GFR (General Finance Rules) and Innovation Promotion

In 2007 World Bank released a report `Unleashing INDIA’S Innovation’ and question thus arose;  where is the `leash’?  Is it low budget or structural holes or mind set?

It is common refrain to say that only 1 in 8 of innovations make money in the market. For government departments, the accounting treatment of failed innovations is governed by the rule book GFR. Unfortunately despite a series of announcements including INDIA INNOVATION DECADE, the GFR has not been updated to stimulate risk investment by Government. The GFR condition amended in 2005 says:

Ministries or Departments of Government sponsor projects or schemes to be undertaken by Universities, Indian Institutes of Technology and other similar autonomous organizations such as ICAR, CSIR, ICMR,etc., the results from which are expected to be in national interest. Normally the entire expenditure on such projects or schemes including capital expenditure, is funded by the Ministry or Department. The funds released for such projects or schemes in one or more installments are not treated as grants-in aid in the books of the implementing agency. Apart from the requirement of submission of technical and financial reports on completion of the project or scheme, a stipulation should be made in such cases that the ownership in the physical and intellectual assets created or acquired out of such funds shall vest in the sponsor.

R&D Grants to Industry

There is no provision or bar on funding R&D projects or innovations by commercial organisations. History of R&D funding will thro light on this.

TAAS

DSIR was the first to provide R&D grants to Industry under TAAS (Technology Absorption and Adaptation Scheme). This is influenced by the Japanese Model, where initial technology was imported, absorbed and improved. MITI moulded the program in Japan, the Indian version TAAI taken up by DGTD was resisted by industry due to conditions on PMP (Phased Manufacturing Programme) to improve local content during the initial 5 years of license. To motivate industry to take up technology absorption , DSIR came up with TAAS and R&D grants were given to over 30 Public Sector Firms. GFR does not differentiate between Public Sector or Private sector and this decision to restrict funding to Public sector was primarily to play safe.

PATSER

With liberalization and globalization, the focus shifted to new product development. The literature is supportive of government initiatives to support commercial firms at pre-commercial stage of R&D and WTO also approved this subsidy. DSIR started PATSER as conditional and matching grants scheme, attracting private capital to R&D and at the same time not penalizing them for R&D failures. More than 150 R&D projects were supported under this program and majority of the executing agencies were private firms developing proprietary technology. Similar programs taken up by TIFAC, DOE ran into rough weather as they were loan schemes with no provision to write off failed Research.

TePP

New century shifted focus again , this time to creativity, innovation and incubation. New ground was covered under TePP as network program with slots to support idea at different stages. Read: PPT on Freedom to perform in Government-case of TePP . 

Is GFR the leash that confined India to a narrow circle of achievements?

• ·     Under the same GFR, DSIR started TePP and PATSER programs giving grants to commercial firms for R&D at pre-commercial stage.
• ·         Under the same GFR, TDB started giving time much larger amounts to commercial firms as soft loans at Commercial stage.
• ·        Under the same GFR, TePP started giving small but significant grants direct to innovators for proving their novel ideas at concept stage.
• ·         The amount spent by Government of India on private R&D and Innovation is less than the R&D cess collected from Industry for technology transfer.
• ·         The grant amount is a tiny fraction of revenue foregone (Rs 6330 crores) by Government by way of fiscal incentives ( Deduction/weighted deduction for expenditure on scientific research (section 35 (1), (2AA) &(2AB))

·      It is good if GFR is amended to keep with the times, even otherwise the precedents created should form the base to charge ahead with conviction..

India faces certainty of Water Challenge in an uncertain environment to meet the challenge.

Born and brought up in a village on the bank of Buckingham Canal, imaging a water stressed region was difficult. This McKinsey  report is disturbing as the bridging measure appear in-feasible. 

By 2030, under an average economic growth scenario and if no efficiency gains are assumed, global water requirements would grow from 4,500 billion m3 today (or 4.5 thousand cubic kilometers) to 6,900 billion m3. This is a full 40 percent above current accessible, reliable supply (including return flows, and taking into account that a portion of supply should be reserved for environmental requirements ). By 2030, demand in India will grow to almost 1.5 trillion m3, driven by domestic demand for rice, wheat, and sugar for a growing population, a large proportion of which is moving toward a middle-class diet. Against this demand, India’s current water supply is approximately 740 billion m3. As a result, most of India’s river basins could face severe deficit by 2030 unless concerted action is taken, with some of the most populous—including the Ganga, the Krishna, and the Indian portion of the Indus—facing the biggest absolute gap. The report lists many measures to reduce demand and increase supply. 

As per this report, the biggest additional source for water is National River Linking Project (NRLP)- will it ever take off?  I first heard of reversing course of river during visit to Chicago and American civil engineers achieved this feat in year 1900- how admirable.

