushed back by a decade or so, then America will continue to have its supremacy. After all, in the digital age, the country that possesses superior technology will be the default leader.

China’s Response

Xi Jinping, China’s President, has responded by making technology and innovation a national priority. This year alone, the government has earmarked USD 51 billion for science and technology—the largest percentage increase in allocation of all priority sectors, including defense. Already, the government and the private sector combined spend a staggering $456 billion in R&D annually, making China the second-largest R&D spender after the US.

In contrast, India’s gross R&D investment, as per the Department of Science & Technology, was a modest Rs 127,381 crore in 2020-21 (or $15 billion at current INR-USD exchange rate of 83), and almost two-thirds of that is due to the government. Elsewhere in the developed world, it’s the private sector that leads R&D investment. But in India, unfortunately, it brings up the rear.

As per Xi’s directive, no effort or money is to be spared to keep China’s innovation engine roaring. The government has announced plans to offer ultra-long bonds to specifically fund investment in nationally-critical technology. The bond issuances could be as much as 1 trillion yuan or $138 billion. As China’s premier Li Qiang said while making the announcement, the money would “systematically address funding shortages facing some major projects for building a great country and advancing national rejuvenation”.

Thanks to consistent investment in R&D over decades now, China is already a tech powerhouse. Alibaba, Baidu, Tencent, ZTE, BYD and Huawei are just a handful of well-known global tech brands that China has spawned. What should be a wake-up call for India and other countries is the assessment by an Australian think tank that China already leads the world in 37 out of 44 critical technologies. According to the Australian Strategic Policy Institute, these technologies include artificial intelligence, quantum technology, advanced materials, robotics, biotechnology, space, and even defense.

Perhaps nowhere else is China’s tech supremacy so much in your face as in the EV industry, where BYD is the undisputed poster-boy. It is estimated that almost 60% of the EVs sold around the world are Chinese. No other country has a vice-like grip on the EV supply chain like China does—from critical minerals to battery technology. The Chinese government support and subsidies is only one, much-publicised, part of the success story. What cannot be denied is that the Chinese EV ecosystem is not just innovative, but nimble. Unlike traditional car makers struggling to get the EV sauce right, China has pure-play tech companies that are native EV makers. Apparently, that DNA is very different compared to that of IC engine car makers.

A Ministry of Innovation

A Minister of Innovation may sound like an oxymoron, because governments and their bureaucrats are never the answer for anything bleeding edge or agile. But given that India’s private sector lags so far behind in R&D investment, India may have no choice but to count on government money to just stay in the tech race. The push for self-reliance in semiconductors is a noble goal, but it may take decades to materialize, with the inevitable risk that the current leaders may further innovative, making our chips look like stage coaches in the era of EVs and autonomous vehicles.

So, what must this Ministry of Innovation do and how? The first thing to do would be to identify the technologies that are absolutely critical to India’s competitive future—just like what China has done. These would include AI, quantum computing, advanced materials, biotechnology, defence, and space. The next thing to do would be to allocate substantial budgets, and issue ultra-long bonds like China is doing. Money must not be lacking in this endeavour.

Then, the Ministry must go about building specific organisations staffed by highly-skilled, globally head hunted and motivated Indians—find the Vikram Sarabhais of today who can build the ISROs in each of these critical technologies. None of government’s bureaucratic procedures or even salary structures should be applicable to these. Ideally, the key organisations should report directly to the Prime Minister, and not a Minister.

These organisations must be ring-fenced from politics in such a way that changes in government do not impact leadership and budgets. Each organization’s performance must be measured against specific, agreed-upon milestones and outcomes.

With its minuscule R&D spend and lackadaisical approach to innovation, India is already decades behind the US and China. If its economic heft as a soon-to-be-fourth-largest economy has to have a sustained edge, then the new government—by all accounts a Modi Sarkar 3.0—must make technology and innovation a national priority.