Affect of transnational corruption on host country firms innovation behaviour

Researchers Alexis Habiyaremye  and Wladimir Raymond focus on rarely discussed topic- impact of MNCs corruption on innovation behaviour of local firms in transition economies. 

This is known for long that many Indian innovations failed to take off as customers both in government and in private sector favoured MNCs for kick-backs ranging from free foreign trip to over-invoicing.

Using firm-level data from the Business Environment and Enterprise Performance Survey, the researchers show that the involvement of foreign firms in corruption practices reduces the propensity of firms in host countries to invest in research and development and harms their ability to improve their existing products and services.

Read: http://www.merit.unu.edu/publications/wppdf/2013/wp2013-050.pdf

Agriinnovate India Ltd launched.

Agrinnovate India Ltd. (AgIn) was incorporated under the Companies Act, 1956 (No. 1 of 1956) on 19th October, 2011. It is a “for profit” Company owned by Department of Agricultural Research & Education (DARE), Ministry of Agriculture, Government of India. It is to act as an effective interface between Indian Council of Agricultural Research (ICAR- an autonomous organization under DARE) on one side and the Stakeholders of agricultural sector (Farmers; Public & Private Sector firms; R&D organizations; Educational Institutions- all of these at National and International level) on the other side, for a significant purpose of securing, sustaining and promoting global agricultural development.

The Company has been set up with an authorized share capital of Rs. 100 crore, with an initial paid up capital of Rs. 50 crores from DARE/ICAR.

Close

RELATED ARTICLES

Missed manufacturing- next cycle may be century away.

Prime Minister in his message to the report `National Strategy for Manufacturing (2006)' acknowledge that share of manufacturing in national income had shown only a marginal improvement from 15.8% in 1991 to 17% in 2003. He wanted it between 25% to 35%. This goal of 25% was never reached. Share of Manufacturing has come down to 15.2% in 2012-13 from 15.7% in 2011-12. 

Despite regular announcements to boost up manufacturing with policy interventions, it seems India would never achieve the coveted 25% share. Researcher Dani Rodrik says de-acceleration in manufacturing is cyclic and inevitable, both developed and developing countries have gone through the phase of accelerated growth followed by decline in manufacturing. The critical difference is the peak reached before the decline sets in.

In UK before world war 1 had 45% of workforce in manufacturing, now less than 10%. USA had 25-27% of workforce in manufacturing in early nineteenth century , now less than 10%. In Sweden manufacturing peaked to 33%, Germany to 40% before decline had set in.
India peaked at 13-15% in 2002 and has since trended down. When US, Britain, Germany, Sweden began to deindustrialize their per capita income reached $10,000 (at 1990 prices). India switched to service sector at much lower per capita income.

Will India stagnate as a service economy at low income level?
Read more at http://www.project-syndicate.org/commentary/developing-economies--missing-manufacturing-by-dani-rodrik#kTJKPCAZbH1yIdLC.99

2013 China Innovation Survey

The China Innovation Survey is jointly conducted by the Benelux Chamber of Commerce in China, 21st Century Business Review, China Europe International Business School, and Booz & Company. Findings:

• China is well on its way to becoming a true global innovation hub for MNCs from developed markets: Two-thirds of the MNCs in China that took part in the survey reported that they are already conducting product development for foreign or global markets.Participants were even more aggressive in their projections, they expect to be conducting global R&D in China for the rest of the world 10 years from now.
• In addition, the survey contradicts a piece of conventional wisdom: that innovation in China tends to focus on copying and making incremental improvements to existing products. In fact, the data shows that Chinese companies—to a higher degree than most global competitors—pursue the same practiced by the world’s most successful innovators, notably companies based in Silicon Valley. These companies pursue Need Seeker strategies : focusing their R&D efforts on consumer needs, developing products that meet those needs, and then quickly getting the products to market.
• Apart from the optimism, the Chinese firms and MNCs in China share the confusion: neither are clear on Key Capabilities.

For copy of the report contact: Kevin.lu@innoenterprise.com

Reforms in Higher Education- RUSA

The cabinet recently approved RUSA which can make significant impact of quality of higher education. The report prepared by MHRD in association with Tata Institute of Social Sciences makes many recommendation, important is need to completely overhaul the University Affiliation system.

Majority of the students (94%) are enrolled in state universities or autonomous/ affiliated institutes. The state universities depend on affiliation fees and raise additional resources by offering revenue yielding courses. This type of university affiliation, with resource started university granting degrees to hundreds of affiliated institutes is the main problem. Need for affiliation revenue ensures that universities do not let go even autonomous institutes. The second problem is structure of UGC which is entrusted with responsibility of maintaining standards and also fund disbursement. 

The solution proposed transfers action to state with empowered State Higher Education Council. Will it deliver? 

SEMINAR ON LANDFILL- FREE INITIATIVES, VJIM, HYDERABAD

Zero Waste is a concept utilized by communities as well as businesses.  This approach says that waste should be thought of as a “residual product” or simply a “potential resource” to counter our basic acceptance of waste as a normal course of events. In the initial phase, companies strive to reduce waste generation through such factors as greater efficiencies,  reusable packaging and divert unavoidable waste to various recycling streams.  Now, MNCs like GM adopt a LANDFILL – FREE manufacturing. To qualify for LANDFILL –FREE status, facilities must handle by-products by any other method except placement in a landfill. Materials sent to a recycling center and subsequently landfilled by the recycling center must not exceed 1% by weight of the facility’s total.

Zero waste embodies the goal of a closed-loop system that reuses resources rather than creating waste. Such an approach requires consideration of the entire life-cycle of products, processes and systems within the context of a comprehensive systems understanding of our interactions with nature and search for inefficiencies at all stages.

A Zero Waste strategy supports Triple Bottom Line sustainability goals of economic wellbeing, environmental protection, and social wellbeing. Economic wellbeing is enhanced by solid waste elimination and improved production efficiencies. Environmental protection is promoted through the consumption of less new raw materials from nature, and the elimination of waste materials returned to nature. Social wellbeing is heightened through improvements that better safeguard society’s scarce resources, as well as through the creation of new jobs in the “closed loop” processing involved with reuse and reprocessing of materials.

Case:

Glen Raven is a textile manufacturer, Burnsville Plant in North Carolina is a leader in sailcloth , flag and banner fabrics in North America , cutting-edge performance fabrics for ballistic vests for the U.S. military and protective work apparel for electric utility workers. During a plant renovation in the late 1990s, a recovery and handling system for nylon and polyester fibers was put into place starting with segregation. In addition to recycling nylon and polyester fibers, Burnsville recycles batteries, fluorescent tubes, clear plastics and cardboard. Wood pallets are repaired and reused multiple times and reuseable plastic crates are used for receipt of raw materials. Food waste from the plant cafeteria is collected by a local hog farmer. The remaining waste items, however, were the most difficult to recycle, including materials such as contaminated fibers and floor sweepings.

It was at this point that Burnsville Plant called on assistance from its sisterplant,theAnderson,S.C.,Sunbrella fabrics manufacturing center, which has been landfill-free for three years. Through additional separation and reprocessing steps, difficult to-recycle waste items can be used to create absorbent materials, such as those used to control the oil spill in the Gulf of Mexico. Other reprocessed materials can be used for filler in packaging and insulation. Anderson Plant has advanced to this step and Burnsville Plant will implement a similar approach.

Programme

Seminar on LANDILL-FREE INITIATIVES

Venue: VJIM Auditorium, Bachupally, Hyderabad 500090

Time: 11.30AM to 01.30PM

Date: 18th October 2013

Dr Anita Goel's team bags grand prize in Nokia Sensing Challenge

The Nokia Sensing XCHALLENGE is a $2.25 million global competition to accelerate the availability of hardware sensors and software sensing technology that individuals use to access, understand, and improve their health and well-being. Innovation in sensing is an important component to creating a means for appealing, usable, smarter digital health solutions.

The Grand Prize of $ 525,000 /- was won by team Nanobiosym , an Advanced Nanotech Incubator & Research Institute with a mission to: (1) Create new science and disruptive technologies that emerge at the convergence of physics, biomedicine, and nanotechnology; (2) Spin off new companies and joint ventures that capture the commercial impact of the promise of nanotechnology; and (3) Transition these technologies to solve some of the planet’s most pressing challenges in healthcare, energy, and the environment. NBS serves as an incubator for transformational technologies that have the potential for a game-changing impact on society and seeks to leverage science and technology to address the planet’s greatest unmet needs in global health, energy and the environment. 

Dr Anita Goel is the team leader.

A Harvard-MIT-trained Physicist-Physician, Dr. Anita Goel is a globally recognized leader in the emerging field of nanobiophysics, a new science at the convergence of physics, nanotechnology, and biomedicine. Nanobiophysics integrates these three fields to reveal new scientific solutions to the world’s most pressing challenges.

Her pioneering contributions to nanotechnology and nanobiophysics have been recognized globally by prestigious honors and awards, including multiple awards from US Government agencies such as Defense Advanced Research Projects Agency (DARPA), Department of Defense (DOD), Department of Energy (DOE), Air Force Office of Scientific Research (AFOSR) and US Defense Threat Reduction Agency (DTRA). Dr. Goel was named as one of the world’s “Top 35 Science and Technology Innovators under the age of 35” by MIT Technology Review. She holds a PhD in Physics from Harvard University, an MD from the Harvard-MIT Joint Division of Health Sciences & Technology (HST), and a BS in Physics with Honors and Distinction from Stanford University.